Finally, you’ve decided to start a cryptocurrency trading career, and prolly, you’ve heard about how much money you can make on daily basis doing it, right? Undoubtedly, there is much profit in trading cryptocurrencies, but the success doesn’t happen as fast as it seems.
Cryptocurrency trading can be very risky in such a way that you can actually make lots of money, but can also loose all your bitcoin investment as well.
Well, if you’re still interested in the learning how to make money with cryptocurrency trading, this step-by-step guide will show you almost everything you need to get started with trading bitcoins for beginners.
I am going to give you some information on how the whole cryptocurrency trading started, and also show you the difference between short-term and long-term trading, including the pros and cons of the periodic terms.
By the time you finish reading this detailed how to trade cryptocurrency guide, you will know how to start investing your bitcoin assets in trading cryptocurrencies, while mastering the skills to maximize your own profits using a unique cryptocurrency trading strategy during the whole process of doing it all on your own.
Now, let’s dive straight into cryptocurrency for beginners and how to make money by trading it.
What exactly is Cryptocurrency Trading?
Cryptocurrency trading is the process of exchanging crypto assets using cryptocurrency trading sites as the market place, each of the crypto trading platform must have some functionalities, just like any foreign exchange (Forex).
Brief history of Crypto Trading
As we all know already, bitcoin happens to be the very first cryptocurrency to emerge in the virtual or digital currency world, and it was released in 2009. As at then, it was only bitcoin that’s available, so it’s kind of impossible to trade since bitcoin was the only crypto coin as at then.
Few years later, more cryptocurrencies were created and that was when it became possible for people to start trading cryptocurrencies. The whole idea is, you trade one crypto coin in exchange for another so you cam make profit from the volatility of the prices – just same thing as real-world stock trading or foreign exchange.
However, experienced (professional) traders uses different tools to find right profitable gems at the right time. These tools include softwares that can be used to analyze history of the price changes or increases according to the historical data.
Short and Long-term Cryptocurrency Trading
Now we’re going to discuss about short-term and long-term trading alongside their advantages and disadvantages.
Short-term crypto trading
Short-term trading is when you buy crypto assets to hold for a short while, before exchanging it back to the basic currency (mostly Bitcoins) to make either profit or lose. This short time can be minutes, hours, days, weeks or months.
Pros of short-term trading
The major advantage is that you can make huge percentage of profit during the up trends, unlike fiat currencies in forex where you only make just 1% each day.
Now that there are so many cryptocurrencies and the whole market is popularly known, you can actually double the whole of your total investment overnight. Since it’s based on percentage profit per investment at a time, you can use huge number of bitcoins to earn more bitcoins.
Cons of short-term trading
The cryptocurrency markets are so volatile to the extent that prices of each cryptocurrency changes very fast. This means that you will need lots of time to catefully analyze the market trends.
You need to have full control of your emotions because you cannot always win. This is one thing you need to have in mind whenever you’re trading cryptos. It is very stressful to follow the price fluctuations than you ever imagined. Learn to accept loss because whether you like it or not, you must loose to gain (if you know what you’re doing).
It’s equally not a Get-Rich-Quick scheme. Short-term trading goes with short profits according to short times, so this means you must know how to read charts accurately.
As a beginner, you will also need to learn how to read the charts in a little while. Additionally, for someone to make huge profits in cryptocurrency trading, quite a large crypto investment must be made. And that’s one thing you may not be comfortable with, as a beginner.
Long-term cryptocurrency trading
This is where the popular cryptocurrency jargon, HODL, is mostly heard often. If you don’t know what it means, read my previous post on cryptocurrency terms, as HODLing is not a word you can find in the dictionary. You only find it in bitcoin forums and other online communities (e.g. crypto trading reddit), where cryptocurrencies are being discussed.
Due to the rapid change of cryptocurrency prices, most investors will choose to save the stress of watching the daily charts by buying and holdng (i.e. HODLing) their preferred cryptos for a longer time to make huge profits.
A great example of this (even though i missed on this opportunity myself), lucky investors who bought bitcoins in 2011, when it was just $0.35 per bitcoin. If they held it from then uptil late 2017, they could’ve sold each bitcoin for almost $20,000. That’s over 57,xxxx% percentage profit on their initial investment!
That’s a whoooping profit right? Lol… but there’s a lot to that anyways. Let’s discuss the advantages and disadvantages of long-term HODLing.
Pros of long-term HODLing
The main advantage is that it’s very easy as you don’t need to have the knowledge of reading the daily charts, and it saves you much time to relax without always thinking of the investment since is for the long haul.
You don’t have any business with constantly checking the price actions of the cryptocurrencies, and you can actually, get started with a smaller amount of investment unlike that of short-term trading.
Cons of long-term HODLing
You can loose large amount of money, if your investment made is on a Pump and Dump (Shitcoin). Most times, you can loose a big opportunity to earn more money on short time up trend (i.e. huge increase in market bitcoin value over a short period of time).
