With the onset of cryptocurrency trend worldwide, everyone is trying to dig deeper and know more about the concept of cryptocurrencies. The new trend that falls in the line nowadays is people considering cryptocurrency trading.
However, knowing how to get started with the process and how to go about it remains an arduous task. Here, we break down for you the procedure, stepwise so to make sure your journey towards cryptocurrency trading is a smooth one.
First of all, have you made your decision to invest in cryptocurrencies? If not, here are 3 reasons that will convince you to take this step right away:
Cryptocurrency Trading, while similar to trading fiat currencies on forex, comes with its own set of advantages.
For each trade, the exchange platform you’re using will take a small percentage as commission for the service they’re providing. This is inevitable. Where cryptocurrency trades differ from their fiat currency equivalent is in the size of this fee. Because the fees for transferring cryptocurrencies (typically via wallet payments) are cheaper than credit card and bank transfer fees, market-trading fees are cheaper than forex-trading fees.
Traders make profits when the price of the currency takes large strides upwards, and cryptocurrencies often experience large price movements. While this increases the risk (large price movements happen downwards as well), you can often make a lot of profit with a relatively small bankroll.
You can only trade stocks and commodities during business hours, and you can often only trade forex during weekdays. Cryptocurrencies, on the other hand, can be traded 24/7, anytime and anywhere, depending on the exchange.
Before getting started, make sure you have planned out on how you want to and how much you want to invest in cryptocurrency trading. The general tactics everyone has when planning to start cryptocurrency trading are the following:
You just want to buy a few different coins and keep them as a long-term (>1 year) investment. This is the simplest cryptocurrency trading strategy and usually involves the least amount of risk. You’ll most likely stick to cryptocurrencies with a larger market cap.
You hold a higher risk tolerance than the long-term hodler. There may be coins you hold for awhile, but you also rebalance your portfolio every month or so. Your holdings probably include a mixture of large and medium market cap coins.
The most advanced and riskiest cryptocurrency trading strategy. You focus mainly on technical analysis to trade volatile swings in the market. This can be lucrative if you do it properly, but it’s difficult to execute well. All coins are fair game with this strategy.
One must note that you can mix these three tactics as well. If you’re just starting with cryptocurrency trading, we recommend you stick with the first two.
You need to invest a lot of your knowledge knowing the ups and downs of several cryptocurrencies before you finally choose the cryptocurrencies you invest in. Since the prices can go up and down according to certain circumstances, one must pay high attention.
The most important step of every investment opportunity is to research the cryptocoin you want to buy. Doing this one step will set you notably ahead of many other investors out there.
You should be familiar with the future prospects of the coin, the team behind it, and what purpose the coin has in the overall ecosystem.
The coin’s white paper is a great way to gather all more insights. These documents may seem intimidating, but after reading the first couple, you’ll find that they aren’t so bad. The Bitcoin white paper is the perfect starting point for any cryptocurrency novice. Check it out and learn what started the whole blockchain revolution.
After proper due diligence on your coin (or ten coins), it’s time for you to make the investment.
If you have learnt enough about cryptocurrencies, you would be also well informed that there are endless amount of exchange options. Each one consists of pros and cons for different traders as well as different lists of available coins.
When finding an exchange, it’s important that you first see if it supports the coins you want to trade. Most exchanges have an easy-to-find page that lists all of the available coins. Here is a list of most popular cryptocurrency exchanges for trading cryptocurrencies:- “top-cryptocurrency-exchanges/”>List Of Best Cryptocurrency Exchanges To Buy/Sell Altcoins | Best Cryptocurrency Trading Platforms
If you’re a beginner interested in sticking to the most well-known cryptocurrencies, Coinbase can the safest option. GDAX and Gemini offer similar coin selections with lower cryptocurrency trading fees.
Kraken has similar ease-of-use as the previously mentioned exchanges but consists of a larger list of coins.
These platforms support a wider array of coins than the beginner exchanges and usually have lower fees as well. However, this comes at the expense of user experience.
None of these exchanges allow you to use fiat to purchase crypto. You need to have already owned or first purchased Bitcoin or Ethereum on one of the beginner exchanges.
Reputable exchanges in this list include:
As you become a seasoned cryptocurrency trader, you may find yourself trading small market cap coins. Most of these coins aren’t available on centralized exchanges. Instead, you have to use an Ethereum-powered decentralized exchange (DEX).
On these exchanges, you trade directly on the blockchain. There’s no intermediary to match orders. You use a tool like MetaMask to execute your trades. Once again, decentralized exchanges are only recommended for experienced traders.
If this is something that interests you, Ether Delta and IDEX are two solid DEXs to check out.
Finally, and most importantly, you should have a secure wallet if you plan on holding your coins for an extended period of time. Once again, you have plenty of options for storage.
You have 4 options, placed in ascending order in regards to their security:
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