The cryptocurrency industry is fast becoming a household name. Several individuals and companies around the world are beginning to reckon with this form of currency over the fiat currency. It might be difficult for beginners to get along with the crypto industry and understand how cryptocurrency trading works. However, it becomes easier when terminologies used in the space are understood, but this does not still guarantee a successful cryptocurrency trading experience.
Crypto trading is only one aspect of the crypto market; there are other sides to cryptocurrency. This include crypto investment, completing transactions with cryptocurrency, and crypto mining. However, crypto trading is still the bedrock of all these other aspects of cryptocurrency. This is why it is essential to understand how to trade, especially if you are just starting out in the crypto industry.
This article focuses on the things you need to note before beginning crypto trading. You will also get to learn how to go about trading different cryptocurrencies in the market.
WHAT YOU NEED TO KNOW BEFORE TRADING
UNDERSTAND THE ORDER TYPES
Crypto trading involves various order types, and unless you fully comprehend how each of these works, it is not advisable to trade cryptocurrency. If you are not using a broker for your trading, you need to know how the limit order and market order works. You must also understand the concept of stops and slippage whenever you are trading on some platform.
You need to know about these order types because of the lack of liquidity in the crypto market. Hence, to not lose out much during your trading, you will want to play safe by making use of the order types depending on which one works best for you.
UNDERSTAND VOLATILITY
The crypto market is highly volatile, which means that you can make massive gains and lose it all within a few hours. However, you can mitigate your risks by learning technical analysis while understanding how the market runs.
Some cryptocurrencies have higher market caps, such as Bitcoin and Ethereum, while others have lower market caps. The chances of losing massively within a short period are slimmer when trading coins with a high market cap. This is as compared to trading those with lower market caps and volumes.
However, you are also more likely to make quick gains from altcoins with lower market volumes than those with higher market volumes. Hence, it is best to choose which one works best for you before opting to trade cryptocurrencies.
SECURE YOUR ACCOUNT
Trading is interesting until your account is hacked or you lose access to your wallet. When this happens, it is unlikely that you will be able to recover your cryptocurrencies anymore. Hence, it is essential to trade on a secure platform and secure your cryptocurrencies in a safe and trusted wallet.
Make use of a strong password as well as the 2FA security measure to protect your account further. Some trading platforms and wallets also enable the whitelisting option, which secures your account, even more, when you turn it on. You can also back up all your seeds or pins in a safe offline location. This location should be easily accessible, in case you forget your password at any point in time.
GET UPDATED
The volatility of the crypto market is linkable to the kind of news and trends in the market. Government regulations, platform applications, software updates, wallet improvements, and many other factors can affect each cryptocurrency’s performance. To succeed in the cryptocurrency trading space, you need to keep updated with the current trends and news. Follow different verified and top platforms, either online or on social media, that release updated information about the crypto market.
You can also take your time to study the market cap, history, and future of each cryptocurrency you want to trade. This will make it easier for you to analyze the market and understand each of these coins’ potentials.
HOW TO TRADE CRYPTOCURRENCIES
Crypto trading is simply exchanging cryptocurrencies; this means you can sell a particular cryptocurrency for fiat currency and vice versa. You can also exchange one cryptocurrency for another, depending on the market’s condition at that time.
Apart from knowledge, which has been established earlier, other things you need to start your trading journey are a crypto trading or exchange platform and a secure crypto wallet. With this in mind, follow the steps highlighted below to enjoy a seamless trading experience:
OPEN A TRADING ACCOUNT
There are different crypto trading platforms to choose from, but ensure you open an account with a trusted and user-friendly crypto trading platform. Create an account on any of the platforms with your email and a strong password. You can also be asked to verify your account on some of the trading platforms using a valid ID.
MAKE A DEPOSIT
Once the account has been successfully created, the next step is to make an initial deposit on the platform you want to trade with. Depending on the platform you choose, this deposit can be a fiat currency or another cryptocurrency. Ensure you read the guidelines for trading on each of these platforms before making your deposit.
START TRADING
Once you have familiarized yourself with the order types and have chosen the currencies you want to trade with, begin your first trade on the platform. As stated earlier, trading can be crypto-crypto or crypto-fiat. Whichever option you choose, ensure you are making as much gain as you can from the trading experience.
WITHDRAW YOUR EARNINGS
Once you have earned some amount from the trading, you should withdraw some, if not all. This will help reduce the temptation of using all to make another trade. This is where the crypto wallet comes into play. You can withdraw your earnings into the wallet of your choice. Some other trading platforms also allow you to store your coins on their platform.
CONCLUSION
The crypto market is large enough to accommodate everyone, as new currencies are being launched daily. Hence, no one should be scared to try out crypto trading. However, it is best to understand all the points stated above before kicking off.
ABOUT THE WRITER
I am John Oladokun Opeyemi. Follow me on Facebook, Twitter, Instagram to access several updates on Business, Work, Marketing, Freelancing, and How to Build a Reputable/Profitable Brand or Business on the Internet.