The article guides beginners on how to trade cryptocurrencies and gives a complete list of trading strategies, with the pros and cons of each.
What is Crypto Trading
Buying and selling of Cryptocurrencies via crypto exchanges is called as crypto trading, You can trade in Bitcoin or Altcoins( all crypto coins other then bitcoin are known as Altcoins).
Cryptocurrency trading is done in 5 Steps-
- First step is to open an account with the Crypto Exchange-here you open a account with the cryptocurrency exchange like Binance, eToto,Coinbase etc which has the crypto you want to trade in.
- 2nd step is to fund your account- you have to then connect your crypto exchange account with your bank account, most of the crypto exchanges accept payments through debit card or wireless transfer.
- 3rd step is to choose and pick the cryptocurrency to trade in- look for the Crypto you want to invest in, it could be Bitcoin or any altcoin.
- 4th step is to start with the trading- you can have your trading strategies in place and start trading or you can utilise the service of an Bot.
- and finally the 5th step is to store the cryptocurrency in the wallet-Crypto assets can be saved in both software wallets or hardware wallets, as far as safety is concerned hardware wallets are more safe because they keep crypto in the physical device which is not connected to the internet
The Different Cryptocurrency Trading Strategies
There are many different cryptocurrency trading strategies that can be used by investors and traders. Some common strategies include:
1) Buying and holding:
This strategy involves buying a cryptocurrency and holding it for a long period of time, in the hopes that it will appreciate in value over time.
2) Day trading:
This strategy involves buying and selling cryptocurrencies within the same day, in an attempt to make profits from the short-term price movements.
This strategy is best suited for those who have a good understanding of the market and are able to make quick decisions.
This can be a very profitable strategy but it is also very risky. You need to make sure that you know what you are doing before you start day trading.
3) Swing trading:
This strategy involves taking advantage of larger price swings in the market, by buying low and selling high.
Swing trading is a strategy where traders hold onto their cryptocurrencies for longer periods of time, usually a few days or weeks. This strategy is best suited for those who are patient and have a good understanding of the market trends.
swing traders hold crypto for the duration of a day to 30 days
4) Scalping:
This strategy involves taking small profits from a large number of trades, by entering and exit the market quickly.
Scalping is a strategy where traders take advantage of small price movements in the market. This strategy requires traders to have a good understanding of technical analysis and be able to make quick decisions.
5) Position trading:
This strategy involves holding a cryptocurrency for a long period of time, in the hopes that it will appreciate in value over time.
Position trading is a strategy where traders hold onto their cryptocurrencies for long-term periods, usually months or years. This strategy is best suited for those who have a good understanding of the market and are comfortable with holding onto their investment for extended periods of time.
6) invest in new projects or ICOs.
This means that you will be investing in new coins or tokens that are being released onto the market. This can be a very profitable strategy but it is also very risky as there is no guarantee that the project will succeed.
7)Another strategy is to trade based on the news.
This is a news based strategy, here you look for the news events that will cause the big volatility in the market, you can take advantage of the situation and earn good profits.
There is no one perfect cryptocurrency trading strategy. Each investor and trader will have their own plans of action, depending on their risk tolerance and investment goals. so you have to experiment with different strategies and find the one that works best for you.
The most important thing to remember when using any of these strategies is to never invest more money than you can afford to lose. Cryptocurrency trading is a risky business and you should only trade with money that you are comfortable losing.
Tips for Beginners
- Start with small investments in cryptocurrency and grow your portfolio as you gain experience.
- Diversify your portfolio by investing in different cryptos and in different strategies to reduce risk.
- Don’t invest big amount initially and stay patient with the result, you won’t get an overnight growth.
- keep yourself updated with the latest development in the crypto you are invested in, and take careful decisions without panicing, your attitude and knowledge is the deciding factor here.
- Have a well thought of strategy in place that works for you and follow it, that will manage your risks.
- have accounts in different exchanges because exchanges too can collapse., so be invested in many exchanges
- cryptocurrency is very risky investment , you can lose all of your invested money so be prepared to lose everything you invest.
- Read news, whitepapers, increase your knowledge and do your own research and also consult with a financial advisor before investing.
Cryptocurrency Trading is a Risky Business
You should always remember that cryptocurrency trading is a very risky business. You can lose all of your money if you are not careful. This is why it is important to do your own research and learn as much as you can about the different strategies before you start trading.
The most important thing to remember when you are starting out in cryptocurrency trading is to never invest more money than you can afford to lose. This means that you should only invest money that you have in spare and that you won’t need for anything else.
Another thing to remember is that you should never trade with money that you cannot afford to lose. This means that you should only trade with money that you have spare and that you will not need for anything else.
Must read: what is NFT and why are they good investment
Must read: FTX Samuel bankman fried files for bankruptcy exchange falls
Must read: Beginners guide to cryptocurrency order types
Must read: Day trading and how it works for you
FAQ
Buying and selling cryptocurrencies on the crypto exchange in order to gain profit is called cryptocurrency trading.
There are many strategies like investing in an ICO, news-based strategies, day trading, positional trading scalping, etc.
To start trading in cryptocurrency you have to first open an account on the crypto exchange, deposit the money in the exchange and start trading.
Trading in cryptocurrency is very risky, you can grow your invested money exponentially but you can also lose all of it in no time, so you have to be alert and plan your trades so as to avoid big losses.
To minimize risk you need to have a strategy that works for you, not every strategy works for everyone, some make good money by day trading whereas some take good growth in buying ICOs, positional trading works for some, so you have to do trial and error and see what suits your personality.