A Beginners Guide Trading Cryptocurrency
Cryptocurrency trading can be extremely profitable if you know what you are doing, but it can also lead to disaster. Even though most traders decide to either go with fiat or bitcoin, other cryptocurrencies can represent viable income sources, as long you as you tread carefully and understand what you are doing.
This guide is for those who want to start getting involved in cryptocurrency trading.
That being said, after you learn how to trade cryptocurrencies, study the ones you are going to trade before actually investing. Some may be on the forefront of innovation and represent a safe way to make money, while others might just flat out fail – as bitcoin has shown us, sometimes it may be better to hold on to your coins.
Also read: How to Start Your Investment Portfolio: Is the Crypto Space the Place to Invest?
Where to trade
The first thing you will need is a safe and secure platform to trade your cryptocurrencies.
While fiat currencies have well-renowned financial institutions in which you can trade, most cryptocurrencies aren’t that lucky.
It is, however, possible to trade bitcoin, the number one cryptocurrency, using renowned institutions.
A few trading platforms now include bitcoin, as some even offer Contracts For Differences (CFDs).
These allow you to trade bitcoin without actually using it, as they represent a contract between you and the exchange. In it, the two parties ‘agree’ the difference between the entry and exit price will determine your profit or loss.
How to Invest in Cryptocurrencies - Getting Started Guide 2019
CFDs are a flexible option, but they do have disadvantages worth looking into.
To trade other cryptocurrencies, you will need to use cryptocurrency exchanges.
According to CoinMarketCap, there are well over 100 active exchanges, so we need to filter them.
Is it worth your time to mine for cryptocoins?
The best way to do so is to go with those with the largest trading volume, as they will enable the best possible opportunities. According to data, these are the 20 biggest exchanges you can use:
In the last 24 hours, Poloniex had a whopping $160 million trading volume, and CHBTC was at $7 million.
Note that, trading volume alone, doesn’tmean the exchange is trustworthy. Before choosing one, check for online reviews. A great tool to use is Web of Trust, as it compiles user reviews and can be downloaded as a plugin to your browser.
There are also other exchanges in which you don’t need to create an account, such as Shapeshift.
The following principles stay true across exchanges, even though user interfaces and other aspects can vary. As an example, I’ll be using Poloniex to explain how one can start trading cryptocurrencies.
The first thing you need to do is to sign-up and confirm your account via email (Poloniex).
While setting up your account, make sure you use a safe password that includes numbers, letters, and symbols. 2-factor authentication might also be worth considering.
A varying level of verification will be required, so make sure you pick a trustworthy exchange.
Once you’ve signed up, you will need to transfer funds into the exchange. At Poloniex, you are now presented with the exchanges’ terms and conditions.
After agreeing, select the currency you are interested in trading and click “Deposit/Withdraw.” In some exchanges, it is also possible to deposit via bank wire.
You’ll be given an address to which you should transfer your funds.
After doing so, you should have access to the pending deposit. Depending on the currency, it shouldn’t be long until your funds are available.
Where to trade
Remember, you might need bitcoin to be able to start trading on a cryptocurrency exchange as most do not accept fiat money (if you do not have any other cryptocurrencies).
Buying and selling
Now all you need to do is find your desired market, in which you will trade a certain amount for another cryptocurrency. Before placing an order, make sure you properly analyze the market, and agree with the current best price. If there are enough available tokens at your eligible price, your order will be immediately taken care of.
If not, your order will be waiting for someone to trade at your desired price.
Cryptocurrencies are volatile and can be traded 24/7.
It’s important to closely follow the news and to understand how the market may interact with certain types of information – you need to know the ins and outs. General trading principles apply, and always remember: buy low, sell high.
Some believe it isn’t a good idea to leave money on an exchange for a long period of time. Bitcoin’s history has been marked by the collapse of Mt.
Gox, an exchange trusted by users that suffered the largest-ever bitcoin heist.
If you are new to cryptocurrencies the volatility may make you feel like gambling. In order to start learning without risking your money, we’ll give you a few ideas:
If you want to experiment with bitcoin, you can try the Plus500 platform, and check the BTC/USD currency pair using a demo account.
The pair is also available on the Spark Profit app, in which you can trade for free and earn points.
If you accumulate a lot of points, you can then cash out real money.
It is also possible to mine specific cryptocurrencies so you can trade them. Although popular coins such as bitcoin can be ruled out for most users, currencies such as Monero and Bytecoin are optimized for CPU mining, and pretty much everyone can get a few coins.
Finally, it is possible to earn Steem by blogging on the Steemit platform, or to earn Siacoin by sharing your available disk space with users all over the world via the Sia platform.