How to Trade Cryptocurrency
Trading cryptocurrencies can be very profitable, and that’s understating the fact. Many cryptocurrencies have increased seven-fold in value year-on-year, often outperforming other asset classes in terms of ROI (return on investment). But choosing the right trading opportunities in cryptocurrency trading can be challenging – especially in the sea of never-ending indicators that often conflict with one other, making technical analysis a confusing prospect. So before you jump in blindly, let’s look at the basic understandings of cryptocurrency trading, and the advanced technical analysis and overly-complex indicators.
We’ll look at some of the strategies that work best for beginners who are considering the idea of trading digital currency. Hopefully, it will help you make smarter first-moves with cryptocurrency trading. Before starting to trade crypto, it is equally important to carefully think about the amount of money you’re comfortable putting at risk in this endeavor. Like any market, cryptocurrency markets can be ruthless and volatile. And while it does allow for the opportunity to see huge gains, it can just as easily lead to gut-wrenching losses. Therefore caution is advised. Even with the best of trading strategies, everyone will experience a loss eventually. So the key is to win more than you lose and to avoid some of the more common mistakes that new traders often fall victim to.
You Need a Cryptocurrency Wallet
The first thing you need before getting started with cryptocurrency is a wallet. You’ll need a wallet when you buy cryptocurrencies like Bitcoin or Ether to protect them. Most cryptocurrency exchange platforms provide a free wallet along with the ability to trade, all in one place.
You Need a Cryptocurrency Exchange Platform
The exchange platform is where you’re able to trade one cryptocurrency for another instantly. Note that each platform has its list of currency trading pairs. You might be able to exchange Bitcoin to another cryptocurrency, but not between one another. This can hinder your ability to trade fast and flexibly.
Main Differences between Exchange Platforms vs. Brokers
At first glance, an exchange platform might look the same as a brokers platform. But they are different. While a crypto exchange tries to match buyers and sellers with their bids and asks, a crypto broker buys and sells the cryptocurrencies directly from/to you. This is also why brokers tend to have higher rates when compared to exchange platforms.
Winning Cryptocurrency Trading Rules
Have a quick look at this list of trading rules, recommended by winning traders:
- Always research the cryptocurrencies you choose to trade and invest in. Reading the whitepapers can help you better understand what more than 90% of others don’t about trading crypto.
- Attend crypto events, it’s the likeliest place to find new opportunities and to learn about the latest news.
- Don’t buy into a new cryptocurrency after it has dropped in value.
- Learn everything there is to know about blockchain.
- Get to understand the correlation between the different cryptocurrencies.
- Secure your winnings and limit your losses.
- Learn all you can about technical analysis, it plays a significant role in reading market movements.
- Never make a trade if it’s an amount that’ll make lose sleep over it.
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