Crypto trading has been around for a long time, much longer than you might think. The first major cryptocurrency, bitcoin, was created in 2009 by a mysterious person using the pseudonym Satoshi Nakamoto. Since then, many other cryptocurrencies have emerged and become popular among traders. Today we’ll talk about what crypto trading is and how to do it for beginners.
What is crypto trading?
The simplest way to describe crypto trading is buying and selling of cryptocurrencies.
Cryptocurrencies are a digital currency that uses cryptography to secure transactions and control the creation of additional units. The most common cryptocurrencies are Bitcoin, Ethereum, Ripple, Litecoin, Monero and Bitcoin Cash.
Trading crypto is very similar to trading stocks or other traditional financial assets like bonds or commodities. Cryptocurrency traders can buy and sell these assets on exchanges (like stock exchanges) but there are some differences in their risk profiles compared to other asset classes because cryptocurrencies have high volatility (they change value quickly) so you should only invest what you’re willing to lose!
How to trade cryptocurrency for beginners
Trading cryptocurrency can be intimidating, but it’s actually quite easy. You can start small and still make a profit, as long as you follow these simple rules:
- Start with a demo account. This will allow you to try out different strategies without risking real money. Once you have some experience, it’s time to move on to the real thing! (Note: if you’re interested in joining an exchange that provides demo accounts for beginners, check out CEX.)
- Use stop losses so that your trades are protected from big losses when prices fall unexpectedly. This technique is highly recommended for beginners because it allows them to limit how much they lose while they learn what they’re doing (and reduces stress).
- Don’t over trade or use leverage—these things increase risk and decrease profitability at the same time!
Sign up for a cryptocurrency exchange
The first step to getting started with cryptocurrency is signing up for a cryptocurrency exchange. You will need to provide your name, address, phone number and email address. Each exchange has different requirements for KYC (know your customer) and AML (anti-money laundering). For example, some exchanges require you to upload documents like a government issued ID or passport in order to deposit money into their platform.
Once you’ve signed up for an account with an exchange make sure that you have set up 2FA (two factor authentication). This will help protect your funds from hackers who might try and access your account by guessing passwords or using keyloggers on the computer where you sign in from.
Basics of cryptocurrency trading
Cryptocurrency is a digital asset designed to work as a medium of exchange that uses cryptography to secure its transactions, to control the creation of additional units, and to verify the transfer of assets. Cryptocurrencies are classified as a subset of digital currencies and are also classified as a subset of alternative currencies and virtual currencies.
Technical analysis is a way of analyzing the price movement of a stock or cryptocurrency. It’s based on the belief that historical prices can predict future prices by looking at trends, patterns, and other factors.
Technical analysis uses charts and graphs to help predict price movements.
You can use a number of basic tools to help you understand the market and make better-informed decisions.
- Use a charting tool to get a visual representation of the cryptocurrency market. Charting tools will show you historical price trends, and they’ll allow you to track how prices move over time. They also provide data on things like volume, which is important when making predictions about future movements in value.
- Use an automated trading bot if speed is important for your strategy or if you need help managing risk along with making trades automatically based on preset criteria (such as whether the price goes up or down by more than 10% from its previous day’s close).
- Track your progress with portfolio tracking software, which allows investors to keep track of their gains over time so they can see how well their investments have done overall since purchase date
Fundamental analysis is a method of evaluating stocks and other financial assets. It involves looking at the company behind the investment, its business operations and overall value. This is used to determine if a stock is worth buying or selling. The same concept can also be applied to cryptocurrencies, but in this case we’re going to call it “fundamental analysis for cryptocurrencies.”
The idea behind fundamental analysis for crypto is that you want to know if the cryptocurrency has inherent value as a decentralized currency or store of value (like gold). You want to know why it has value in the first place and how much demand there will be for it in the future? These are some things that fundamental analysts look at when they evaluate stocks, so they should apply here too!
Crypto vs. stocks
It’s important to remember that crypto is not a stock. It’s a currency, and it’s also very different from stocks in the way that it works.
Cryptocurrencies are not regulated at all by any government body, which means there aren’t any rules about how much money you can invest or when you should sell your assets. This lack of regulation means that cryptocurrencies can be more volatile than stocks—and often are!
Cryptocurrency is also less liquid than stocks; this means that because of their inherent volatility and lack of regulation, it’s harder to get out when you want to sell them (called “liquidity”). For example: if you have $1000 worth of Bitcoin but want to use it as cash right now (to pay off some bills or buy something), maybe someone will buy it from you for $900 so they can use it themselves first? If everyone was trying to sell at once because they wanted their money back ASAP due to some bad news coming out about Bitcoin tomorrow morning…well let’s just say things could get ugly fast!
Trading crypto is risky
You may have heard that trading crypto is risky. That is true, but you can mitigate the risks by staying informed and making sure you understand what you are getting into.
Cryptocurrency trading is unregulated and volatile, which means there are no rules and no laws to protect you if things go wrong. There are also hackers looking to steal your money, so make sure that anything you transfer has been encrypted before sending it anywhere!
I hope that this guide has helped you to understand how to trade cryptocurrencies for beginners. If you still want more information on the topic, we recommend checking out our other articles or subscribing to our newsletter.