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Cryptocurrency Trading For Beginners – What Should You Know Before Getting Involved

Cryptocurrency Trading For Beginners

WHAT SHOULD YOU KNOW BEFORE GETTING INVOLVED

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Keeping an eye on new opportunities in the market is very important for the trader who wants to take advantage of them while still in the early stages. Sometimes these opportunities come in the form of entirely new markets. Cryptocurrencies were prominent even before 2009 when Bitcoin was created.

However, it wasn’t until the popular digital currency started hitting record highs after peaking at $10,000 in November 2017, that traders began to notice the huge potential behind it. the rise of these fast-paced markets. Despite the increasing number of participants, this market is still very young, highly volatile and has many opportunities for the trader willing to understand them.

Getting started with cryptocurrency begins with understanding the different options available. Whether you believe in the long-term value of cryptocurrencies or want to take advantage of daily double-digit fluctuations, here are the three most popular ways of cryptocurrency trading for beginners to get involved.

BUY AND HOLD

Since Bitcoin was launched, early investors in this digital currency have received millions in profits. An investment of $100 in Bitcoin in 2010 will be worth over 5 million by the end of 2017. Combine that with the cutting-edge technology that cryptocurrencies use and this explains why some investors Investors see cryptocurrencies as a long-term opportunity.

However, buying and holding Bitcoin and other cryptocurrencies requires a deeper understanding of the instrument involved. To buy cryptocurrency, you first need an online trading account. Since there is no bank involved, it becomes your responsibility to store and keep your cryptocurrency safe.

After the bankruptcy of Mt. Gox, the world’s first exchange to make Bitcoin available to mainstream investors, customers have lost access to hundreds of millions of dollars, and traders have lost confidence in unsanctioned exchanges. control. That’s why personal e-wallets are often recommended, leaving owners fully responsible for the safety of their crypto.

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TRADE ON THE EXCHANGE

Another way to participate in cryptocurrency trading is to speculate on the price of Bitcoin, Ethereum, Bitcoin Cash, Litecoin and other cryptocurrencies through an exchange. The rapid rise in the price of Bitcoin has caused a similarly rapid increase in the number of cryptocurrency exchanges.

The most important task for any trader before getting started is to evaluate the security the exchange offers

Due to the lack of regulation in the crypto markets, these exchanges are not regulated the way a financial institution is and so you need to do your own due diligence before opening an account and transferring funds. .

In addition to security, the serious trader in trading cryptocurrencies on an exchange needs to evaluate the level of leverage and available payment methods. Those who want to control a position greater than their initial capital must first verify whether the exchange offers trading using margin, also known as leverage.

While some exchanges offer this option, the level of leverage available can vary considerably.

An in-depth analysis of available payment methods is also required, as it is currently not possible to deposit using your card on all exchanges. In some cases when cards are accepted, the fees are so high that traders are better off using a bank transfer although slower but more cost effective.

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TRADE WITH A BROKER

For those interested in taking advantage of cryptocurrency price changes without having to deal with the hassles of an e-wallet or worry about the safety of their funds, trading crypto with Managed brokers are the most popular choice.

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When it comes to safety, funds with any UK regulated broker are protected up to GBP 50,000 against the unfortunate event of insolvency. It should be noted that some brokers offer higher protection at no additional cost. This makes cryptocurrency trading for beginners more affordable.

The second benefit of trading with a broker is leverage. With the increasing number of cryptocurrencies offered through traditional brokers, traders can now access special leverage on a wide range of cryptocurrencies. This is a great way to increase your profits no matter how low or high your initial capital is. However, be aware that leverage is a double-edged sword that should be used with care to limit potential losses.

Cryptocurrency trading with a broker is similar to forex trading. Cryptocurrencies are quoted against the US Dollar or the Euro and traders can use spread or CFDs to take advantage of this price movement. With most reputable brokers offering reliable trading apps to keep you up to date with the crypto markets on the go, it’s not surprising that a growing number of traders are starting to join. This attractive market is growing.

TRANSACTION EXAMPLE

Let’s look at a few examples to find out how trading Bitcoin and other cryptocurrencies works in practice.

Example of buying Bitcoin:

Your research on the cryptocurrency market shows that the price of Bitcoin will go higher. You open a position to buy 1 Lot of Bitcoin (BTC/USD) for $18,041 USD. This corresponds to one Bitcoin and your profit or loss is calculated as the difference between the opening and closing prices.

Within a few days the price reached a new high. Bitcoin is trading at $18.683 and you decide to close your position and take profit. Good job! You have earned 642 USD.

Example of selling Ethereum:

Let’s say you observe that Ethereum’s trading is increasing and hitting new highs. Your technical analysis suggests it’s time for a correction and you want to take advantage of the opportunity. ETH/USD is trading at $363.90 when you open a short position 1 Lot, which is equivalent to one Ethereum.

For Ethereum, your profit and loss is also the difference between the opening and closing prices. Your analysis proved correct and the market moved below $221.90, when you decided to close the position. Your profit on this trade is $142.

Thank you for reading some tips about Cryptocurrency Trading for beginners. Remember to visit my website often to know more about digital world!

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