Cryptocurrency or Crypto is a currency with digital existence that can be used over the Internet for trading. It can also be stored over a long period to grow its value. Some of the leading examples of cryptocurrencies are Bitcoin, Ethereum, Dogecoin, and Tether.
The act of buying and selling these currencies to make a profit is termed cryptocurrency trading. This trading market has skyrocketed in the last few years and is expected to reach $4.94 Billion by 2030 growing at a CAGR (Compound Annual Growth Rate) of 12.8%. This astonishing growth has created a range of opportunities for traders.
However, the vast number of jargon and processes involved make it daunting for beginners as well as seasoned traders. This article guides beginners in strategizing their journey to learn cryptocurrency trading.
How To Start Crypto Trading As A Beginner?
The availability of multiple online educational sources has made things quite complicated for beginners who wish to learn cryptocurrency trading. Here are some tips that can help you in framing the right strategy for your crypto trading.
- Learn About Different Cryptocurrencies in The Market
There are around 10,000 crypto coins already in circulation making it hard to select a cryptocurrency for trading. Perform refined research on different types of crypto coins and closely analyze their behavior over time. Cryptocurrencies have their official whitepapers that can be a reliable source of information for research.
- Create A Cryptocurrency Brokerage Account
To trade the crypto coins, you will require a crypto brokerage account that acts as a middle man between the crypto buyer and seller. Some of the leading platforms to create a crypto brokerage account are Coinbase, Binance US, and eToro.
To create a crypto account, simply head to the crypto broker’s website and enter your personal information and documents that support your identity.
After the verification, add funds to your wallet for buying the crypto coins.
- Discover Trading Methods
The trends in the crypto market change very often increasing the probability of losing money. You need to learn certain trading methods/strategies depending upon your expectations of returns.
Elliott Wave Theory is considered one of the best crypto trading methods that work on the principle of market sentiments and psychology.
Some basic trading methods include
- Day Trading -Buying and selling on the same day
- Scalping -Trading in high volume in a single day
- Range Trading -Selling and buying within a short period
- Dollar-Cost Averaging - Dollar-cost averaging is a simple technique that entails investing a fixed amount of money in the same fund or stock at regular intervals over a long period.
Dollar-cost averaging is a strategy, and it can get results that are as good or better than aiming to buy low and sell high.
Being a beginner, it might get difficult for you to get familiar with the basics of cryptocurrency trading.
- Build A Portfolio
Once you have created your account and chosen a trading strategy, you can now start building your portfolio. Your cryptocurrency portfolio should have multiple crypto coins as it minimizes the volatility risks.
Being a beginner, you should be more focused on buying stable coins like Bitcoin to have some liquidity and refrain from investing a huge amount in unstable/latest coins. Post investing in coins, split your portfolio into 3 parts, striking a balance between high, medium, and low-risk investments.
- Manage Investment Risks
Due to the high volatility of the crypto market, the price fluctuations are more frequent and this makes it difficult for crypto traders to predict the future outcomes of the investments.
To alleviate the market risks, you need to research properly and analyze the ratio of returns and risks involved. You should pre-define your entry and exit plans for trading and follow them strictly.
As discussed above, your portfolio must have diversity in the coins to counter the volatility. The crypto portfolios devoid of multiple coins often fell prey to sentimental losses.
- Play In a Long Run
Avoid "getting rich overnight” schemes while trading cryptocurrencies as they are absurd. Investing for longer terms in cryptocurrency can minimize your risks and reduce the transaction fees as compared to active trading. Before you invest in crypto coins for the long term, you need to analyze their market share, technological development, transactional value, and ongoing news in the market.
Wrapping Up
The volatility of the crypto coins has proved to be beneficial for traders in earning massive profits. The market is still rising and is expected to grow more in the coming times. Moreover, the limitless buying and selling of the assets make it a lucrative investment solution.
If you’re looking to gain more knowledge and insights about crypto trading, blockchain, and other digital technologies, Taking Bigger Steps offers a variety of online self-paced courses and a rich library of resources dedicated to that purpose.
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