Beginner’s Guide: How to Start Trading Cryptocurrency

Beginner’s Guide: How to Start Trading Cryptocurrency

The trading landscape has undergone tremendous changes. Investment and return on investment as we know it has reached unprecedented heights.  A lot of investors prefer trading cryptocurrency. That’s because this is a volatile asset and if you trade correctly, you can get very high returns.

Crypto investors have one of two goals, which are to accumulate bitcoin and ethereum. The other is to make a profit in USD within a shorter period.

It’s easy for a portfolio to increase in value in a crypto bull market. It is, however, difficult to build your bitcoin stake. For an investor to track their portfolio’s value, they need to trade altcoins against bitcoin on exchanges.

An investor risks losing their crypto to the market if they actively trade their cryptocurrency. That’s because crypto prices are volatile and as such, it’s not unusual for a trader to lose their investment. That’s the reason why a lot of crypto investors just HODL their cryptos.

How to Start Trading Cryptocurrency 

Cryptocurrency trading is trending, and why not when it’s the future? Cryptocurrency is not just disrupting the financial sector. It’s also disrupting major sectors like information technology, retail, the health sector, tour and travel, automotive, and a lot more.

Owning cryptocurrency sounds great, however, handling it in the right way can be challenging. That’s the reason why people are keen on learning more about how it’s done. If you are interested in getting into trading cryptocurrency, this is the right article for you. We are giving you a complete beginner’s guide to trading cryptocurrency.

1. Do Your Research

The biggest challenge for cryptocurrency is not getting caught up in the hype. Digital currencies have quickly risen to prominence in many investors’ portfolios. Analysts have also cautioned investors about the unpredictability of cryptocurrencies. Thus, it’s important that you do your research if you’ve decided to start trading cryptocurrency.

The most important question you must ask yourself is why you want to get into cryptocurrency trading. There are a lot of investment vehicles available and some provide stability and fewer risks compared to digital currencies.

Read :  How can bitcoin affect Lenovo?

It’s also important that you develop a sense of how the digital currency world works before investing. Take time to learn about the different currencies that are available. With the hundreds of different coins and tokens available, you must look beyond the biggest names such as bitcoin and ripple.

Bitcoin, for instance, has been around long enough and has enough demand. As such, supporting itself is enough. That may not be the case for other coins playing this game. You also need to read the cryptocurrency whitepapers. When considering an investment, find time to read the project’s whitepaper.

Crypto shouldn’t only promise to solve some of the issues but it should do it in a way that makes sense. Blockchain projects are laid out in a whitepaper. This is a publicly available document that details blockchain’s mission and how it works. Even bitcoin that was published anonymously has a publicly available whitepaper. The paper has been widely read and circulated.

Your research must include the crypto exchanges, crypto currencies, and the various platforms for trade. Be sure to also check out the benefits and disadvantages of investing in such a diverse market. Proceed to trading once you’re convinced by the information you’ve gathered.

2. Practice Different Trading Strategies

The crypto market is volatile and unpredictable. Due to this, it’s important to have a cryptocurrency trading strategy before trading the market.

When we speak of cryptocurrency trading, we are referring to the act of speculating on bitcoin prices and other cryptocurrency price movements through a CFD trading account. These are leveraged derivatives and they can help you speculate on price movements, even without owning the underlying assets.

You can also purchase crypto currencies through an exchange. This means that you’ll need to buy the coins yourself and create an exchange account. You’ll fund the full value of the position and store the cryptocurrency tokens in your bitcoin cash wallet, for instance, until you’re ready to sell. Here are some of the trading strategies that can make trading crypto currencies fun and safe:

  • Scalping
  • Day trading
  • Range trading
  • Dollar-cost averaging
  • Building a balanced portfolio
  • Not making trading calls based on the hype 
Read :  Check Out the Top 4 Reasons For Doing Bitcoin Trading!

3. Pick cryptocurrency and Start Trading

The idea of anonymous cryptographic electronic money had long been postulated. But this wasn’t until 2009 when decentralized cryptocurrency bitcoin was first created. Since then, bitcoin has been a trendsetter ushering in a wave of cryptocurrencies built on a decentralized peer-to-peer network.

There are currently over 20,000 crypto currencies in circulation, so how do you pick the good ones? If you just said guess work, there are many others who would have said that too. But note that, this shouldn’t be how you go about it. You can use the crypto valuator (R.O.H.A.S) to turn your research into actionable insights.

R.O.H.A.S is an acronym for Revenue, Organized, History, Algorithm, and Social engagements. We’ll help you understand them.

  • Revenue. The first issue you need to address is the revenue model or the economic impact. After all, crypto is a financial asset and should solve some problems or generate money for its ecosystem. The ecosystem can include miners, node operators, and partners. It also involves startups building on the platform.

Bitcoin, for instance, is a medium of exchange that’s not dependent upon a government or a bank. The idea is that anyone in the world can pay anyone else using bitcoin cash. If the cost of transaction is less compared to the conventional ones and the speed is more, bitcoin becomes the preferred way to pay and receive.

  • Organization. So how about the organization behind the crypto? Crypto currencies are supposed to be decentralized, meaning that there shouldn’t be a group of people behind it. As such, it’s necessary that you check out the team behind the crypto, which includes the founders, developers, and even marketers. The team should be highly skilled and respected with a strong and relevant experience, solid credibility, and a positive social media status.
  • History. This is about the history of crypto. You must scrutinize to know whether the project’s milestone was achieved on time in the past. You must also check out the history and liquidity of the crypto. The crypto must show strong growth in its active users and trading volume. There should be adequate liquidity and availability of various trade pairs. It must also be listed on multiple credible exchanges.
  • Algorithms. Here, you’ll need to look at three aspects which are consensus mechanisms, the source code, and the developer pool. The consensus must be proven, secure, and efficient. As for the source code, it must be of high quality. When it comes to the developer pool, you must scrutinize the long-term availability of adequate developer talent.
  • Social engagements. Note that a successful crypto must have a large, vibrant, active, engaged, and positive community with a fair share of fanatics. 
Read :  Get to Know About Some High-End Tips for Making More Money In Bitcoin Trading

1. Don’t Put all Your Life Savings into Trading

Investors are advised not to put all their eggs in one basket. The rule also applies to digital assets as well. Much as they can seem to be lucrative, there’s also the possibility of total loss. Diversifying across various altcoins will help to cut your losses. That’s if one cryptocurrency drops in price.

It’s also wise that you invest money you can afford to lose as there’s never a 100 percent guarantee that you’ll get back your money’s worth. Not even if you do everything according to the book. 

2. Avoid the Fear of Missing Out

Trading cryptocurrency has become a global phenomenon and a lot of people are trading. There’s also the human tendency of doing what everyone else is doing.

If you, for instance, decide to participate in day trading, watch out for the fear of missing out. That’s because it’s the fastest way to lose money. You must also avoid trading when you feel pressured. 

3. Keep Yourself Updated on Crypto Currencies

The cryptocurrency market is always evolving, which comes with new aspects of the trade. Thus, you must stay updated with what’s going on if you’re to do well in investments. Social media platforms, for instance, are excellent channels for getting reliable news.

This will help you to make good judgments regarding trends and user opinions. People are always ready to post comments and ideas that may be valuable to others.

Conclusion

There are a lot of approaches when it comes to how to trade crypto currencies. To start trading, you must have adequate knowledge about the subject. You must also understand the associated risks and the laws that apply based on your jurisdiction.

admin

Technonguide is an IOT guide for Latest technology News, Trends, and Updates for professionals in digital marketing, social media, web analytics, content marketing, digital strategy.