Cryptocurrency has become the talk of the town, and trading in crypto has never been higher. The cryptocurrency market share has seen an incredible yet bumpy ride, as stocks and prices have risen dramatically and fallen just as much. There are many people who want to buy this currency and make their future secure. Have a look at this step by step guide to crypto trading here.
This has led to a renewed interest in crypto, specifically in crypto trading. Despite its volatility, there are many investors to be found as the returns are much higher than any other market. If you get the timing right, you may earn thousands of dollars on a very small investment.
But to invest wisely and trade prudently, you need to know a good deal about crypto and how crypto trading works. We have detailed in this article everything about crypto and crypto trading that you will need to know to trade in crypto buy currency trading pairs.
What is cryptocurrency?
Cryptocurrency or crypto is a digital currency that is based on an online ledger to secure its transactions. Just like any other currency, it can be used to buy goods and services. They are most commonly used by businesses as tokens to purchase specific goods and services from them, and these cryptos are issued by them specifically for this purpose.
Bitcoin is the most commonly used and popular type of cryptocurrency. Bitcoin, like all cryptos, works on blockchain technology, and this makes them decentralized. The main reason why bitcoin and other cryptos are popular is due to their decentralized nature. This is because:
- Decentralization cuts the overhead costs associated with banks and the traditional financial system
- Transactions are of low cost when sent internationally
- No need to depend on the Federal Reserve for money transactions requirements
- Lending and trading are made easier when using decentralized currencies.
Bitcoin is the most popular form of cryptocurrency and is often referred to as “digital gold”. Ethereum comes second in place.
Which cryptocurrency should be chosen?
While there is no single best or number 1 currency, there are best currencies that should be used in certain situations. Bitcoin is the best option for most investors as it has a wide market, has the most widespread adoption, and finite supply, making it easy for investing in worldwide investors.
When investing in a cryptocurrency, you should always make sure it has solid backing. Cryptocurrencies are highly dependent on the market, and this has often lead to instances where investors do not get the returns they were promised. Under delivery of returns and questionable use cases have also been seen.
Read the white paper on cryptocurrency to get all the information regarding it. The crypto’s working, as well as its intended use, will be clear to you, and you can make a sound decision regarding whether or not to invest in it.
How to trade in cryptocurrency
Investors are attracted to cryptocurrency due to its high volatility. It is not uncommon for crypto’s price to fluctuate up to 10% on a given day. This is a great idea for investors who wish to gain high returns, but risk-averse investors should not think about investing or trading in crypto.
If you are interested in crypto trading, here are the five steps to take when trading in cryptocurrency:
- Make a cryptocurrency brokerage account.
If you already have a brokerage account, this step can be skipped. If you do not, then you must begin a brokerage account with a brokerage site. Gemini and e Toro are some of the popular and recommended websites to use when creating a crypto brokerage account.
These websites have a simple user interface that you can employ and plenty of crypto coins to choose from when you begin trading. When opening an account, you will need to provide personal information such as your Social Security number, date of birth, address, and email address.
- Add funding to your account.
Once your brokerage account is set up and ready to go, you need to include a funding method. Most commonly used is the bank account connected to your debit or credit card. The wire transfer method can also be used.
- Pick a cryptocurrency to invest in
Most investors usually go for bitcoin and Ethereum as they are the most widespread type of cryptocurrency. They are more predictable, and their market is global. Trading will be much easier with these coins. But investing your money completely in bitcoin or Ethereum is not advised.
Altcoins are also a great option for investors to try out. Although they are riskier than their established cousins, sometimes it is the smaller coins that give you maximum returns on your investment. Some altcoins have driven upwards of 1000% in over a matter of months, which also makes them attractive options for investors.
Most crypto trading sites provide technical indicators that denote the best crypto to invest in, and most investors may use these to decide which ones to invest in. Multiple factors need to be taken into account when investing in crypto. Speculative assessment of the market is often the most employed strategy due to the volatility of the crypto market.
Most seasoned investors use the Elliot Wave Theory when investing in crypto, and we advise that you read up on this theory before going into investing.
- Store your crypto
As you trade in cryptocurrency, you will have to keep an eye on your funds and keep your crypto stored on the exchange to get easy access to them. If you are planning on doing a long-term investment in crypto, then it is best to use a crypto wallet.
Cryptocurrency is one of the most widely traded assets in the market. Its volatile nature makes it a lucrative choice for investors as the returns are manifold compared to the investment. You can either collect and store up on bitcoins or simply make profits. Whatever your deal is, it is a good idea to consider crypto as a future asset to invest in, given the waves it is making in the market.