With all the recent hype around cryptocurrency trading, it’s hardly surprising that lots of new traders are entering the market. If you are one of them, here are a few tips on how to get started with trading digital currencies, quickly but safely.
Educate yourself
Too many new traders are jumping into the cryptocurrency markets without fully understanding the process. There is no excuse for that, given the wide range of resources out there for new traders.
It is well worth spending some time reading the information available online and watching videos, not just about cryptocurrency trading, but also about each altcoin you are planning to invest in. Maybe you understand how popular currencies like Bitcoin work, but there are now thousands of other cryptocurrencies you might want to consider as an investment.
If you don’t fully understand how a particular cryptocurrency works, why it was created, or what it derives its value from, you need to find out before diving in and buying some. You might also want to find out what platform the currency is built on, what it is used for, and what the market cap is. The market cap indicates how many of a particular coin there are, or how many there will eventually be, and is one way to judge the potential future value of a coin.
Start small
As with any new investment strategy you are trying out, you probably want to start small, whatever that means for you. Most importantly, do not start by investing more than you can afford to lose.
Crypto markets are highly volatile and completely unregulated by government authorities except for money laundering purposes. This is, of course, what makes them so attractive and exciting to potential investors with a strong appetite for risk. It means there is a lot of potential for quick profits, but also, inevitably, a potential for sudden catastrophic losses.
As you become more experienced at buying and selling digital currencies, and understand the potential pitfalls, you will feel a little more confident and be able to slowly increase the amount of money with which you are trading.
Consider diversifying
Now is an exciting time to be investing in digital currencies, with many traders asking themselves some interesting questions, such as what is cryptocurrency trading going to look like in the future? It is no longer just about Bitcoin. There are now close to 5000 cryptocurrencies available worldwide, and the number is growing.
Other coins you might want to consider include Ethereum, DogeCoin, Tether and Binance. However, with so many available the next big success in the digital currency world could easily come out of nowhere and gain traction very quickly. If you are truly interested and dedicated to observing the market, you will probably find a fair chunk of your time is spent looking at what to diversify into next.
Trade safely
As already mentioned, trading cryptocurrency is a high-risk activity, so don’t make it any riskier than it needs to be. Consider trading with a reputable crypto brokerage or exchange and follow best practices regarding the safe storage of any cryptocurrency you hold.
Many traders use crypto wallets to hold their cryptocurrency, which can be online or off. Offline wallets, sometimes referred to as ‘cold storage’ for cryptocurrencies, are generally more secure and more difficult to hack. This makes them preferable if you are holding a digital currency long term.
If you use a broker to trade cryptocurrency, ensure that you set up your account securely with a unique password, preferably using Two Factor Authentication.
Try different strategies
Many cryptocurrency traders are young and adventurous, so it’s not surprising that they are experimenting with different strategies and adapting as they learn. If you are trading via a broker, many will offer a demo account, allowing you to try out new trading techniques and strategies using virtual funds.
You may also want to learn to use specialist tools that help you make informed trading decisions, such as Cryptolume or CryptoView. Some brokers also offer opportunities for copy trading, effectively allowing you to follow more experienced and successful traders and copy the trades they make.
The cryptocurrency markets are fast-moving and constantly in flux. What’s more, they are open 24 hours a day, and worldwide events can have a sudden impact on price movements at any time of the day or night. This means beginner cryptocurrency traders have a lot to think about and a lot to learn, but also a lot to gain if they get their trading strategy right.
