Getting Started On Your Cryptocurrency Trading Journey: A Beginners Guide

With this guide, you will learn how to begin trading in the cryptocurrency market and get started on the right track.

Choosing A Cryptocurrency Exchange

The first thing you need to know is where to trade and this means that you have to select your preferred cryptocurrency exchange. They are the online marketplaces that you can access through a cryptocurrency trading platform through which one can purchase or sell and even exchange cryptocurrencies such as Bitcoin, Ethereum and many more. When choosing an exchange, first of all, security should be the number one priority. Therefore, when selecting exchanges always choose those with an established reputation of safekeeping users’ funds through measures such as authentication and encryption. Liquidity is also a factor because it means that you can buy and sell assets without affecting their prices. In addition, check the fee systems of various exchanges as there are differences and it is preferable to choose an exchange with low trading fees. Check that the platform has the currencies you want to trade as not all of them have the same currencies. Last but not least, for the novices, a clear and intuitive interface should help a lot to make the process much easier and less stressful.

Research and Analysis

It’s really important potential investors do research before making any trades. This requires the identification of the basic features of the various cryptocurrencies including their function, application, market requirements and development team. Some of the best resources offer information on prices, market capitalization and trading volume. Besides, it will help you get a feel of current market conditions and future developments that may influence the prices of cryptocurrencies by following the news. For more detail, technical analysis tools will assist you in interpreting charts and indicators therefore making better decisions. Through careful analysis and the proper resources, you can avoid making rash decisions where the world of cryptocurrency is concerned.

Trading Strategy

A good trading plan is crucial for the cryptocurrency market. Some of the most used approaches include day trading and long-term investment also known as holding. Day trading means purchasing and selling cryptocurrencies on the same day with a view of making gains from the price changes. It involves understanding technical analysis and a great deal of time watching the market trends. On the other hand, the long-term investment (or “HODLing”) consists of acquiring cryptocurrencies and keeping them with the intention of selling them in the future for a higher price than the purchase value. This strategy is best for those who do not want to get into the process more deeply and may suit best with the known cryptocurrencies, such as Bitcoin or Ethereum. The choice of strategy will therefore depend on your financial objectives and your tolerance to risk. Day trading provides quick results, but being more risky and tense, long-term hedging is less risky and passive.

Market Trends

To become a successful trader, one has to know the markets and analyse price charts and use technical analysis. Probably, the most popular charts are the candlestick ones, plotting the opening, closing, high, and low price of a cryptocurrency in a certain time period. It also becomes an important point of analysis for traders to predict when looking at the chart. Moving averages are pretty handy, too, because they serve to make the price data more readable by averaging out fluctuations in prices. The RSI will also tell a trader if an asset is overbought or oversold and could be a good time to either enter into or exit from a position. The volume data will show how much of a certain cryptocurrency is being traded and can give the effectiveness of that trend. Understanding these tools will provide you with the necessary insight to take the appropriate actions that will increase the probability of a good outcome within this highly unpredictable crypto market.

Avoiding Pitfalls

New investors in the cryptocurrency market may find themselves making some avoidable mistakes when trading. The single biggest mistake that we can make is what is called “emotional trading”, that is, buying or selling a security out of fear, greed or a hot tip. This is often a loss-making exercise, particularly if the trader is buying at the peak of a price rise or selling at the bottom of a price drop through panic. Another mistake is to not conduct enough research. A large number of new traders buying coins are doing so because the coins are popular at any one given time, without knowledge of the coins themselves. Also, recklessly disregarding the basic safety guidelines, like keeping large sums of money on the exchange or not enabling two-factor authentication, you are taking risks you don’t need to take. If you steer clear of these common pitfalls and stick to a rigorous routine then at least your trading experience should be much smoother.