If you’re someone who decided to get in on the cryptocurrency trading department for yourself, then you’ve come to the right place. However, just because cryptocurrency is a great market for investors, it doesn’t necessarily mean that you’re going to succeed in it overnight.
Truth be told, if you go into something without planning for it with care and precision, crypto trading can be a very risky kind of business. There are a handful of people that have made lots of money, but there are also those who’ve lost a lot of money as well.
So if you are serious about starting a career in cryptocurrency trading, there’s no better place to start than this article. We understand that even though things are tough with the COVID-19 outbreak that the world is currently dealing with as of this writing, there is no doubt that once this outbreak has been taken care of, you can start trading as soon as possible.
In order to stay on the right side of things during crypto trading, here are the most important steps that you must keep in mind:
1. Learn What Cryptocurrency Is All About
Before investing in cryptocurrency, you need to understand the terminology of the market, or in other words, learn what cryptocurrency is.
Cryptocurrencies are digital assets or a digital type of currency that are tradable. Unlike physical currency, digital money is decentralized, which means that they aren’t controlled or even backed by a central bank or any government of the state.
The Cryptocurrency that started it all is Bitcoin, which was the first-ever altcoin invented for those who were fed up with the conventional banking system in the midst of the 2008 Financial Crisis.
The only problem with Bitcoin at the time was that it couldn’t be traded with any other cryptocurrency at the time. It wasn’t until a couple of years later that other types of digital assets were introduced, whether it was ethereum, Ripple, Litecoin, Bitcoin Cash, NEO, or any other type of cryptocurrency that came after Bitcoin.
Since then, cryptocurrencies like Bitcoin would make financial transactions much more accessible and open to everyone across the globe. Plus, cryptocurrency transfers have another advantage in that they reduce the high fees charged by conventional financial institutions. These are some of the reasons why cryptos have become so popular over the years.
What Is There To Know About Cryptocurrency Trading?
In a number of ways, cryptocurrency trading can be similar to forex trading. For example, Forex Trading allows you to use US Dollars should you buy an option or position in euros, yen, swiss francs, or any other type of currency and then sell them again at the time of your choosing, whether you book a profit or a loss on the trade.
Similarly, cryptocurrency trading is like buying and selling currencies to make a profit out of it. To put it simply, the traders are betting on the changing price differences between two separate currencies. For instance, if you have Bitcoin and wish to sell it for ethereum, you’ll need to use a cryptocurrency exchange to help you find an ethereum seller to trade with. There are other expert online brokers who can help you out by visiting this source.
2. Decide How Are You Going To Trade Cryptocurrencies
There are two ways in which people can engage in cryptocurrency trading: using CFDs to speculate on crypto prices or buying digital assets and hope that they increase in value later on.
Using CFDs To Trade Crypto-currencies
A Contract For Difference (CFD) is a contract in which the trader agrees to exchange the difference in a cryptocurrency’s price from when they first opened their position to when they’re going to close it. You, as a trader, speculate on the price of the market, instead of owning the cryptocurrency. If a long position is open and if the currency does indeed go up in value, you’ll be making a profit, but if the value depreciates, then a loss will be made, and – it’s true the other way around as well for a short position.
Using An Exchange To Buy Cryptocurrencies
On the other hand, you can buy cryptocurrencies, as in outright taking ownership of a digital currency’s portion, along with the intent on keeping it in a digital wallet and profit off of it if its value increases.
Before you start, you’ll have to open a cryptocurrency wallet, as well as an account with a cryptocurrency exchange. We’ll get to the steps regarding the process a little later.
3. Choose A Crypto-currency Exchange
Like fiat finance, you’ll need a place to keep your cryptocurrencies for trading. To start, you’ll have to register and put some funds into your crypto exchange account, and then start buying and selling cryptos.
Some of the most popular crypto exchanges include:
Before you choose the one on the top, we suggest doing some prior research regarding these exchanges. This is because these exchanges come with varying terms of service and trading platforms. This approach will give you a much more informed insight into which exchange best suits your needs.
There are over 200 crypto exchanges, according to Cryptocoin Charts statistics, with a total daily trade volume of $3.24 billion. However, not all of these exchanges are reliable. There are scenarios where cryptocurrency traders will lose their money because of the exchange being hacked on a regular basis. There are also situations where any of the exchanges will suddenly shut down with little or zero explanation, leading to a total loss of funds. That’s why it’s important to choose a reliable and reputable exchange, like the ones we’ve mentioned above.
4. Select A Cryptocurrency Wallet
Once you’ve selected your exchange, you’ll need to create a cryptocurrency wallet where you can store and also control your funds with. These wallets help you store encrypted passwords that represent the coins you’ve stored. Think of it as storing your own funds in your bank account.
You can choose several types of crypto wallets. There are wallets available in the desktop version, mobile version, hardware, or even paper ones. To start, it’s best to choose a mobile or a desktop hot wallet that’s directly connected to the internet. An online wallet can be set up in a couple of minutes and can work in the same manner as mobile or online banking.
Some of the best crypto wallets that you can choose from include: