The cryptocurrency industry is currently growing impressively, with many people showing an interest in this area.
Bitcoin, the largest cryptocurrency, is just a little over 10 years old and has proven itself to be the best performing asset in all world markets. Today, there are more than 3,000 different crypto assets, which boast a combined value of $252 billion and an $84 billion 24-hour volume.
If you’re already familiar with the traditional financial world, and in particular with stock trading, cryptocurrency trading can be a lot easier to understand. Read on to learn a few important things you must do to begin cryptocurrency trading.
With crypto trading, everything boils down to research. All the points listed below and pretty much every other thing you do as a trader must be backed by extensive research. As a beginner, you have to assume that you can’t get all the information you need from just one source. The advisable thing to do would be to check multiple sources and try to find some common ground before you make any decisions. Research is key.
Select an asset
As stated earlier, there are thousands of assets in the market for you to choose from. There is usually a lot more information for the largest assets, therefore, it makes sense to go down this route.
However, it’s also important to not just follow the crowd with the most popular ones; again, this is where research comes in. A good understanding of assets will guide you with your decision.
Choose a crypto exchange platform
Simply put, a crypto exchange is a platform where cryptocurrencies are traded. You may think of a crypto platform as the marketplace where you can go and buy some of your favorite products – in this case, cryptocurrencies.
There are advantages and disadvantages to these exchanges, just like there might be some commercial banks that are more reliable and trustworthy than others. Consider how you came to the decision of keeping your money in one bank over another and consider doing the same for crypto exchanges. Some of the biggest ones include Binance, Coinbase, KuCoin, Bitfinex, etc.
Find a wallet
Just as the name implies, a wallet is where you keep your cryptocurrency. With wallets, you can easily store your funds or send and receive funds. Each cryptocurrency will have its own wallet, so if you’re holding Bitcoin as well as Ethereum, you need to have both a Bitcoin wallet and an Ethereum wallet.
There are different types of crypto wallets but most of them usually fall under hot or cold wallets. Hot wallets are online and require an internet connection for access. Crypto exchanges have their own wallets and require an internet connection.
Cold wallets are the opposite. This describes an offline wallet that doesn’t require access to the internet. Because they are offline, cold wallets are not susceptible to hacks and are therefore safer.
There are several websites that track the price activity and state of cryptocurrencies. CoinMarketCap and Coin360 are two of the most popular sites usually used by the crypto community to follow price movements.
To conclude, it’s important to understand the marketplace with online trading course materials that will answer all your questions. For example, one common piece of advice that many people suggest is that if you’re looking to invest, you should never put in more money than you are willing to lose. This is because the crypto market is extremely volatile and while there’s a chance your investment can triple in a few days, it’s also possible for you to lose everything in the same period.