Cryptocurrency Trading for Beginners: 5 Tips and Tricks
With crypto prices steadily climbing in spite of the pandemic, and Bitcoin’s value touching $66,000 recently, it is not surprising that keen investors will want to jump onto the crypto bandwagon. But trading in cryptos is anything but simple. Cryptocurrencies have been around for more than a decade now but people are still learning about it. Following the Bitcoin, cryptos like Ethereum, Litecoin, Bitcoin Cash, Ripple, etc have been launched along with altcoins which are Bitcoin competitors. Trading these properly will bring in good returns. So, here are some of the best-known tips and tricks to become a savvy investor in no time:
- Choose a reliable crypto trading platform: While there may be many cryptoexchanges and trading platforms out there, not all are reliable and credible. You need to choose an exchange which offers a wide range of cryptos and tokens, multiple payment methods, prioritizes security, and guarantees quick transactions. To open an account in any trusted exchange, you will need to submit KYC documents such as address and identity proof. These measures protect against frauds and keep your funds secure.
- Get information/news only from reputed sources: It is a common mistake to follow the opinions and advice from just any source. Beginners often commit this blunder, ending up with severe losses. Critics have called crypto trading a fad which will only leave you disappointed. However, if you are confident about cryptocurrencies and wish to trade these, stick to only reputed news sources which are authentic and credible. Ignore the noise and invest with confidence. No one can predict accurately every time, but a reputed source will not hang you out to dry.
- Understand that market is volatile: When you wish to trade in cryptocurrency, you need to accept volatility. The market is erratic and even your best laid plans may not yield the expected outcome. Bitcoin prices have skyrocketed and crashed several times in the past. You need to allocate your funds responsibly and smartly, investing only what you can afford to lose.
- Experiment with altcoins: Having a diversified portfolio will protect you against huge losses. So, it may be a good decision to invest in some altcoins besides putting your money into a stable crypto like Bitcoin. This ensures that even if Bitcoin prices fall, your losses will be offset by gains made through other coins. Research extensively to see which cryptos are doing better than the others and invest in them wisely.
- Keep your money secure: You should learn about the pros and cons of using hot and cold wallets. Digital wallets are needed for storing and transacting cryptos. For beginners, hot or online wallets seem to be more user-friendly and versatile. But hot wallets are susceptible to frequent hacks and thefts. Instead, using offline wallets may be safer. These can protect your money from miscreants and hackers. Whatever method of protection you choose, always stay vigilant.
Trading cryptos is not going to be a walk in the park but it does not have to be rocket science also. Use the tips mentioned above to start your journey as a trader. Remember that you will experience more losses at the beginning. You will need time and continuous learning to hone your trading skills.