5 Steps to Trading Cryptocurrency
Cryptocurrency is an extremely volatile asset and this is one of the reasons why many investors love to trade it. The returns on crypto trading can be much higher than traditional investments if you can time the market rightly.
The goal of most crypto traders is either to make a profit in USD or accumulate Bitcoins. In a crypto bull market, it’s easier for your portfolio to rise in USD value than for your portfolio Bitcoin value to rise.
If you actively trade your cryptocurrency, there is a risk of you losing them to the market. This is relatively common since the prices of cryptocurrency are volatile. For this reason, many crypto enthusiasts choose to “Hold on for Dear Life” (HODL). HODL is a term in cryptocurrency for holding your coins rather than selling them.
5 Steps to Trading Cryptocurrency
To avoid loss on your cryptos, you need to understand the act of trading them. Cryptocurrency trading differs from stock trading. You can learn about the differences here.
If you are not ready to take risks and if you believe in the future of the crypto you have, it may be a better option for you to hold on to them than trying to time the markets.
To trade cryptocurrencies, here are 5 steps you should follow.
Make a cryptocurrency brokerage account
You will need to create an account with a crypto brokerage if it is your first time owning cryptocurrency. Your personal identification information will be needed by your crypto brokerage to make an account. Making a crypto brokerage account is quite similar to opening an account with a stock brokerage. Gemini, eToro, Coinratecap, and Coinbase are examples of crypto brokerages on the market.
Fund the account
The next thing to do after signing up with a crypto brokerage is to connect your bank account. You can make use of a wire transfer to fund your account. Another alternative to funding your account is through debit cards. Wire transfer is the cheapest option when it comes to funding your account.
Select a crypto to invest in
Bitcoin and Ethereum are the cryptos that most active traders allocate their capital to. The movement of these cryptos can be better predicted than smaller altcoins and so, you can trade easily with technical indicators. Altcoins are riskier to trade but they offer a higher reward.
Choose a strategy
You need to have a strategy for trading cryptos. One trading strategy most traders use is the Elliot Wave Theory. This theory is focused on the psychology behind market sentiment. It works well for assets like cryptocurrencies.
Don’t buy or sell cryptos without a trading strategy. As a beginner in trading, enroll or buy a trading course. A good training course will teach you factors you should consider before buying and selling.
Store your cryptocurrency
To have access to your cryptocurrency, you will have to store them on an exchange. Consider a wallet if you intend to hold your cryptocurrency for the long term. You can find these wallets as hardware wallets or software wallets. Both forms of wallets are secure.
Learning how to trade is the first step you should take if you want to trade cryptocurrency. Don’t trade cryptos until you have learned the tricks and tips that make for successful trading. When you understand how crypto trading works, you are better positioned to succeed in the market.