You have probably heard about countless sudden millionaires who all became what they are because of bitcoin. There’s a lot of them already. You have to consider that over a decade ago, bitcoin wasn’t even worth a dollar. Now, it’s worth over $44,000. What’s even more surprising is that analysts aren’t seeing any ceiling price for the cryptocurrency yet.
Like many others worldwide, you are probably considering pouring some of your assets into trading cryptocurrencies. Of course, as with any other financial instrument, you need to be careful when diving into cryptocurrencies. While the prospect of gains may be exciting, you need to keep in mind that these currencies move differently as compared to stocks.
If you’re a beginner hoping to try your knowledge and luck, then it might be wise to read on as we’ve got a short guide on helping you trade as a beginner.
What Is Crypto Trading?
Many experts compare cryptocurrency trading to forex trading. It is comparable in the sense that in crypto trading, you basically trade your coins against others in hopes of making a profit. Aside from allowing you to purchase coins with real money, you can also trade your cryptos to buy other cryptos at a certain part.
You make a profit out of crypto trading when you exchange your coins for another form of crypto at a lower price point. If that crypto’s price surges, you can take the profit or continue to trade instead. If you know how to trade forex, you don’t need to learn much to trade cryptos.
Most crypto exchanges give you access to a demo account. This demo account comes with virtual money which allows you to try and practice trading without having to spend any of your assets.
Trading Or Investing?
Trading is a quick means to make a profit through cryptos. If you make the right calls, you are able to increase your capital substantially. It is a bit riskier and it does require better know-how of the cryptos themselves. However, if you master crypto trading, you can earn a lot of money quickly.
Alternatively, you can just invest in a few cryptos and wait for them to grow. This is how many of those bitcoin billionaires were born.
Pick An Exchange
As you would when investing in stocks or options, you need to pick a proper platform to make trades in. It is more crucial in cryptocurrency trading. The benefit of trading cryptos is that you can remain anonymous while doing so. It’s a downside as well as when you get scammed, it will be harder – nearly impossible to catch the culprit.
Before you make any purchases or before you share your personal information with a broker, it is a must that you do your research about the platform first. As the Great Britain crypto exchange is very active, there is a community willing to help other traders out. Go check out forums, Facebook pages, and other websites for reviews on the exchanges you deal with.
Other than their authenticity, you need to check out other important factors such as how much they charge for transactions. It’s also good to check their methods for cashing in, cashing out, and how long transactions usually take. It’s also good to check the list of cryptos they exchange on their platform.
One Thing Worth Noting
One of the biggest differences between a cryptocurrency and some other financial instrument is that cryptos can die out without notice. Believe it or not, there are already thousands of cryptos that have come and go during the last couple of years. Even analysts are worried that the bitcoin bubble can eventually pop, meaning the price will drop to serious lows.
Before you buy a coin, you need to search about it first. Aside from its market cap and the current number of units in circulation, it’s also vital to know what the main purpose of the coin is. For instance, XRP is a safe coin to buy because the coin is usually used for financial transactions related to the banking industry. While its price movement is slow, it’s one of the safest options out there.
Instead of looking for predictions about what a price of a certain coin will be in the future, it’s best to learn about the recent developments or upgrades being made to it. Coins survive because they are relevant, not because they have a large market cap and not because they are popular.
Trading cryptocurrencies might seem easy. However, it’s something that can result in you losing all of your assets if you don’t tread it lightly. Whether it’s the stock market, cryptocurrencies, or commodities, it’s always advised that you come prepared with the right tools and know-how to make the right calls.