Cryptocurrency trading for beginners can get easier and you can trade like a pro if you were to follow the tips given below to improve your overall trading skills.
Understanding Cryptocurrency and its market.
You need to research the crypto market and cryptocurrency you are interested in. Understanding the historical price trend will help you figure out the factors influencing the price trend of the cryptocurrency market. Although the best experts of crypto traders cannot pinpoint the exact point where the market may reverse its price trend as the market is quite volatile. However, you can combine past historical events and current events that might give a rough estimation of how the market trend may behave.
Understanding crypto exchange.
Compared to the traditional stock exchange, cryptocurrency trading is relatively new; it is important to understand and familiarize yourself with the programs and features of the trading platform. Many exchanges allow demo accounts. Make most of the demo account to familiarize yourself with the platform and also make a habit of applying stop-loss and take-profit features. While trading on a live account, unlike the traditional stock exchange, where transactions take place very quickly, cryptocurrency transactions take hours to complete.
Avoid the temptation of selling right away.
You need to control your emotions if you have invested in the crypto market intending to sell it out. Don’t sell off your assets when you immediately see the price spike. It is wiser to wait for a second or third spike in the price as they guarantee a good return compared to the historical data.
When a high is actually high.
Cryptocurrency is a relatively new financial instrument compared to the other financial instruments in a traditional stock exchange. The price in the crypto market is always alive as the market is open throughout the year, 24 hours a day. The crypto price depends upon the latest development, public perception, press releases, and professional opinions. Again new coins get released regularly, further bringing volatility to the crypto market. As per the seasoned investors, you should sell 20% of your assets on a high as the chances of another high cannot be ruled out.
Keep your coins in a safe and secure place.
You have two options for storing your cryptocurrency after buying it. As you explore cryptocurrency trading for beginners, you should know your options for keeping your assets safe. You can store your assets on the exchange, but this is risky as exchanges are a favorite target of hackers. So instead, you can store them on an online wallet, offline wallet, or even paper wallet.
Choosing an e-Wallet.
A wide range of wallets is available for storing your digital or cryptocurrency. Below we have listed major wallets available for storing digital assets.
Paper Wallets: These are printed sheets of paper similar to traditional funds with one difference; they feature QR or other codes. They are generally unsafe as they can be lost, misplaced or get stolen.
Hardware Wallets: They are physical wallets where digital assets can be stored on a USB or similar devices. These devices require a digital key to gain access to them. In addition, these devices can be kept offline, thus protecting them from malware or other cyber threats.
Cold Wallets: Any mode of storing cryptocurrencies safely and securely without being connected to the internet is called a Cold Wallet.
Hot Wallets: These are connected to the internet. These wallets are suitable for those traders who are frequently trading and wish to exchange their digital coins within seconds.
Multi-Signature Wallets: The digital coins are kept secure by having multiple signatures on a wallet. There are several keys required to gain access to the wallet. Thus it is challenging to break into this wallet.
Securing and keeping backup devices:
If you opt to store your digital coins offline, make sure you have a backup for your wallets. There are chances that you might lose your data if the computer happens to crash due to hardware failure. In addition, although you can access your e-wallet through encryption, there are chances that some hacker might ruin your device, thus further convincing you to have a backup of your device.
Choose a coin for the long term.
While investing in cryptocurrencies, remember that most coins won’t survive for a long period; they will vanish without a trace. Before investing in a cryptocurrency, read its white paper, which describes the intent of the coin. Join a cryptocurrency community if you cannot understand a white paper; besides this, the latest developments in the crypto world are discussed. You can even ask for advice from the community members on a Quora platform. Many futuristic applications of blockchain are also discussed besides the coin.
Invest in crypto step by step.
If you are considering investing in a cryptocurrency for a long period, avoid purchasing your entire amount in one go. Instead, the most efficient and effective way is to invest in cryptocurrencies by breaking your investment amount into several weeks or months. Then, the chances of the price are sure to go down, and you can buy them at the best price. In addition, you can increase your profit by investing in parts over a long period. This method is also called “Dollar-Cost-Averaging” and is quite prevalent among crypto traders and investors.
Watch out for scams.
As a cryptocurrency trading for beginners, you should research more about cryptocurrencies. There are adverts regarding offers and exchanges floating around social media platforms.
It will help if you read about the classics and the latest scams in the cryptocurrency market. But, in addition, it would help if you were vigilant enough so that you don’t become a victim.
Avoid the temptation of leverage.
Many brokers and crypto exchanges offer you the chance to increase your profit margin by investing a low capital. However, when talking of cryptocurrency trading for beginners it is best if they avoid leverage. Although leverages offer an excellent gateway to making a substantial profit, the chances of you making a huge loss also exist. Moreover, leverages are a double-edged sword; if not handled properly they can make you bleed. Therefore, it would be wise to avoid leveraging until you understand all the factors that affect the cryptocurrency market.
You should brush up your skills on a demo account after understanding what makes the market tick, when talking of cryptocurrency trading for beginners. After understanding the basics of the crypto market and the factors affecting its price trend, research crypto exchanges and select the one which suits you the best. Many brokers and exchanges offer a demo account; make most of it and apply all the knowledge you have gained while trading.