Start trading cryptocurrency
Today, many people are interested in cryptocurrency and are eager to know how to start trading cryptocurrency. Whereas quite recently, lovers were only showing interest in this industry, today there are a huge number of innovations stirring the minds—metaverse. In these virtual cities, cryptocurrency is the real currency of virtual cities. Virtual estate, which in dollar equivalent is more expensive than real property - all this is a new reality that exists, but not many people know about it. In this article, you will learn how to start trading cryptocurrency. Let's begin.
What is cryptocurrency?
Let's define for ourselves what crypto-assets are.
Cryptocurrency is a digital payment system that does not involve banks checking transactions. It is a peer-to-peer system that allows any user to send and receive payments anywhere. Cryptocurrency payments exist solely in digital form in an online database describing specific transactions. They do not involve transactions with physical money with real-world circulation and exchange possibilities. When funds are transferred in cryptocurrency, the transactions are recorded in a public registry. Cryptocurrency is stored in digital wallets.
Crypto-currency has come into use because encryption (cryptography) is used to verify transactions: advanced encryption is used to store and transmit cryptocurrency data between wallets and public registries.
The purpose of encryption is to ensure reliability and security.
The first cryptocurrency was bitcoin, created in 2009 and the most well-known today. Cryptocurrency trading is interesting from a profit perspective; there are periodic spikes in the price of cryptocurrencies due to speculation.
How to start trading cryptocurrency
If you want to start trading cryptocurrency, you first need to choose a trustworthy and protected platform. Then register on that platform. Registration is a fast and straightforward procedure. You should also verify your account to secure your personal details and the assets in your account.
There is also a perfect option to get accustomed to the platform's interface and the Bitcoin leverage trading platform through a demo account. This way, you can try out various trading strategies without risking your money. The website also has excellent video tutorials to help you comprehend more about the trading topics you are interested in.
What you need to trade cryptocurrency
What do you need to learn to trade successfully?
- Before you start trading cryptocurrency, it's a good idea to take a look at the control panel of the crypto exchange itself. It's pretty simple, but experts advise you to spend some time on it if you're not a pro.You will need to place Buy-Limit and Sell-Limit orders and set Stop-Loss for the basic steps.
Once you have understood everything, you can make some test transactions, buying the cryptocurrency you think the price of which is likely to rise soon.
Remember, don't invest significant capital until you have gained enough knowledge and experience.
- The next step is to learn the basics of technical analysis. That is quite an important task, which involves recognising the individual patterns seen on the charts. These patterns are often repetitive and, with some probability, can predict how price may behave in the future.
Technical analysis and its various methods can be learned over a lifetime, and understanding the basics should take you a few hours of solid study.
- One of the most important points is - Cryptocurrency trading strategy. It is important for those who want to properly start trading cryptocurrency.
The detailed strategies of individual players can of course vary considerably. However, every trader should stick to some basic rules, which professionals often point out. If you are just taking your first steps in trading on the exchange, it is advisable to take the time to do so. And you will learn more about this in this article.
What is a cryptocurrency trading strategy?
A trading strategy is simply a plan that you follow when making trades. There is no one right approach to trading, so every strategy will largely depend on the profile and preferences of the trader.
Regardless of your approach to trading, developing a plan is crucial. It defines clear objectives and keeps you on the course, succumbing to emotions. When making a plan, you must decide what you are going to trade, how you will do it and at what points you will enter and exit.
Some cryptocurrency trading strategies
Managing your investment portfolio.
Portfolio management involves building and managing a set of investments. The portfolio itself is a group of assets. For example, if you trade solely in cryptocurrencies, your portfolio probably includes bitcoin, Ethereum and other digital coins and tokens in some proportion.
- Diversify - just as the saying goes, "don't put all your eggs in one basket", you shouldn't bet everything on one cryptocurrency. The market is unpredictable, and bad news for a given cryptocurrency can appear at any moment. If you don't want to reduce a significant amount of your capital in one day, divide your money into multiple currencies.
- Don't get carried away - decisions are usually poorly thought out. Instead, plan each cryptocurrency for different scenarios, so you don't have to make hasty decisions.
- Buy and sell in 'batches' - if you're unsure whether to buy or sell a given currency now, do so for, say, 50% or 25% of the total estimated value. Similarly, if, for example, you intend to buy bitcoin over the long term and are unsure whether its price has already reached the lower boundary, divide the purchase amount into several parts and buy each of them from time to time. This way, you will average the exchange rate.
Day trading is a strategy that involves entering and exiting positions within a single day. The term originated in traditional markets since they are only open for a particular day. Outside of these periods, there should be no open positions.
Cryptocurrency markets, as you probably know, are always open. As a result, you can trade 24/7 every day of the year. Therefore, in the context of cryptocurrencies, day-trading means a style of trading in which a trader enters and closes positions within 24 hours.
This style is a very active trading strategy. It may be highly profitable, but it is also hazardous.
Top 5 crypto-assets
Market capitalisation: $68 million.
Technology: ETH is the cryptocurrency on which Ethereum runs. It is a decentralised software platform that allows the creation and running of smart contracts and decentralised applications (DApps). However, Ethereum is a platform and a Turing-complete programming language.
Market capitalisation: $30bn.
Technology: XRP is a centralised cryptocurrency created by Ripple Labs as a solution to enable banks and financial institutions to use the power of blockchain technology to improve cross-border transaction systems. XRP runs on the RippleNet digital payments platform on top of a distributed ledger database called XRP Ledger.
Market capitalisation: $6 billion.
Technology: Chainlink is a decentralised network that aims to connect smart contracts with real-world data.
Market capitalisation: $5 bln.
Technology: Litecoin is based on the Bitcoin protocol but differs in the hashing algorithm used, hard limitation, time of block transactions.
Bitcoin Cash (BCH).
Market capitalisation: $6 billion.
Technology: Bitcoin Cash is a peer-to-peer system designed to become trusted global money with fast payments, micro-commissions, high privacy and high transaction capacity.
What not to do
Newcomers make many mistakes, and they usually cost money. Therefore it is better to learn from other people's experiences beforehand to avoid unnecessary losses. There are a few rules for this that every beginner should follow.
- Do not buy cryptocurrency on the news. As a rule of thumb, if a user learns about some news that is supposed to lead to a rise in the price of a coin, it has probably already happened. If they have bought - be sure to use stop-loss orders. These are orders to sell coins at a specific price.
- To be very careful, or not at all trust other people's signals for buying and selling assets.
- Do not get greedy. For example, if you managed to buy bitcoins at $9000 and then their price went higher, it is safer to sell some of the coins and put a stop-loss on the rest.
- Don't give in to emotions. Most losing traders are made precisely because of a loss of control.
- Always have funds in case the price of the asset drops below the level you bought it at.
- Write down your deals. It will help you evaluate and adjust your trading strategy and detect mistakes you have made.
Is crypto trading safe?
If you are thinking about the security of buying or trading crypto-assets before, you are on the right track. The first tip a modern crypto trader should take is to register on popular big exchanges. Choose ones that have been on the market for years and that you have confidence in.
Is trading Cryptocurrency profitable?
There would be more millionaires who have become rich off of cryptocurrency if most newcomers did not make the same mistakes, ignored important rules of crypto-trading, and diverted from their intended path ahead of time.
Which Cryptocurrency is best for trading?
A crypto trader can focus on only one coin, e.g. bitcoin, and consequently trade a single pair, BTCUSD (or BTCEUR). Or he can concentrate on multiple coins and consequently trade pairs such as Bitcoin, Ethereum and Ripple (XRP) paired with the US dollar or euro.