Trading cryptocurrency is becoming a big deal – and you want to get in on it. Find out what you need to know about how to trade cryptocurrency.
From familiarizing yourself with the different cryptocurrency exchanges to understanding what a trading bot does, it’s easy to feel overwhelmed by all things crypto.
While, yes, it won’t always be simple to learn to trade cryptocurrency, the truth is it’s not as difficult as you think. It’s easy to feel like you’ve won the lottery after your first few crypto trades go well.
But don’t get ahead of yourself.
The important thing is to learn to master the basics before you get into anything more complicated.
If you’re interested in how to trade cryptocurrency, you’ve come to the right place.
Consider this post your starting point for getting your feet wet into the seriously exciting (and, be warned, somewhat addictive) world of crypto.
Whether your goal is to master day trading cryptocurrency or if trading will be more of a hobby than a full-time job, you need to start by making sure you’re absolutely clear on what exactly it is.
Most people are aware that cryptocurrency trading is the process of switching out one currency of crypto for another. For example, you could decide that you want to trade your Bitcoin for Ethereum.
But many people don’t realize that trading also means actually buying and selling cryptocurrency from a coin source. Trading also refers to the process of switching out fiat currencies (like dollars, yen, euros, and other international currencies you can get from a bank) to crypto.
When the majority of people enter the crypto market for the first time, they’ll buy established and well-known cryptocurrencies, like Bitcoin. However, you may not know that there are, as of this writing, well over 1,500 different kinds of cryptocurrencies.
So, what should you do if you want to buy a lesser-known option?
In order to get in on an initial coin offering, or ICO for short, you’ll need to make sure that you start by having enough of these more common coin currencies in the bank first. You can also use special blockchain services from a coin source to get the currency you want.
Learning how to trade cryptocurrency the right way also means understanding the differences between a centralized and decentralized coin exchange.
These crypto exchanges are where you actually buy your crypto in the first place. In other words, you can’t just stroll into a branch of your local bank and pick up a few Bitcoin.
The majority of coin buyers will use the centralized exchange to trade and buy crypto, because there’s a “middle man” there to help facilitate stronger security measures.
You don’t want to lose sleep at night worrying about whether or not your coins will still be there in the morning.
In other words, the centralized exchange stores both your fiat and cryptocurrencies, and you give that exchange access to your account. Though this might sound dangerous at first, it’s actually a smart move.
You’ve likely read horror stories about lost wallet private keys and passwords. If you forget your password, on a centralized exchange, you’ll be able to get help regaining access to your crypto wallet.
This isn’t usually the case with a decentralized coin exchange — which is why they’re not nearly as popular as the centralized option.
On a decentralized exchange, the focus is peer-to-peer trading, buying, and selling. Essentially, there’s no “middleman” or “storage space” for your coins. Instead, trades are executed on the basis of swaps and even smart contracts.
it’s important to keep in mind, however, that both centralized and decentralized coin exchanges can be hacked into.
Many people feel that the best way to trade Bitcoin and other cryptocurrencies is by using trading bots and other automated trading tools (like those discussed on this website.)
This is because, unlike with our traditional stock market, there are no “closing and opening bells” on the crypto exchange.
Instead, the crypto market is open 24/7. Of course, you have work, time with friends, and (presumably) the need to sleep. This means that you can’t always jump on the top trading opportunities and best prices when they’re available.
So, many people enlist the help of these trading robots and tools to execute these trades for them automatically. Essentially, the bots are made from software that’s able to analyze the current data of the market, and determine if it’s in line with your objectives.
Plus, you’ll also be able to use a bot to help you to see multiple crypto markets at the same time. Especially if you’re interested in trading lots of different currencies, this is a valuable asset.
Another advantage of going the automated route?
These trading bots are able to execute trades much more quickly than you could on your own. So, if your goal is to participate in a high overall volume of trading, relying on a bot to do the hard work for you is a smart move.
Just make sure that you do your research to find the best bot and automated tools for your needs.
We hope that this post has given you a better grasp on the basics of learning how to trade cryptocurrency.
Remember to understand the type of exchange that fits with your interests and overall risk tolerance. We also suggest starting with a more established currency, like Bitcoin, before getting involved in newer offerings.
Above all, as with any investment strategy, resist the temptation to put your eggs in one basket — no matter how good the deal sounds.
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