The cryptocurrency market has exploded in popularity in the past couple of years. This created a great range of opportunities for many traders to speculate on market prices and invest in their desired cryptocurrencies. Likewise, many ordinary people who do not have experience and knowledge in trading have decided to invest in these currencies, especially in Bitcoin, at its beginnings.
At the beginning of crypto trading, the whole process seemed confusing and complicated to an inexperienced trader. However, today, with plenty of great platforms being developed, everyone can easily sign up and start trading and investing in their futures. So, no matter if you are an experienced or an inexperienced trader, getting started on this market is fairly easy, but here are some tips on how to start and how to understand the whole process better.
Decide How You Would Like to Trade
There are two ways to trade cryptos – speculating on their prices through CFDs (Contract for Differences) or buying the digital currencies.
CFD is a contract that obligates you to agree to exchange the difference in the price of your desired cryptocurrency. It starts when you first open your position up until you close it. With CFSs you are basically wagering and speculating on the price of the market, instead of taking ownership of the actual cryptocurrency. For example, if you open a long position and the chosen crypto increases in value, you make a profit. However, if its price falls, you will make a loss. The opposite rules apply if you open a short position.
On the other hand, you can buy a cryptocurrency of your choice. This means you are taking ownership of a portion of the currency with the intention to hold it in your digital wallet and make a profit if its value increases. For this type of trade, you have to open a digital wallet and an account with the desired exchange platform before you start buying and trading cryptos. This process may take longer, but some platforms have made it much easier.
Learn the Basics of the Market
Even though you may have experience in trading, you still should get familiar with how this specific market works. The crypto market works in a different way than any other financial market, so it is absolutely vital for you to learn the basics of it and how it works. You also should understand the jargon used to describe anything in this market, and make sure to cover all the basics.
This market is decentralized and it is a digital currency network. This means it operates through a system of peer-to-peer transaction checks and not through a central server. Also, when cryptos are bought and sold, all the transactions are added to the blockchain. Blockchain is a shared digital ledger and it records all data and transactions. This process is also called ‘mining’.
Another thing to remember about this market is that cryptos are famously volatile. You have to know this and know what is more likely to move the market. But, anything can move this market, from ICOs and blockchain forks to breaking news and government regulations regarding cryptocurrencies.
Chose Your Desired Crypto Trading Platform
Once you decide to start trading in cryptos, you will have to choose a platform to do it on. When choosing, there are a couple of things to consider and research.
The first thing to do is access how accessible is crypto trading in your country. Not all countries allow access to every crypto exchange, so before you choose a platform see if it is available where you live. The second thing is looking into security. Since you will be dealing with investments, money, and your personal data, make sure that the exchange you chose provides the necessary protection and security of your data. Not all platforms use the same measures, so look into those factors.
Also, see if the platform you’re choosing has any signup fees and costs that you didn’t even think about. Some crypto exchanges include fees, but there are those that offer free signing up and you can deposit your money without extra costs. One such crypto platform is Bitcoin Motion and they require no signup fees, the entire process is straightforward and the minimal deposit is €250 which is affordable.
Last but not least, when choosing the trading platform, research which coins they offer. Some offer a lot of them, while others are more focused on Bitcoin, so depending on which crypto you wish to have or trade, use those desires to guide you through your platform choices.
Have a Trading Plan
Having a solid trading plan is essential if you want to succeed in any trading. It is even more important when it comes to crypto trading since the market is highly volatile. And even though this volatility makes this market extremely attractive, it is a double-edged sword and it is often difficult to trade and stay on top of everything. That is why you should develop a trading plan and include risk management tools, your goals, and which cryptocurrency you want to trade. Also, research a methodology for entering and exiting trades (trading strategy) and make sure to cover every aspect of it.
Additionally, you should include in your plan the way you want to analyze the market – technical or fundamental analysis. The technical one is more focused on the movement of prices and historical patterns. The fundamental, on the other hand, focuses on external factors and macroeconomic data that can impact the digital asset.
With the availability of the cryptocurrency market and their constant increase in values, more and more people are joining the club of crypto trading. However, just like any other trading, this one too requires you to gain certain knowledge or find a professional to help you start. So, do the research of the market, learn the basics and only then get into investing and trading.