The world of cryptocurrency is full of surprises. Mining, buying and trading crypto-coins are some of the most exciting things in this digital age. But as you get started, you’ll also realize that there are equal challenges to do with how the industry works. This is a new area for most, and for that reason, you need to be fully aware of what it entails and the challenges in it. As such, we’ve listed a few things you may need to consider before you start trading cryptocurrency. Here they are:
- Start Small
A saying goes, “if it looks too good to be true, then it probably is.” The same applies here. Cryptocurrency is a very volatile market, and so far, there hasn’t been a formula or system that has discovered the perfect way to make profits consistently. As such, it’s best to begin by opening a smaller trading account with what you can afford.
- Know what you’re getting into
Many people have an inflated idea of how easy it is to make money with cryptocurrency trading. You’ll need to start by learning a lot of new terminology and tools. Even if you have prior knowledge, the crypto market moves so fast that it behooves you to continue learning on the run. It’s also essential that you know exactly why you’re investing in a particular cryptocurrency. Many factors can sway the market – for example, do you want to invest in something that’s not likely to go down in value? You’ll want to avoid riskier currencies like Dash or Ripple.
- Start With A Demo Account
Trading with a demo account is much easier than with a real money account. In addition, when you are starting, all of your trades will be “paper trades” anyway. The only difference between demo and real accounts is that in real accounts, the money is real, whereas, in demo accounts, the money is virtual.
- Choose a reliable trading platform.
One of the most important tips is choosing a reliable trading platform. The main thing here is that you should not invest your money in the project without checking all its features. You will find a lot of platforms for cryptocurrency exchange, but only a few of them are worthy of trust. Trading should take place using a platform that has been audited by independent organizations and has gained popularity among users. One of the most reliable platforms for this is the bitcode method. It has a good reputation with investors, and it is also a reliable source to make money.
- Buy and Hold
Holding cryptocurrency as an investment can be just as simple as buying and holding any other kind of asset class. Just like you would hold real estate or stocks, you can hold cryptocurrency for the long term and expect to see returns. Since this market is still in its infancy, it doesn’t mean you shouldn’t be aware of some of the inherit risks that come with cryptocurrency. You never know if the cryptocurrency you are holding will suddenly become worthless, so store your digital currency in a wallet that gives you control over your public and private keys. If you don’t have control over your private key, then you don’t control your coins!
- Buy low and sell high.
This may sound complicated, but it’s quite simple if you remember this phrase. If you know how to trade coins strategically, buying low and selling high is a piece of cake. For example, if you purchase $X worth of coin A at the price of $1, and the coin goes up to $2-$3 in value, then you sell it and earn a hefty profit.
- Know Your Tools:
You will be required to use different tools and resources for your cryptocurrency trading, and you must know how to use them. If you are starting with cryptocurrency trading, multiple options are available for you, such as Coinbase and Kraken. Check out their official websites and learn more about these tools. If you wish to trade through technical analysis, use tools like Coinigy or Crypto Compare Safari Extension.
- There is a chance you will lose money.
You will probably never see the day when your crypto investments will give you a 1000% return on investment. You might even see a negative percentage for a day or two. Don’t fret over it. The crypto market is extremely volatile, and you can easily lose money. Worse, if you ever begin investing in a coin that starts to plummet in value, you could potentially be in the negative to the point of no return.
- Don’t Get Greedy
For cryptocurrency traders, greed is one of the leading causes of bad decision-making. The current price of your favorite coin might be almost twice what it was a week ago, so you decide to hold on for a few days to see how high it goes. Then you read that some other coin is rising, too, and you think, “I’ll just sell my coin at its peak and buy that one instead.”
In both cases, you’re getting greedy and abandoning your trading plan. You’re not being realistic about the market because there is no way to know when the market will turn. Don’t get greedy. Stick to your plan and trade with discipline.
- Don’t Trust Everyone
Cryptocurrencies are a new and evolving market, so they’re a magnet for con artists and other shady individuals. It would help if you were wary of the people trying to sell you anything in a market like this. Always do your due diligence, even on the people you know and trust.
Final Words
The mathematical aspect of cryptocurrency trading is fascinating, but to make it as profitable as possible, you also need to keep thinking. You have to be constantly updating your plans and adjusting your trades in line with the current situation. Because of this, you should always be planning and basing your next move on the overall trend rather than just a specific momentary trend.
