How To Start Trade Crypto? Everything You Need To Know About Crypto Trading
Cryptocurrency trading means buying and selling digital currencies and speculating on their price movements. It can be done in two ways: either by using a platform that helps you to predict the rise or fall of the coin, or by directly buying the coins through an exchange.
Crypto trading is preferred by investors for several reasons. Firstly, the crypto assets are tangible. Secondly. The transactions are borderless. Thirdly, the market allows you to carry out the trading at any time.
This article covers various aspects of crypto trading, including its different types, how to trade, various risks involved, and safety measures to be followed.
What Is Crypto Trading?
Buying cryptocurrency and then selling it when its prices rise is called crypto trading. Crypto trading is divided into various types
- Long-term trading is also known as position trading. They hold their crypto assets for a long time until the right time comes to sell their assets.
- Day trading is the buying and selling of cryptocurrency on the same day. The profit generated by the method is comparatively less when compared to other trading methods. A positive aspect of day trading is that it prevents the overnight risk
- Range trading involves determining a price range for a crypto asset. This trading method has a low price range and a high price range for a specific time period. The user can earn profit by setting a definite price range for a particular time period.
- Swing trading follows a longer time to analyse the price behaviour of their crypto investments when compared to day trading. This trading is stress-free and less time-consuming.
Things to Know Before You Start
Before trading cryptocurrency, it is important to look into the following aspects.
- Cryptocurrency can face time-to-time fluctuations in its prices, which can result in significant losses and gains.
- Cryptocurrency regulates on its own; it is not owned by the government or any other agencies, therefore, it lacks support from the authorities when the funds are stolen or lost.
- Although the blockchains are secured, the wallets and exchanges are often subjected to scams, hacks, and fraudulent activities.
- According to many jurisdictions, tax is imposed on cryptocurrency assets. A detailed record regarding the gains and losses should be submitted to the respective authority.
- Invest a small amount and get accustomed to the whole process before depositing a large sum.
- Choose reliable exchanges like Coinbase, Binance, and Gemini to ensure security.
- Protect your private keys and enable two-factor authentication.
How to trade cryptocurrency?
- Choosing a reputable Crypto Exchange like Coinbase, Gemini, or Kraken helps prevent mistakes to a great extent while trading.
- Create an account and verify your identity.
- Deposit fiat currency into your account, and with this, you can purchase the first cryptocurrency from the exchange platform.
- Begin trading by buying, selling, and swapping cryptocurrencies after depositing money from your bank into the cryptocurrency exchange platform.
- Monitoring your account helps in a better understanding of the rise and fall of the prices of coins that you own. It also aids you in making the best decisions on when to sell, buy, and swap currencies.
- Withdraw your cryptocurrency into a wallet.
Essential tips for maintaining safety
- Beware of the phishing scams, as they are very common. For example, users might receive emails that direct them to a fake website, which often looks like the original one.
- Scammers often imitate fake customer service support to steal users’ credentials.
- Be doubtful of the fake investment schemes with little to no risk and guarantee high returns. It is crucial to research before investing.
- Fake wallets and apps are created to steal funds. Therefore, be cautious about the apps that ask for your private keys, as no reliable apps will inquire for such information.
- Ensure that the trade is done on secure platforms to avoid fraud-related activities.
- Stay informed about the regulatory warnings.
Conclusion
Staying safe in the crypto space requires constant awareness of the risks, vigilance, and skepticism. To earn profits, it is essential to have a clear understanding of the market and its risks.
Before one starts trading their cryptocurrency, it is important to know about the market, how to trade the cryptocurrency, and how much they need to invest in the initial stage to avoid potential losses.
Risk management is also a key trait that people need to focus on themselves, as crypto trading is highly unpredictable and demands careful decision-making
FAQs
Although trading crypto involves high risks, it can offer high returns.
The biggest problem with cryptocurrency is generally considered to be its extreme price volatility and lack of robust regulation.
The golden rule of crypto is never invest more than you can afford to lose due to the market’s high risk and volatility.
Most countries treat cryptocurrency as an asset or property. Therefore, it is generally not tax-free.
It simply refers to digital currencies that exist only online and have no physical form.
Crypto & Blockchain Expert