Bad news can come up against your investment portfolios with you knowing on time, because you don’t always check the news or read the price movement charts.
Now that you know some things about the two different types of cryptocurrency trading, let’s take a look at things you should always avoid when trading cryptocurrencies.
What are the things to avoid in trading cryptocurrencies?
One thing you need to always keep in your mind whenever you’re trading cryptocurrencies is that you could loose all your investments at an instant. Therefore, you should never trade with an amount of money you cannot afford to loose if anything should go wrong (or against your wish).
The way you handle your loses will determine your success in cryptocurrency trading. Never try to earn all your loses by unnecessarily investing larger amounts. This is actually the kind of investment mindset that causes most people to loose a lot of money.
Let’s get going with some of the things you should be very careful of while trading.
#1. FUD – This term stands for Fear Uncertainty and Disinformation. It is popularly used in both real and crypto world to indicate when group of people or organization tries to make people not to invest in a particular asset by telling them that they will gain or loose their money.
Of course you already know that, nobody will like to loose money anyhow, especially when you’re being told already. So these organizations mostly tag assets as scams which will definitely crash just to stop people from patronizing it.
Advice: Always do you own research careful before trying any trade. Use Google search, it’s always our best internet friend.
#2. Persuasions – Never get influenced by other people’s opinions as you’re simply not the only person that wants to profit from cryptocurrency trading. You can watch youtube videos, but don’t go straight into believing everything you see in those videos. Some of them are promoted contents.
#3. Lack of Knowledge – Don’t enter any trade without a full knowledge of how the market operates. Doing this can put your investment at a serious risk, and your money can also vanish instantly if you’re not very careful when reading any chart and researching on the historical data of an asset.
Having read to this point of the guide, guess what’s coming next? It’s time to learn how to trade cryptos!!
How to trade cryptocurrency?
Getting started with cryptocurrency trading, you will need all the important basic tools for you to trade the right way. Basically, the tools you’ll need ranges from a place to store your cryptocurrencies, chart reading tool and a platform where your will be trading.
#1. Cryptocurrency exchange marketplace
#2. A cryptocurrency or Bitcoin wallet
#3. A cryptocurrency investment site
#4. Cryptocurrency trading app for reading charts
A Cryptocurrency Exchange Marketplace
If you’re looking to start trading cryptocurrencies, the first thing you need to do is getting yourself some basic coins (mostly Bitcoin or Ethereum). And the easiest way to do it is buying from a reputable crypto exchange marketplace.
The fastest way to go about it is buying them with a credit or debit card. I recommend using, either Luno, Changelly or LocalBitcoin as they are well trusted by many investors as well as all other companies. Luno and Changelly supports buying cryptocurrency assets with debit or credit card.
To secure your new cryptocurrency, you will need either a hot wallet or cold wallet. It is strong advised to always store your cryptocurrency investment with an offline cold wallet. I recommend Ledger or Trezor hardware wallets because they’re both highly secured and also manufactured by trusted companies.
However, as a starter you may want to try out with a very small amount of investment, you can get a mobile software wallet, Jaxx or Mycelium to store your crypto assets. But it’s not recommended to store bigger amounts with this kind of wallet because they are hot wallets. This means that they always connect to the Internet to read your coins. Offline hardware wallets are always the best wallet due their full security from hackers.
Cryptocurrency Investment Site
For you to start trading cryptocurrencies after buying some amount of bitcoin or ethereum which are basically known as the base cryptocurrencies for some investment sites, you will now need to choose yet another reputable investment site to start investing and trading your basic crypto coins in exchange for other cryptocurrencies.
Binance is mostly recommended to start with, as they’re still new but one of the fast growing trading platforms and it has a good number of both established coins as well as newer altcoins than some other platforms. This will help you to spread your investments appropriately. Don’t ever put all your eggs in one basket (that’s, buying only one asset with your entire bitcoin investment) to avoid major regrets.
If you don’t have an account already with Binance, you can click here to create one immediately.
Warning: Avoid using any other link aside the ones provided on this post to avoid phishing or hacking.
Final Thoughts on Cryptocurrency Trading
Unlike Forex trading, cryptocurrency trading occurs 24/7. This means that the market is continuously open at any time. Trading volumes differs during the day depending on your region as many other traders from different countries enters the market at different times.
Use VPN (Virtual Private Networks) service to hide your cryptocurrency transaction footprints on the blockchain network. This will help you to avoid loosing your cryptocurrency investment to hackers or theft.
I recommend using hardware wallets like Ledger Nano S to fully secure your investment, because Ledger hardware wallets are among the best cryptocurrency wallets that you can use to save your investments fully in offline mode.
The entire market is so volatile, which means that it can skyrocket or recline by large percentages in a matter of times. Just know that trading cryptocurrency can put your capital at a bigger risk, so invest what you can loose.