If you’ve heard about cryptocurrencies and you’re looking for a guide on how to trade, then you’ve come to the right place. This article consists of information about cryptocurrency trading for beginners. Here, you as our reader will know about the basics of crypto trading, as well as a short introduction to cryptocurrencies, how cryptocurrency trading works, its advantages, and a short introduction on how you can start trading. After you’re done reading about the fundamentals, you may also have access to a list containing the top brokers we recommend for beginner traders.
Before delving right into cryptocurrency trading, it’s important to understand what cryptocurrency is first.
The term “cryptocurrencies” is the name used for digital currencies. Bitcoin is the most popular cryptocurrency, partly because it was the first one released in 2009. The reason why cryptocurrencies like Bitcoin are well-received by investors is because it uses blockchain technology, making it one of the most secure currencies in the market.
The decentralized technology used by cryptocurrencies allows users to make secure transactions online. It also doesn’t require users to visit a bank or use their real names for these transactions. The blockchain, which is also a public ledger, keeps an updated log of all transactions by currency holders.
In the past decade, more than 900 cryptocurrencies have shown up on the Internet. Some of the most popular are Ethereum, Litecoin, Stratis, and Bitcoin. Cryptocurrency trading is similar to Forex, where these cryptocurrencies are invested, traded, and bought in the market. Think of it like the usual Forex, but allows the use of Bitcoin and other cryptocurrencies rather than only using USD, GBP, and many other currencies.
Crypto trading doesn’t require the use of a mining hardware, nor does it require users to invest in Bitcoin cloud mining (which, by the way, comes with a lot of risks). Users can start by signing up in cryptocurrency trading platforms, which are basically the site where online currency exchanges occur.
One of the reasons why trading with cryptocurrencies is continuously gaining popularity is because of the fact that cryptocurrencies have become a popular and conventional investment option. On the other hand, cryptocurrencies are generated using a process called mining, and uses a decentralized system to handle peer-to-peer transactions, making it secure to invest and trade.
More importantly, cryptocurrencies use the blockchain technology, in which the cryptocurrencies themselves create digital ledgers which authenticate and record all transactions that have occurred in one particular cryptocurrency. These ledgers prevent people from spending a single cryptocurrency twice, making it even more secure and fraud-proof.
Some prominent platforms for trading cryptocurrency are Bitstamp, Coinbase, BTC-e, and many more. More information on cryptocurrency trading will be explained in the following sections.
When to Trade with Cryptocurrencies?
Investing and trading are two different activities in the cryptocurrency market. Investors are users who spend real money to buy a cryptocurrency in the hopes of its value rising in the next few months. A trader, on the other hand, exchanges cryptocurrencies for the purpose of receiving a different type of cryptocurrency.
While it’s true that those who have started investing and trading early on have mostly become millionaires by now, it’s not too late for you to gain profit from this if you’re just about to start. Before you start trading however, there are things that you first need to understand before you get right into buying and selling cryptocurrencies. One of those is technical analysis.
Technical analysis involves observing and studying the rise and fall of the prices of cryptocurrencies in the market. By doing so, you get to spot the most profitable opportunities to trade. Technical analysis helps you to avoid making mistakes such as selling when the price falls and buying when the market price starts to rise, as most inexperienced traders would do.
In technical analysis, there are factors that help to predict when it’s time to trade your cryptocurrencies. Indicators can be found in the candlestick charts that people often see in their bitcoin trading platform. By studying these charts and by practicing predicting when the prices rise and fall, you’d be able to tell when it’s the best time to trade or not. Trends, although not recommended 100% for beginners, still have an important role to play in determining patterns in the charts based on the falls and rises.
Other things you should watch out for are volumes (amount of cryptocurrencies being traded); moving averages (helps to see price trends better); patterns, and a lot more. For the serious trader who wants to excel in this industry, then these elements are of utmost important. However, for beginners, signing up for a broker might be a more viable choice.
In addition to learn about technical analysis, it’s also important to read about and stay up-to-date with news on the cryptocurrency market, as well as sticking to fundamental information about cryptocurrencies. The bottom line here is that while technical analysis is not a strategy per se, it is a tool which will help you identify gainful and profitable opportunities for you as a trader.
If you’re at a loss as to how and where you can start trading, there are guides available online that contains helpful information for beginner traders. At TradingToplists.com, there are a number of brokers you can sign up with. There are brokers who offer video tutorials, guides, and even demo accounts to help you become familiar with the process before diving right into actual trading. These are a just a click away, and this way you’d be able to form a sturdy foundation before you take a risk.
Trading with Cryptocurrencies Explained
As mentioned previously, trading cryptocurrencies means that you exchange one coin for another. In Forex, for example, you exchange one currency for another currency while staying within its market value. In crypto trading, you can exchange your Bitcoin or Litecoin for USD or GBP or vice versa. This is how people involve themselves in the cryptocurrency market without having to mine it themselves.
The cryptocurrency market is open 24/7 compared to the stock market which closes at certain times of the day. This way, you’ll get more opportunities to monitor the rise and fall of prices, especially if you’re planning to trade anytime soon. In learning bitcoin trading how to, it’s important to first familiarize yourself with the process before plunging right in. This ensures that you’d be able to build a good, strong foundation of knowledge to minimize risks and to maximize profit opportunities. The following is what cryptocurrency trading typically looks like.