Cryptocurrency Trading Guide For Beginners.
In this very article we will learn the Complete Guide To Cryptocurrency Trading For Beginners Step-by-step.
What is cryptocurrency? A cryptocurrency is a digital currency, which is an alternative form of payment created using encryption algorithms. The use of encryption technologies means that cryptocurrencies function both as a currency and as a virtual accounting system. To use cryptocurrencies, you need a cryptocurrency wallet. These wallets can be software that is a cloud-based service or is stored on your computer or on your mobile device. The wallets are the tool through which you store your encryption keys that confirm your identity and link to your cryptocurrency.
It seems like everyone is going crazy over cryptocurrency trading! And why not? Crypto is the future. It is not only disrupting the financial sectors but also other major sectors like information technology, health care, retail, tour and travel, automotive, and many more. However, owning cryptocurrency sounds great but handling it in the right way is challenging. Cryptocurrency trading is trending, and people are keen to learn about how it is done? If you are someone who is interested in starting cryptocurrency trading, then you have landed on the right page. This article will provide a complete guide to cryptocurrency trading.
Also, if you want to pursue cryptocurrency trading professionally, then you can explore the best online Cryptocurrency Certifications and Cryptocurrency Instructor-led Training (ILT) sessions available on the blockchain council.
Overview
For trading cryptocurrency, many factors and specific steps are needed to follow. Experts recommend that it is essential to have extensive knowledge about cryptocurrency, crypto exchanges, cryptocurrency security, and all the necessary terminologies related to cryptocurrency trading before investing time and money into this particular field. In this bustling cryptocurrency market, it is crucial to have the right strategies in mind for making rightful trading decisions and be aware of the risk that can occur at any point. Although cryptocurrency trading is different from stock market trading, some of the concepts of stock market trading can be considered in understanding cryptocurrency trading. Therefore, stock market knowledge can be advantageous while implementing crypto trading.
What is Cryptocurrency Trading?
Before getting directly to cryptocurrency trading, let us understand the meaning of trading. Trading can be defined as the economical concept of buying and selling assets. The assets can be goods and services which are being exchanged between the trading parties. Here we are talking about the financial markets where trading of financial instruments takes place. These can be stocks, currency, cryptocurrency, margin products, etc. Trading is usually considered short-term; however, this concept is misled by many. Furthermore, we will be discussing types of trading, namely day trading, swing trading, and trend trading, in detail later.
Cryptocurrency trading involves buying and selling cryptocurrency by using a crypto trading platform or exchange. Some of the most popular cryptocurrency trading platforms are Coinbase, Binance, CoinDCX, etc. The idea behind cryptocurrency trading is to achieve profitable outcomes over a certain period of time. Trading differs from investing, and the concept behind it is what we are going to discuss further.
Difference Between Investing and Trading?
Investing is quite different from trading; trading has the concept of gaining profit within a certain time period, whereas investment works when you hold the assets for the long term. While making any investment, we need to look for long-term trends and turn a blind eye to short-term fluctuations in the market. In cryptocurrency investment, the main goal is to get more coins. For instance, if you have purchased four bitcoins at a certain price, after a few years, the entire invested value of your asset will increase in proportional to the coin price.
On the other hand, trading is concerned with short-time fluctuations, and thus it is essential to understand the daily market while trading. The main goal is to earn dollars or any other currency. Experts recommend understanding the market trends and short-term price trends if you want to excel in cryptocurrency trading. It is more like buying in low and selling at high prices, then the trends turn out to be in your favor. In cryptocurrency trading, you will need to drop coins very often in order to gain maximum profit.
Structure of a Trade
The structure of trade combines the buyer and seller. In trading, one will gain, and the other will lose. In simple words, if the person is gaining profit in selling, the other one will have potentially low benefit. When you step into cryptocurrency trading, keep the fact clear which is understanding the market trends to prevent yourself from getting high losses. As the crypto market is volatile, it is always recommended to invest the amount you can afford to lose, and if you are a newbie, you must consult an expert. Certified Cryptocurrency Trader is an expert in managing the buying and selling of cryptocurrency by considering market trends. Also, they are aware of the trade structure and execute the trade accordingly. If you are also interested in exploring crypto trading then you must consider the factors affecting the market trends. For instance, when more people are buying any particular order, the price generally goes up. In contrast, when people are selling more than buying, the price tends to drop.
To understand the market trends better, let us understand the different types of trading strategies.
