Cryptocurrency trading is a complex thing. The market changes daily, and it can be challenging to stay on top of all the latest information when you are trying to trade. That’s why we put together this beginner’s guide to help you learn how to trade cryptocurrency in just 5 minutes or less! From understanding how exchanges work, what types of trades exist, and even beginner strategies for different instruments – no one should be left in the dark about cryptocurrency trading anymore.
Table of Contents
What is cryptocurrency, and why trade it?
Cryptocurrency is a that doesn’t possess any physical form. It’s not bound to any country or government, and it does not have its own payment system either. Instead, cryptocurrency exists solely online – which makes it very different from fiat currencies like the Canadian dollar (CAD).
So why would you want to trade something with no real-world value? Well, for one thing, because there are many people who believe cryptocurrencies will become widely used in the future as stores of wealth similar to gold bars.
They do often fluctuate wildly on an hourly basis, though, due to their unregulated nature, so they’re best seen as risky speculative investments instead of safe places to park your money long term! Cryptocurrencies can be bought or sold through various exchange platforms and can be done so with fiat currencies like CAD or USD.
How to buy cryptocurrencies using?
The first thing you’ll need to do is open a cryptocurrency wallet. There are several wallets available, but the most popular for beginners will be an exchange-based or hosted wallet like Coinbase. These allow users to purchase cryptocurrencies online and have them stored in their wallets on your chosen platform.
If you want to start trading cryptocurrency, then it’s also recommended that you sign up for one of these platforms as they offer access to multiple exchanges where traders can buy and sell cryptocurrencies.
How to find a good trading platform for your needs?
While searching for a cryptocurrency trading platform, you should look for an exchange that offers a number of different digital currencies to trade. At bitcointester, you will find several reviews of cryptocurrency exchanges, so make sure you check them out. This way, you’ll be able to diversify your portfolio and make it less risky.
Additionally, these exchanges need the crypto-cash market in order to function, which means they are closely tied with cryptocurrencies themselves – not like traditional stock or Forex markets where fiat currency is used instead (meaning there’s no real direct connection between cryptocurrency prices and broker profits).
How does trading actually work?
When looking at how buying works on an exchange, it’s important to note that every single transaction has fees associated with it. While this might seem negative when thinking about making a profit through trading, remember that all transactions occur within the same kind of ecosystem (exchange ), and more often than not, fees are used to increase the speed of transaction processing (meaning ultimately it benefits users).
Most exchanges will offer both types of buying options – either by using fiat currency or another cryptocurrency.
Fiat deposits tend to attract higher deposit/withdrawal fees but can be easier for new traders as they allow them to buy with a payment method that’s already linked within their banking infrastructure (so if you’re based in Europe, chances are your bank account has direct support for SEPA transfers which means transferring money into an exchange is far cheaper and faster than via international wire transfer for example).
Tips for how to make money from trading crypto
Before you start trading crypto, it’s a good idea to understand the market, as well as some basic trading terms. The following are some high-level tips that can help you get started, but to really gain an understanding of how the market works, it’s advisable to do a lot more reading.
It’s essential to understand what you’re investing in and why. This includes the market cap of the coin (i.e., how much it is worth), its circulating supply (how many coins are currently available) as well as who created or invested in that particular cryptocurrency. The point is, if you have a good idea of how the market works, what types of trades are out there, and where you can find reliable information about different cryptocurrencies – then you’ll have a much better foundation when it comes time to actually start trading.
Knowing your exchanges
There are multiple different ways to trade cryptocurrency, depending on which exchange or platform you use. For example, if it’s Bitcoin that you’re trading, then some popular options include Coinbase (US-based), Bitstamp (Slovenia) & CoinCorner (UK). Each one has its own pros and cons, but they generally all allow for buying/selling through bank transfer or credit card payment in addition to PayPal / other online wallets like Skrill, etc. Some even take things further by allowing you to trade via company-issued credit and debit cards.
Read up on the news
News plays an integral part in trading any type of asset, cryptocurrency included. If there is bad press about a certain altcoin, for example, then chances are it will negatively affect the price – so keep your eyes open! Similarly, if something good happens, like a partnership announcement with another company or regulatory changes around cryptocurrencies, this can also have positive effects on prices.
Research specific coins
Before investing in cryptocurrencies, make sure you understand what they are used for – this could mean anything from buying goods online (e.g., TRON) to using them for other digital services (e.g., IOTA). Knowing how many coins will ever be available and how quickly they are released is also important. For example, Bitcoin will only ever have 21 million coins in circulation – so it’s not infinite like fiat currencies such as the US dollar or Euro!
Cryptocurrency trading can be a really lucrative thing to get into, and it’s definitely something that anyone with an interest in finance should consider. Whether you’re looking for ways to make money online or just want another income stream – cryptocurrency could help!
Alex is fascinated with “understanding” people. It’s actually what drives everything he does. He believes in a thoughtful exploration of how you shape your thoughts, experience of the world.