If you have been following the news, then the word cryptocurrency trading has definitely come up a couple of times. But you may not be entirely sure of what the term means or if its even something you consider investing in.
Here’s a quick breakdown:
Think of cryptocurrency as stocks rather than the currency you usually deal in which is known as ‘fiat’ cryptocurrency. When you purchase cryptocurrency, you buy tech stocks which is part of blockchain and part of the entire network.
Cryptocurrency has risen to prominence in the last couple of years but wading in its deep waters can be quite a challenge for beginners.
So, here is a quick cryptocurrency trading guide for beginners:
- Get the basics right – Read up as much as you can on cryptocurrency before you think about getting into the space. Arming yourself with knowledge is crucial as cryptocurrency is not regulated by laws and can be quite dicey if you don’t know what you’re doing.
- Choose the right platform – Once you understand cryptocurrency, you will need a platform that will allow to buy, sell and exchange bitcoins and altcoins. You can use fiat currency to buy and sell cryptocurrency.
There are two types of wallets/platforms – hardware wallet and hot wallets. Hardware wallets are immune to hackers and store your private keys offline whereas hot wallets store your keys online and make more sense if you intend on making purchases frequently. At the end of the day, you need a platform that has low exchange rates. For instance, if you wanted to exchange ETH to USDT, you should ensure that the exchange rates are minimal so that you don’t lose out on the transaction.
You also need to find a platform that is secure and user-friendly to make your journey as a beginner comfortable.
- Only invest disposable money: Since cryptocurrency is a volatile space, you should only invest in it if you’re willing to lose that money. It is a risk that you must be aware of at all times. Hardware wallets are more secure but cost money whereas online wallets carry a little bit of risk to them when it comes to security.
- Choosing the cryptocurrency: The cryptocurrency has changed since Bitcoin was released and there are well over 1600 crypto coins at last count. Selecting one can be hard. Research the company, founders and read the white papers before you make the choice. Look for coins that seem to have a real-world use case.
- Spread out your investments: Invest in more than one coins. An example of a good investment would be 40% Bitcoin, 20% Bitcoin cash, 25% ETH (Ethereum) and 15% litecoin. Don’t be swayed by what other people are doing and always use your common sense.
Apart from these 5 tips, start following major publications on cryptocurrency to evaluate the risks and rewards in cryptocurrency trading. Create Google alerts for the crypto coin you invest in to keep track of your investments. And, always remember to keep growing and learning in the cryptocurrency space.