You can exchange cryptocurrencies for goods and services now, just like you do with conventional money, or you can trade them for profits. But while conventional money is controlled and regulated by governments, digital currencies have no centralization and no entity controlling their issue.
The first cryptocurrency created in 2008 was by a mysterious person or group named Satoshi Nakamoto. The introduction of Bitcoin was just the beginning of an influx of multiple other cryptocurrencies launched to replace bitcoin. The currencies that were launched later were known as altcoins, alternatives to bitcoin.
You will need a Beginners Guide to Cryptocurrency trading to get into the fad. At present, there are over 5,000 cryptocurrencies in the market, and more are expected to come up. The second largest and most popular cryptocurrency globally is Ethereum, especially popular for its products like decentralized finance (DeFi) and non-fungible tokens (NFTs).
Is crypto investing the same as crypto trading?
No. Both are different but have the same goal: to make a profit. However, the amount of time it takes for this profit to show is quite different. When talking about investing, the outcome time is from medium to long term, and that of trading is short to medium term.
Investing in cryptocurrency means buying and holding the assets for a long time- months to years. On the contrary, cryptocurrency traders hold their positions for a few seconds to several weeks.
Here’s a quick Beginners Guide to Cryptocurrency trading to get started right away.
First things first, you will need a suitable cryptocurrency trading platform to create an account. Every cryptocurrency enters the market with a certain need and goal in mind, and to cater to those, there are a wide variety of trading platforms out there you can choose from.
There are many factors you need to consider before deciding on a platform- security, ease of use, number of assets offered, etc.
Once you have selected a reliable platform, you will have to create an account. Most platforms provide a registration form where you will need to enter a valid email address, choose a strong password, and complete the registration. Then, you will have to verify your account and deposit a certain initial capital and to start trading.
While it may seem pretty simple, a lot of factors determine your success. Although its price can rise to great heights, it is not a get-rich-quick scheme; it is a wealth-building and income generation method requiring discipline, patience, and skills.
Here’s a list of things that can help you become a good crypto trader,
Research, and loads of research
The crypto market is huge and has numerous protocols for trading. So our beginners guide to cryptocurrency trading recommends that it’s best to understand the market from your perspective. Research the crypto exchanges, cryptocurrencies, and platforms for trading. Look at the benefits and drawbacks of investing in a diverse market like cryptocurrency. If your research gives you a green flag, you can start trading.
You will have to choose from the 7,000 cryptocurrencies presently being circulated in the market based on the criteria of performance and their time in the market. Choose the currency that offers reasonable returns in the long run. And, do not make the mistake of trading initial coin offerings (ICOs) since there’s no success rate for you to measure or a way of determining its legitimacy.
Diversify your portfolio
Do not focus your wealth on one particular asset, no matter how much you believe in it. Digital assets are lucrative, but you can counter the possibility of total loss by diversifying across various altcoins to cut losses in the event that one of your chosen assets falls.
Tread lightly and smartly
Cryptocurrencies are not much different from other financial assets; either you make money or lose it. The crypto market is wildly risky, and it is wise to invest only what you can afford to lose. The sudden market crash was unpredicted, and there were many such incidents and more to come in the future. No digital asset can guarantee you 100% returns even if you do everything by the book. There are many characters at play contributing to losses in investments, internal and external. These include government interferences, economic conditions, malware attempts, and hacks. Moreover, the volatility of the market adds to it. Ensure that all your savings are not in one particular investment and that your retirement plan is safe.
Do not give in to FOMO (fear of missing out)
Cryptocurrency is all the rage around the globe. Everyone is trading or wants to trade, and as humans, we tend to do what everyone else is doing. One can day trade with cryptocurrency as well, as we do for the stock market in traditional finance. Our beginners guide to cryptocurrency trading suggests that if you are day trading, avoid acting based on your FOMO, or you will lose money. Avoid trading under pressure.
Be updated
The market evolves by the day, and new aspects of trading are added every day. To do well in investments, stay updated with what is trending every day. Twitter, Facebook, and Telegram, even cable news, can give you reliable news and act as excellent channels for news. Adjust your investments according to changing markets to ensure profits.
Learn trading methods and staking
The Crypto market uses two different trading analysis methods, fundamental analysis and technical analysis. The technical analysis considers the entire price history of an asset, while fundamental analysis looks at current affairs that affect the price of an asset. Combining the two methods maximizes profit. You can also start to consider staking your crypto and earning a passive income out of it. It is an easy method to gain from crypto in the long term.
Mistakes happen
Cryptocurrency won’t make you rich overnight. Making money through crypto and succeeding in trading requires discipline, practice, and skills. And it is okay to make mistakes and incur losses, even for professional traders. Cryptocurrencies are as volatile as any asset can get, and trading might result in the loss of money. So, learning skills like risk management and trading discipline will help you get through losses and even see them coming. Don’t lose hope when you make mistakes, learn from them.
Wrapping Up,
All in all, this article aims to help you through trading and steer clear of bad actors, all the while not losing hope and patience. Take your time, read and practice as much as you can before going for the real deal.
