If you haven’t been paying attention to the news recently, you may have missed the fact that cryptocurrency is having quite a moment. Crypto is a very volatile asset, which means trading it at the right moment can produce a whole lot of income.
This is why many people learn how to start trading cryptocurrency, to begin with, because there’s a lot of money to made in a quick amount of time. If you haven’t yet started trading this way before, you may be curious how to get into it all.
What do you need to know to get into cryptocurrency trading and what risks should you look out for? What is the information you need to know? Read on, and we’ll walk you through all of the basics you’ll need as a beginner crypto trader.
What is Cryptocurrency Trading?
Let’s start with the real basics. If you’re curious about cryptocurrency trading, it’s best to think of it as not too dissimilar from the stock exchange. Trading involves the buying and selling of assets, where the buyer pays the seller for the exchange of the said asset.
In the cryptocurrency market, different financial instruments are sold between buyers and sellers. A bitcoin or fraction of a bitcoin may be sold — this digital item is what is on sale.
The price and value of these digital items might fluctuate greatly over the course of a day or even the course of a single hour. For this reason, buyers and sellers may be actively entering and exiting the market over short periods of time.
That isn’t to say that if you get into cryptocurrency that you need to get involved in swing trading or day trading. It is possible to make a purchase and hold onto your new financial asset for as long as you want.
Cryptocurrency trading is simply the swapping of your funds for a digital asset that you’ll be able to sell later if you wish. As most countries and businesses don’t accept cryptocurrency as an official form of payment at this time, you can view an investment in crypto as just that: an investment.
That means that most people who hold onto cryptocurrencies plan to exchange them for local currencies at some point in time.
There are some exceptions, like a Korean province that plans to replace local currencies with crypto, though this isn’t the norm — yet!
How to Start Trading Cryptocurrency
If you’re ready to get going with your own trading, what is the best way to get started? You’ll need to follow a number of simple steps.
Create A Brokerage Account
If you haven’t yet ventured into crypto waters at all at this point in time, you’ll need to set up a brokerage account for your crypto collection. There are a number of crypto brokerage companies out there, the most popular being sites like Coinbase or eToro.
In order to make an account with these companies, you’ll need to provide a bit of personal information. That would include your Social Security number, date of birth, and other such bits of information.
These brokerage websites are user-friendly, and getting an account up and running should take you little to no time.
Once your account is up and running, you’ll need to deposit money into it. Most brokerage websites will allow you to connect your brokerage account directly with your bank account.
Wire transfer is typically the cheapest and most affordable way to fund your new account.
Choose a Currency to Invest In
If you’re getting into the world of crypto, it is likely because there is already a specific cryptocurrency that has caught your eye. It might be something as stable as Bitcoin or Ethereum or you might be more attracted to trend currencies such as Dogecoin.
Either way, you’ll want to make a plan on which currency you want to invest in as you get your account up and running. Bitcoin and Ethereum tend to be more stable as compared to the smaller currencies, though these currencies might offer more of an opportunity for a fast profit.
If you’re able to tolerate a lot of risk and fluctuating prices, it may be worth putting some money into smaller currencies.
Crafting a Trading Strategy
It’s also a good idea to have an idea of how you want to handle your trading before getting too deep into the world of crypto. Having a plan in place can make a big difference to your overall success as a trader.
Are you going to be trying to ride the fluctuations of crypto and make quick profits, or are you going to be riding things out for many years without touching your assets?
You can see why it’s important to make this distinction ahead of time.
It’s also a good idea to get familiar with stock market theories such as the Elliot Wave. Many claim this theory can help to predict certain financial movements. No matter what your own personal strategy is, it’s important to go in with a plan so you can make the most of your new cryptocurrency investment.
Keeping Up With Cryptocurrency Trends
If you’re new to the world of digital investing, there’s a lot to learn. The above information can help you learn how to start trading cryptocurrency with ease. Once you’re up and running, your ability to make a profit will be limitless.
Need more information on cryptocurrency, or more general personal finance advice? Keep scrolling our blog for more.