In the last decade, the financial markets have undergone a number of changes, but none have been as vital as the introduction of cryptocurrencies. It all started with Bitcoin in 2009 and hasn’t slowed down since then. Within a decade, thousands of other cryptocurrencies have been introduced and these have gained attention as a trading and investment vehicle because of their high volatility. It is primarily due to this volatility that the price of cryptocurrencies can actually fluctuate by more than 10% in a single day. Hence, this makes it an excellent option for people who are looking for high returns.
Nonetheless, it is essential to remember that while this volatility can certainly give you profits, it can also result in losses. Therefore, you have to approach the process carefully and in the right way in order to get the desired results. What should you do? Here is a step-by-step crypto trading guide that every beginner can use:
Step 1: Make a crypto brokerage account
The first thing you need to do is open an account with a crypto broker. There are a number of these that you can find nowadays and their numbers are steadily going up due to increased interest in cryptocurrencies. You can find a crypto broker that offers you an easy interface and a variety of cryptocurrencies to trade.
In order to open an account, you will be required to provide some personal identification information, which is quite similar to when you open an account with a stockbroker. Some of the details that you need to provide when setting up your account include your name, address, Social Security Number, email address and date of birth.
Step 2: Add funds to your account
Once you have opened an account with a crypto broker, you will obviously need to add funds to it in order to start purchasing. Most crypto brokers offer their clients the option of using debit and credit cards, or wire transfers. You can choose the method you are comfortable with and add funds to start trading as quickly as possible.
Step 3: Select the crypto you want to trade
Most active crypto traders that you will find in the market end up allocating most of their capital to Bitcoin and Ethereum. These cryptocurrencies tend to have more predictable movements than smaller coins, which makes it easier for traders to use technical indicators.
However, it is also a good idea to dedicate a portion of your trading capital to smaller altcoins. While small mid-market cryptocurrencies do carry a higher risk than large-market cap ones, they have higher upside potential. There has been more than a 1000% increase in the value of some smaller altcoins and this makes them solid investments for risk-tolerant traders.
Step 4: Choose a strategy
You can find a horde of trading indicators and most traders will take into account a plethora of factors when they buy and sell cryptocurrencies. If you are new to the art of crypto trading, you may want to take a crypto trading course first. There are a number of these that can be found. If you are an experienced trader, chances are that you already have some strategies for trading other financial instruments. Some of these can also be used for trading cryptocurrencies. But, it is best to run them through a demo account first in order to know what to expect because the crypto market’s volatility makes it a tad unique.
Step 5: Store your crypto
You should also get a crypto wallet if you plan on keeping your crypto for some time. Leaving it on the exchange is only recommended when you are day trading and will buy and sell quickly, so there wouldn’t be any need to store it. In case you plan to keep it longer, you should get a crypto wallet and make sure it is secure and reliable.