How to Start Cryptocurrency Trading?
Since 2013, the cryptocurrency trading is witnessing crazy awareness in the public’s mood, from the market capitalisation of $10.3 billion then to $237.1 billion, in 2019 (as per Statista) shows how investors and traders perceive it.
It touched the market cap of 566.26 billion dollars in the year 2017, following the exceptional performance by bitcoin, which touched its all-time high threshold. However, on 30 November 2020, bitcoin surpassed its previous record. It showcases that the limit is hitchhiking and only getting better than before.
The records in 2020, which got severely hit by the COVID-19 pandemic are turning out to be even better.
Beginning Cryptocurrency Trading
Cryptocurrency trading is quite similar to other financial tradings. Although the major difference is that there is no physical property or product that gets exchanged with money. It is a virtual form of currency with no centralised authority governing or monitoring it. But despite that, the use of blockchain technology makes it secured and safe to use for all users.
Know about the Cryptocurrency Market
The cryptocurrency market uses cryptography which makes it challenging to get counterfeited by any hacker. It works on a peer-to-peer network situated in discrete locations of the world. The virtual currency is completely immune to any government interference or intervention whatsoever. There is no way anyone can manipulate or initiate irregular and forced changes in it.
The decentralised form pushes it to work without getting controlled even by any private organisation or institution. The primary reason for its acceptance is technology and security that it offers. Also, over the years since its establishment more than a decade ago, it has won people’s confidence and heart. Not just that, some of them have become millionaires.
- Dan Morehead
- Barry Silbert
- Michael Novogratz
- Blythe Masters
- Cameron and Tyler Winklevoss
These are some people who recognised the potential in the cryptocurrencies and invested in it many years ago. Now, today, they have become pioneers and inspiration in investments.
They get represented by ledger entries. Interestingly, due to the restriction of virtual tokenism, only online payment can happen through cryptocurrencies. Meanwhile, going by times of coronavirus, cashless transactions are on the rise, and digital money is among the best investments in the financial market.
Several encryption algorithms get referred to as crypto. Some entries that safeguard entries are hashing functions, elliptical curve encryption, public-private key pairs and others.
Learn about Cryptocurrencies Trading
Knowing about the fundamentals of virtual digital currencies is vital for success. You are required to master principles and guidelines of cryptocurrencies to know which direction it can go. Also, external and internal factors speed up the growth of any currency. So, before starting the trade in it, accumulate as much information as you can.
There are more than fifteen hundred altcoins in the market prevailing in different markets in distinct capacities. Most renowned cryptocurrencies include:-
- Bitcoin cash
Investment in these cryptocurrencies is fruitful for the kind of reception they receive from investors is phenomenal. Satoshi Nakamoto kicked the caravan of the official cryptocurrency as bitcoin. Today, it is expanding its wings each day. Experts, who once negated the approach are accepting it with open arms.
Ethereum is second to none, and most companies and conglomerates are accepting it as an exchange currency. The adoption of ETH is growing faster in the market than once anticipated about it. Some experts and trade pundits are of the view that the altcoin has lots of potentials, and it will surge beyond the expectations in days to come.
Ripple is like bitcoin in many ways. Currently, its price is not as high as one might think, but it has displayed enormous promise in the past, and investors have committed to do that again. The lower price and robust fundamentals attract traders toward it. Anyone can buy several of its units in bulk.
Choose an apt Broker
After fetching important information about cryptocurrency, it is now the turn to think about a broker that can live up to the requirements and ensure profits for traders. Global Trade ATF, Oinvest, ROinvesting, 101investing and many more are among the top brokers which accommodate the needs of investors and adjust as per their capacity to invest in the crypto market.
However, while you pick a broker, always check whether that has an authority which is keeping a check, registration and license numbers. These parameters put the stamp of validation on it. The reviews from genuine customers can also assist in making a view about a broker.
Moreover, to exchange or simply trade cryptocurrencies, you can use various but popular crypto exchanges that charge minimal charges for bidding and acquiring the asset.
Some top exchanges include:-
Notably, these websites may have different conditions and terms. So, it is advisable to read them carefully before making an investment or depositing some funds in their wallets.
Interestingly, there are more than two-hundred crypto exchanges globally available to people as options for trading. Choosing among them makes for an arduous task.
As per GBTC, the average cryptocurrency trading volume daily was $254.41 million in November 2020 compared to $95.87 million in October 2020. Hence, it discovered a hike of 165 per cent in the volumes.
The report of December is turning out to be even better. The pandemic took away several opportunities in many financial markets, but the crypto market paved a way of improvement here. Investors started earning amazing profits in a short time. The early gains are creating their life during Christmas and new year festivities even better.
Trade through CFDs
An instrument that has enormous fluctuations can get traded using a contract for difference. CFDs allow an investor to trade a larger position by owning fewer funds in deposits.
For example, with lesser capitals, you can trade one bitcoin. Here you need to have an initial margin as small deposits.
The best part is, using CFD you can go short or long irrespective of the market’s movement. You get a chance to earn in the risky market. Additionally, cryptocurrencies get traded for twenty-four hours and seven days a week.
In the volatile market like crypto, investors should use hedge physical portfolios.
Learn about Day Trading
Day trading is a way where a trader does not need to take deliveries of the assets. You exit the position as the session for cryptocurrency ends in the day. Many traders and investors take up the route to quickly earn money. However, it is a double-edged sword that needs to be handled carefully. A slight mistake can wipe-off all deposits and funds.
During day trading, market players get a chance to sell, bid and buy multiple-assets several times. They have a high probability of gains and losses. If trading gets performed strategically, more often than not, there will be huge profits in the lap of a trader.
Notably, day trading requires the guidance of experts because it is perilous compared to other forms of cryptocurrency trading. If you can devote more time to get the subtlety and Knitty-gritty right, then case solved, money earned.
For mastering day trading, people can use demo accounts available with various brokerage firms and websites. They provide a real-time environment for practising.
Traders switch to different ways for earning maximum money when one method does not suit their plan. Arbitrage is one among them. Through this, market players buy cryptocurrencies from one exchange and sell it on the other.
Benefits of arbitrage
- Does not require much hassle for the entry
- Profit-making happens instantly here.
Things to remember during arbitrage
- The high volatility might put a dent while selling crypto on another exchange, so awareness is pivotal.
- Not every opportunity that occurs here is not favourable to the trader.
It is one way to draw as many cryptocurrencies as possible, but the only prerequisite is one should know computer coding and programming. Moreover, a highly equipped computer would help in resolving the mathematical equations and problems for drawing cryptos like bitcoins.
The best part about crypto mining is that it opens the door for experimentation and earnings. The potential of gains is higher here. You don’t have to pay anything but rely on your skills to crack the code. However, it can take away your time.
Long term investment
Unlike share markets or forex, there is no dividend or interest applicable in cryptocurrencies. However, there is a scope of long term investment which ceases the stress of the market’s movements. Even when the price of assets fall below the purchasing cost, a trader can have patience and wait for it to recover with time.
The premise for such type of investment is research and confidence over the cryptocurrency.
Currently, most traders are focusing on bitcoin, ripple and ethereum for long term investments because of their acceptability globally. Hence, the long-term investment plan belongs to the domain.
- It is user and beginner-friendly.
- Aids in making quick and easy gains
The cryptocurrency trading is a blooming and blossoming one. A long-term investment in these digital currencies would script a story of your success. Grab fractions of those virtual currencies that are performing for a while now. The time and era are conducive. More and more people are recognising its might and investing in it.
So, by researching, getting a reputed broker and applying some strategies, market players can enter the crypto market.