Cryptocurrencies are quite popular among Gen Z, and the industry has experienced exponential growth in recent years. The sudden rush of investors into the crypto market has flourished the industry and motivated others to begin their trading journey in crypto.
You must have observed that some of your friends have started trading, and a few of them seem quite serious about it. Along that line, many start trading or investing in crypto under peer pressure, which leads to a loss in the first few trades and demotivates them to continue trading.
What they miss is understanding the basics of the market and the preparations before commencing their trading journey. At first, the trader has to be ready to lose all their funds, as there is no guarantee of profit with a trade, which does carry high risk. The same goes for investing.
Understanding the basics of the crypto market and gaining some knowledge about cryptocurrency can minimize the risk and help you understand market behavior. The more you learn, the more it will help you trade effectively and apply proper strategies to execute a trade.
Let’s go through a brief guide to the basics of crypto trading and how a beginner can be a successful trader.
Trading is a practice used by people for a brief period, and it is used in our day-to-day lives. The same concept is used in the crypto market. Just like in the stock market, traders purchase shares, and when there is a time that they can gain a good profit, they sell them.
The traders in the crypto market, which is a financial market, can trade financial instruments. The trader can trade anything, starting with currency, assets, bonds, or more. Trading mostly revolves around buying an asset, holding it for a short period, and selling it to get a profitable outcome.
People do mix trading with the concept of investing, but trading differs from investing, and how they differ from each other we will discuss further in the next heading.
Trading and investment are quite different from each other, as both methods are placed according to the time period. Investing is a concept where the investor buys an asset and holds it for a longer period; they have to turn a blind eye to short-term fluctuation. The goal of an investor is to gain a considerable amount of profit, like getting nearly double the value of what was purchased.
Where trading is practiced by traders to gain profit from short-term fluctuations, which makes traders stay updated on market trends, which can help them understand market behavior. In trading, understanding market trends can help you excel in cryptocurrency trading, as short-term price fluctuation plays an important role in whether a trader can book a good profit or lose their assets. If you understand market trends and short-term price trends, as a trader, you can easily buy at low prices and sell at high prices.
If you are new to crypto trading, you should understand the basics of Crypto trading and know how it works. But as a beginner, you have to follow a few steps to start crypto trading. Listed below are the steps for crypto trading:
Exchange Platforms are the medium through which you can buy a currency or asset and sell it to a trader. Choosing a good exchange platform is essential because there are many exchanges where traders and investors are defrauded and lose most of their funds.
As a beginner, it will be a wise decision to choose a reputable exchange platform that has a good user base and is quite popular among traders.
Funding your account is the next step after creating your trading account. You are a beginner, so start with small deposits. You can easily deposit your money using various payment options, like debit cards. Out of all the options, a wire transfer can be the cheapest option, as you will be charged low additional fees.
Choosing a cryptocurrency can be a very easy task or a very tough one because most newcomers invest in popular currencies like Bitcoin and Ethereum, which is a good thing, but they avoid the research part. Other groups directly invest in coins that are overhyped and end up being victims of another cryptocurrency scam. You should always thoroughly research and choose your desired cryptocurrency where you see scope for growth.
Strategy is the map for your trading journey; you need a method and proper planning to make a profitable trade. Without any strategies, you can hardly sustain yourself in the market, but with the help of strategies, you can predict the moments of the market and achieve high profits in cryptocurrency trading.
With proper strategy, you can use technical indicators, technical analysis, and research to be a successful trader and earn high profits.
A wallet is a fundamental part of your trading journey. After executing a trade, you have to store your currency in a safe place. For that security, you’ll have a wallet in the crypto world where you can store your currencies and assets, and you’ll have a private key to protect it (which is not recoverable).
There are two types of wallets, one is software, which is somewhat vulnerable to hacking and fraud, but hardware wallets are highly secured wallets.
As mentioned above, if you want to pace your growth in the trading market, you have to adopt a strategy that suits your style. But never follow some successful traders blindly, as they work according to their comfort and style, and their trading strategy may not suit you. So do thorough market research, understand all the pros and cons of the strategies, and choose the perfect one wisely. Listed below are the active trading strategies.
As the name suggests, the Day trading strategy keeps the trader busy during the day as the trader opens and exits the trade during the same day, which keeps the trader away from the overnight market volatility.
The trader does need technical indicators, which help them observe market behavior, identify market trends, and trade accordingly. Most of the time, the trader enters the position and, after making a profit in a few hours, exits the trade immediately.
Scalping is quite similar to day trading, but here the trader enters and exits the position in a few minutes or seconds. Many pro traders practice this trading strategy, as their prime goal is to book as much profit as possible in such short trades. In the beginning, the profit gained from scalping seems less, but if we calculate the overall profit, it is quite significant.
Most experts consider that the best time to practice this strategy is when the market is super busy, as there are high chances of traders gaining a good profit.
Position trading is one of the strategies where a trader holds their trade for a longer period and waits for a significant period to avoid all the minor fluctuations in the market. Traders properly follow all weekly and monthly price charts, evaluating market trends and analyzing market behavior.
In these strategies, traders are not much affected by minor market fluctuations, but a significant change in market behavior can greatly affect their trade. Trend trading is another name for this style of trading.
The swing trading strategy is adapted by traders who are quite busy with their work lives and cannot continue to stay active all the time. In this strategy, traders hold their position for a longer period; on average, traders hold their position for 1 to 30 days.
Here, traders are not worried about small market fluctuations, especially with daily ups and downs. Still, checking the daily updates and keeping up with market trends can help traders gain optimum profits.
Winding up the article, it was all about the basics of Crypto trading, which I hope will be helpful to you as you begin your trading career. The crypto market is full of risks; you have to be focused and open to learning every time. A small mistake or loss can help you climb the ladder of success. The most important thing about being a trader is that you have to do your own research, from choosing an exchange platform to choosing a currency.
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