Sirwin
Sirwin
CoinsFM

Cryptocurrency Trading: How to Start?


So, you’ve finally decided to start your cryptocurrency trading career, and you’re already thinking about how you’re going to spend your millions. There’s no doubt that cryptocurrency is an exciting market for investors, but unfortunately, success doesn’t happen as easy as that.

First you need a good solid trading platform like CoinsFM.com, then some schooling :-)

In all seriousness, cryptocurrency trading can be risky business. Yes, it’s true — some people have made lots of money. However, they have had training. That’s what we’ll start with here today.

For those of you who are interested in learning about cryptocurrency trading, I’m here to help you get started. This beginners guide is going to show you everything you need to know.

First, I am going to give you some background information on when cryptocurrency trading began. Next, I will help you understand the difference between short-term and long-term cryptocurrency trading, and both of their advantages and disadvantages.

After that, we will tell you the important things that you need to be careful of before you start trading.

Finally, I will show you how to trade! 

 

Cryptocurrency Trading

As you must already know, Bitcoin became the first ever cryptocurrency when it was released in 2009. However, with only one coin available, you couldn’t trade it with any other cryptocurrency.

It wasn’t until a few years later when more and more cryptocurrencies were created that people started trading them. The idea is really simple. You trade one cryptocurrency for another, with the hope that the coin you buy increases in value.

This concept is the same as the real-world stock exchange.

When people trade, they need to use a cryptocurrency exchange. This is so buyers and sellers can be matched. For example, if you are holding Bitcoin and want to sell it for Ethereum, an exchange will help you find an Ethereum seller to trade with.

Exchanges will charge you a fee for doing this, which normally costs around 0.1% for each trade. Cryptocurrency trading is now really popular, with billions of dollar’s worth of coins being bought and sold every day.

The “lucky” ones have made a serious amount of money doing this, and there are lots of people that are now trading cryptocurrency as a full-time job.

However, experienced traders use lots of different tools to help them pick the right coins at the right time. This can include software that helps investors analyze previous pricing trends etc.

Nevertheless, everyone must start somewhere! As long as you are not trading more than you can afford to lose, there is no harm in giving it a try.

Now, I will now explain what short-term trading is, along with its advantages and disadvantages.

 

Short-Term Trading

Short-term trading is where you buy a cryptocurrency but only plan to hold on to it for a short amount of time. This can be anything from minutes, hours, days, weeks or even a few months!

You might buy a certain cryptocurrency because you think it will rise in price in the short term. In which case, you would then sell it for a quick profit if you thought the price was going to drop again!

Let’s look at some of the advantages of short-term trading.

 

Advantages

The main advantage of short-term cryptocurrency trading is that it offers a really good opportunity to make high percentage gains. Unlike fiat currency markets, where prices usually don’t move by more than 1% each day, cryptocurrency prices can almost double overnight!

Now that cryptocurrencies have become so popular, there are now more than 1,500 different cryptocurrencies to trade. Which means one thing — more opportunities to make huge profits. Not only that, though, but there are large trading volumes for lots of coins.

Large trading volumes are important as it means you will always find a buyer or seller! It simply means that a high amount of currency is flowing in and out of that cryptocurrency.

 

Disadvantages

As the cryptocurrency markets are so volatile, the prices can change very quickly. This means that if you want to perform short-term crypto trading, you will need to spend a lot of time analysing the markets.

It’s super important to keep in control of your emotions — one thing you will learn when short-term trading is that you don’t always win. It can be very stressful when prices move differently to how you had hoped.

So, learning to accept losses is a big part of cryptocurrency trading. Nobody makes profits 100% of the time!

Short term cryptocurrency traders look for small gains in small price movements, so you will need to have quite a good analysis ability. This means being able to read trading charts and graphs. Which, if you are a beginner, can take a little while to learn.

Another disadvantage of short-term trading is that, for you to see good returns, you must make quite a large investment. Which is something that most of you beginners might not feel comfortable with.

 

Long-term trading

Have you ever heard the word “HODL”? Well, if not, then we’ll assume you’re completely new to the crypto space! No, it’s not a word you’ll find in the dictionary, but you’ll certainly find it in crypto forums and community chat groups!

“HODL” is a slang word meaning to hold a cryptocurrency long term rather than selling it. Its actual meaning is “Hold On for Dear Life”. Usually, long-term crypto trading means to hold a coin for one year or more.

The idea is that, although there will always be volatility, the price should increase in a large amount over the long term.

A great example of this would be the lucky investors who bought Bitcoin in 2011 when it was just $0.35. If they held on to it until late 2017, they could have sold their coins for almost $20,000 each! That’s over 57,000X your initial investment!

 

Advantages

One of the main advantages of long-term cryptocurrency trading is that it’s easy and requires a little amount of time. You don’t need to understand complex trading charts or graphs as you’re simply looking to hold your coin for the long term.

Unlike short-term trading, where you need to constantly spend time checking the prices of cryptocurrencies, you can do it in your spare time. It’s simple, once you have bought your coin, you don’t need to do anything other than wait!

Another good advantage of long-term cryptocurrency trading is that you don’t need lots of money to get started. You can buy small amounts whenever you have some spare money, and let it grow over a long period of time.

This also allows you to avoid the stresses of market volatility, as you don’t need to worry about short-term movements in price.

 

Disadvantages

One disadvantage of long-term cryptocurrency trading is that you might miss a good opportunity to make quick short-term gains.

Sometimes coins rise in value really quickly, only to fall straight back down. Short term traders will notice this and can make a quick profit.

Another disadvantage is that because you aren’t spending time analysing the market (as much as a short-term trader), you could miss some bad news. If there is bad news released that could affect the price of your cryptocurrency (such as regulations), the price could fall and never rise again.

So, just make sure you are keeping on top of cryptocurrency news to avoid this from happening. Look for a platform with a great Education Programme like CoinsFM.com

More to come in this series...

How do you rate this article?

0


Weyland Huffington
Weyland Huffington

Crypto fanatic


cryptotradingnews2020
cryptotradingnews2020

All the hottest news from around the globe on Crypto Currencies, Trading platforms, buying Crypto, Investing in Crypto and much more

Send a $0.01 microtip in crypto to the author, and earn yourself as you read!

20% to author / 80% to me.
We pay the tips from our rewards pool.