The cryptocurrency buzz has gotten into you, and now you want to be more than just a passive participant. You are burning with desire to invest and start trading in it. Any investment, regardless of the capital involved attracts lots of questions. Where should I start from? What tools do I need to do the trading? Will the investment be profitable? These are just some of the questions that most beginners ask before they start trading in cryptocurrency. Here is a complete beginner’s guide that will give you helpful tips on cryptocurrency trading.
What do you need?
Before you start trading in cryptocurrency, you will need two things;
- A reputable digital currency. Don’t just choose any wallet that you come across
- An exchange account that you will use for trading, you can open an account with Top 10 Best Cryptocurrency Exchange
You will encounter other tools of trading as you advance in this sphere. Let’s now look at the step-by-step procedures that are involved in cryptocurrency trading.
Buy some cryptocurrency
The first step is to buy some digital currency like bitcoin at Coinbase. This level requires that you use your traditional or fiat currency. The denomination used for trade depends on the country that you are living in. It can be USD, GBP, EUR among many others. You can then pick any cryptocurrency that you want to use. As a beginner, it is always advisable to start with Bitcoin as it is quite friendly. Other options include Etherum, Litecoin, and Bitcoin cash.
Since you are venturing into cryptocurrency as a trader and not just a passive buyer, you will need an exchange platform to support the trade. The most popular and reliable exchanges for cryptotrading include Binance, GDAX, Kraken, and Bittrex.
At this stage, you will also need a wallet that you will use to store your coins. Before you go any further into cryptocurrency trading, you need to decide on the modes to use. Let’s discern these different modes to help you choose the one that fits you.
1. Easy Mode
Also known as Binance, this mode introduces you to graphs. You will learn how to interact with the graphs that display the behavior of cryptocurrency in the market. The mode will also train you on when to buy (when the prices are low) and sell when they are high. Once you sign up and gain access to your exchange such as GDAX or Binance, bars, graphs, and numbers will be displayed on your screen. You will also be able to view the Buy and Sell options.
Deciding on time and strategy to trade
Now that you have set up the account and everything seems okay, you should proceed to choose the right time and approach for trading. You can decide to wait till there’s a panic in the cryptocurrency market as most people will be selling. This strategy can help you get some coins at a low price.
Alternatively, you can use the Average Crossover technique. Here, you sell when the orange line goes above the purple one. This is an indication that you will reap good returns from the trade. It is common for most beginners to panic when the line goes below the purple line and stays there for long. Keeping tabs on the current news of your currency can help you make wise trading decisions.
2. Normal Trading Mode
In this mode, there is no use of fiat currency. Trading is done using USDT, and you have to open an account on Poloniex. You are also supposed to have some coins in your exchange account to facilitate the trade. The trade begins once you send money from your Coinbase or GDAX to the Poloniex.
3. Margin Trading
This is one of the toughest cryptocurrency trading modes. Here, you use someone’s else’ currency to increase your gains. However, this can also amplify your losses. After the trade, the system will use your deposits to pay back the lender. Margin trading calls for courage and experience.
As a beginner, it is obvious that you will be anxious about participating in cryptocurrency trading. Do not be too excited as you may end up making bad decisions. One of the ways of avoiding traps is choosing reputable companies. For instance, you can start with respectable currencies such as BTC, and when it comes to the exchange, you can use Binance which is a preferred option for many due to its reliability and trustworthiness.