The cryptocurrency trading market is not an easy one to navigate for beginners, especially with the complexities and processes involved. But, even the most experienced cryptocurrency traders were once beginners, so there is always room to learn. First, to trade crypto, you have to choose a crypto wallet and exchange to trade on, wait for verification from the exchange and fund your account, a process that takes only a few days, then you can start trading crypto.
Determine how you would like to trade cryptocurrencies
There are two ways of trading cryptocurrencies; buying cryptos hoping that they will increase in value or speculating their value using CFDs. A CFD refers to an agreement whereby you agree to exchange the difference in the value of a cryptocurrency from when you open your position to when you close it. That way, instead of owning the cryptocurrency, you are speculating the price on the market. For instance, if you agree and open a long position and the cryptocurrency’s value increases, you profit, but you incur losses if the price falls.
On the other hand, purchasing cryptocurrencies through exchange means buying the digital currency and holding it in a digital wallet so that you can profit when its value increases.
Understand the dynamics of the cryptocurrency market
The cryptocurrency market does not operate in the same way as other markets, so you need to educate yourself on how it works. You must understand that the cryptocurrency market is a decentralized one operating through a system of peer-to-peer transactions instead of a central server. When people buy and sell cryptos, the transactions add to the blockchain, a public digital ledger that records data through crypto mining. Again, cryptocurrencies are highly volatile, so it is crucial to understand what moves the market right from government regulations, breaking news, ICOs, etc.
Devise a trading plan
Since the cryptocurrency market experiences a lot of volatility, you must develop a proper trading plan to be successful. Even though volatility makes the market attractive for cryptocurrency traders, it also makes it difficult to trade. Therefore, your trading plan should always include your goals, the cryptocurrency you want to trade, a risk management tool, and a way of entering and exiting the market. Also, determine how you will evaluate the digital currency market either through technical analysis that looks at price movement and historical patterns of a cryptocurrency or the fundamental analysis that looks at the external factors impacting cryptos. Since cryptos are sensitive to market trends, you should be at par with current crypto trends.
Select a cryptocurrency trading platform
Choose a crypto trading platform that provides easy access to cryptocurrency CFDs. A smart crypto trading app offers you a faster way to trade cryptocurrencies, personalized alerts, built-in risk management tools, and interactive charts.
Open, monitor, and close your first position.
After you have decided on which cryptocurrency to trade in, open the ticket for your chosen market, and you will see the buying and selling price listed. Decide the size of your position, decide to buy to open a long position, or sell for a short position. Note that you can limit or close your trade upon reaching a particular level to avoid market risks.
A key takeaway
Note that securing your crypto account is imperative otherwise, you lose your wallet access. Use a strong password and other safety practices to secure your account. If you know your order types, security, and what you are trading, you are ready for any cryptocurrency trade activity.