Different Types of Trading Strategies
There are four active trading strategies that usually get implemented across the market. An active trading strategy can be defined as an act of securely buying and selling considering the short-term market trends and gaining profit from the market’s volatility. Most experts believe that active trading strategy changes with the long-term strategies where investors buy and hold the assets.
The four strategies are Scalping, day trading, swing trading, and position trading, which are explained below:
Scalping
Scalping is the shortest-term trading strategy followed by many experts to gain instant profits. In this type of trading, people hold the coins for a few minutes or seconds. However, the gain is not much as other trading strategies. The purpose of scalping is to achieve small profits which are accumulated throughout the day. The optimum time to execute the trade is when the market is super busy, then the chances of getting profit are maximum. The certified cryptocurrency traders and experts actively practice scalp trading to profit from the small price movements.
Day Trading
This type of cryptocurrency trading involves the holding of assets for a day. Day Trading is also known as “intraday trading,” where traders enter and exit the position within the same day. In this type of trading, you need to consider basic technical analysis using technical indicators that can help you determine current market conditions and identify the trends. Implementing this type of trading also offers small profits; however, it keeps you away from overnight market volatility. Day trading is usually held for few hours.
Swing Trading
In the Swing trading strategy, people hold the position for several days or few weeks. This trading type follows short to intermediate-term trends ranging typically between 1-30 days. The person who is not active on a daily basis and dedicated their time to their jobs can implement this type of trading strategy. Here, you do not need to worry about the daily ups and downs becai]use in swing trading you will not hold the cryptocurrency for just a day. However, keeping up with the trend and checking the daily analysis will help you gain the optimum profits.
Position Trading
In this type of trading strategy, you need to focus on the long-term price shifts. In order to gain maximum profit, major price shifts are considered by the trading experts. Position trading is also known as “trend trading”, as traders tend to hold the position for more extended periods of time. Also, analyzing weekly and monthly price charts can benefit you in evaluating the market trends. While implementing this type of trading strategy, traders are not worried about minor fluctuations in the price. In fact, they are only concerned about the major market trends and follow up accordingly.
So as per your requirement and availability, you can choose any of the cryptocurrency trading strategies.
Cryptocurrency Trading Steps
For beginners, it’s imperative to follow the proper steps for cryptocurrency trading. Here are few steps which you can take and begin your trading journey.
Step 1: Look For Cryptocurrency Exchange
As a beginner, the very first step is to look for the best cryptocurrency exchanges. Some of the most popular ones are:
Binance
Coinbase
Kraken
CoinDCX
Gemini and many more.
You need to make a crypto brokerage account. It will be similar to opening a stock brokerage account. Also, make sure to provide the necessary information required.
Step 2: Fund Your Account
As soon as you create your account in any of the Cryptocurrency exchanges, the next step is to fund your account. Using debit cards and wire transfers. You can easily add money to your digital wallet. Also, wire transfer is one of the cheapest options for funding your account. Crypto exchanges like Coinbase and Gemini provide wire transfers for free.
Step 3: Choose your Cryptocurrency
There are many cryptocurrencies in the market, but most expert traders go for bitcoin and ethereum. The reason is these cryptocurrencies are more predictable than other small coins. However, the altcoins have also seen a rise of about 1000% in just a month which can be considered as a good option while trading.
Step 4: Choose a Strategy
Picking up a trading strategy is a critical step in cryptocurrency trading. Therefore, by utilizing the trading indicators with the correct fundamental and technical analysis, you can achieve high profits in cryptocurrency trading. However, if you are a beginner, pursuing a cryptocurrency trading course and becoming an expert is recommended.
Step 5: Securely Store your Cryptocurrency
Lastly, it is essential to store your crypto in a safe place. For that, you can choose a digital wallet, and it can be software or hardware. Cryptocurrency wattles are highly recommended for storing your digital assets. Cryptocurrency security can be achieved more with hardware wallets.
Conclusion
We have discussed the basics of cryptocurrency trading, which included trading, the structure of cryptocurrency trading, types of trading strategies, and steps that must be taken to start crypto trading by yourself. If you are interested in learning more about cryptocurrency trading and blockchain technology, check out the blockchain council.
If you want to keep up with the trends of blockchain industry, join our communities on Discord, Reddit and Telegram.
Disclaimer: All the information provided above is merely for the purpose of your knowledge. We do not deal with any type of cryptocurrency trading. Therefore, we recommend doing proper research and learning before investing your money in cryptocurrency trading.
Thanks for reading “Cryptocurrency Trading Guide For Beginners – Step-by-Step”
