There is a variety of them to choose from, like Bitcoin, Ethereum, Litecoin, and several other new and old tokens. This has opened some major paths for people to invest, diversify the portfolio and pick some gains on the way.
However, decentralized digital currency is still a topic that many are not fully informed on. Many are still confused about cryptocurrencies, their working, and how they can be traded. Also, trading of any type holds significant risk, and crypto trading is no different. This is the reason why one should read, understand, study and do diligent research on cryptocurrency before dunking their feet in the trading market.
Below we will provide you with a guide about what is cryptocurrency trading, its benefits, some beginner-friendly tips, and finding the best crypto trading platforms or exchanges.
All About Cryptocurrency Trading
When it comes to trading crypto as a beginner, the basic idea is to speculate the value of the token or the commodity. One will buy and sell the token based on the speculation of whether the price will fall or rise. In crypto trading too, one will get to buy the tokens and sell them to speculate gain and lose. This trading is done through exchanges that are platforms where one will open an account to buy and sell cryptocurrencies here.
Now, crypto trading is one of two types in a general sense. One of them is direct crypto trading, where the trader will buy the asset, store them in their crypto wallet, and then sell them as and when needed. In this scenario, the trader will own the cryptocurrency tokens that are bought.
In another type of crypto trading, one will trade CFD’s that is, one will trade derivatives and will not actually have the ownership of the assets. One will speculation the movement of the price, like will short or sell if the price is going to dip or will long or buy if the price will hike.
Why Trade Cryptocurrency?
Several reasons make cryptocurrency trading profitable and thus attractive to young traders. Some of the reasons for crypto trading are as follows:
- 24-Hour Market
Crypto trading market runs for 24 hours a day and for 7 days a week. This means one can trade at any time of the day without any time of day restriction.
- Volatility
For those who like to speculate and look forward to some bug intraday movements in the price of tokens should opt for crypto trading. The market is volatile, and thus the price movements can be quite major, which can help make some big gains.
- Short And Long Trading
When one is trading CFDs, one can speculate the price movements without owning the asset. This one can go long and short both to take advantage of the market. This means one can profit even when the price of the cryptocurrency is falling.
- Decentralized
Many people are against the government ruling on the economy and how that affects the trading market. But, with cryptocurrency trading, one will not have to worry about that.
- Not Tied To Normal Inflation
This comes hand in hand with the fact that the cryptocurrency market is decentralized. There is no regulating body controlling the market movements of crypto. This along with the fact that most cryptocurrencies are fixed in number means the value will not depreciate.
- Fast And Low-Cost Transactions
Lastly, crypto trading transactions are fast as there is no waiting period. One can easily make transactions at any point in time. Also, if one finds a reliable platform, then it is easy to make sure that the transactions costs are minimal for the trader.
Tips For Beginner Crypto Trading
When one thinks of trading cryptocurrency or mining for Bitcoin, there are several things that one might think of. It is easy to get overwhelmed, specifically if one is a new trader and has no prior experience in crypto trading.
Here are some tips that every beginner cryptocurrencies trader should keep in mind:
- Study The Crypto And Overall Financial Market
The very first thing to do is learn about crypto assets and how they are faring in the market. Study the past and present trends and find out what experts are saying about future movements.
- Do Not Rush Into Trades
It is very easy to get influenced by the fear of missing out on sentiment when trading. As a beginner, one should be aware of the risks and should take steps slowly, and should not go by the trends.
- Have A Purpose
It is foolish to not have an objective or purpose before one starts trading. Many tend to have the objective of scalping, while others want to day trade. Regardless of what the choice is, one should study and inform oneself about the trading strategies and how they can align with one's aim.
- Manage Risks
One of the most significant parts of trading is mitigating the risks that cryptocurrency has. One should understand the risks of each crypto coin and what all the potential factors are that affect their price movements. Make sure not to go after bulk profits and instead trade in a more diversified way to keep the profits and losses spread out.
- Check Market Cap
One of the first things that a trader check is the cost of the crypto. This aligns with affordability, as everybody wants to buy cheap and sell high. But, at times this can be a mistake. One should instead check the market cap. A more market cap means more chances of earning a profit.
- Set A Limit
Lastly, one should put a limit to their investments and their losses. Keep a limit, that when reached, one should stop or should sell. This will make sure that one does not go overboard with their finances.
Finding The Right Cryptocurrency Trading Platform
When choosing a platform to trade crypto and store crypto coins, it is crucial to pay attention to the quality and reliability of the exchange. Here are a few things that one should pay attention to:
- Reputation: Check the market reputation and reviews of the traders regarding the trustworthiness of the platform.
- The Volume Of Transactions: Check the volume of the transactions that the platform undergoes. More volume of transactions means more reliability.
- Safety And Verification: The platform should have a strong verification system in place. Also, they should have a reliable safety protocol in place.
- Types Of Coins: You should check is the number of coins that the platform supports. Always try to choose a platform with more cryptocurrencies, so that you can diversify their portfolio.
- Fees: Lastly, one should check the fees and commissions the platform charges for each transaction.
Crypto Conclusion
Crypto trading is still a new avenue for many investors. And for some, it might sound a bit difficult and risky. But, if one is well informed and careful then crypto trading can be profiting.
One should take small steps and should have a clear target in their mind while trading cryptocurrencies.
