Cryptocurrency trading doesn’t have to be complex in fact it can be very simple, today’s article will give you an introduction to the Cryptocurrency market and how to get started in trading cryptocurrencies. The total market capitalization of all cryptocurrencies in 2020 is estimated to be over 250 billion dollars. This is a growth of over 80% from 2018. While this is still small compared to the total market capitalization of all stock in the US, it is a significant number, seeing that the daily trading value of stocks in the US as of 2013 was less than 200 Billion.
Cryptocurrency markets are a force to reckon with. Since they were highlighted by mainstream media in 2010, this is an asset class that has continued to grow. So far, the best year in the crypto industry was 2017, when its market cap reached over USD 500 Billion.
Traders cannot ignore cryptocurrency trading as an asset class. In a recent report, it was stated that there are over 60 million crypto-traders globally. The majority of these are from the United States, Japan and South Korea.
Legacy Exchanges have started to incorporate cryptocurrency trading on their platforms. We also have exchanges that exclusively deal with cryptocurrencies. Some of the top exchanges that deal with cryptocurrency trading are Binance, Coinbase, Kraken, Poloniex and Bitstamp.
To start trading crypto, if you are a complete newbie, it would be good to watch tutorials on YouTube on how the crypto industry operates and the underlying technology behind cryptocurrencies. You can then acquaint yourself with crypto trading basics. This may include studying candlesticks, executing trades, managing risk and also cashing out your profits.
Most exchanges have tutorials for beginners on how you can trade. Simply checking their tutorial sections may give you a solid foundation before you start trading. For example, on Binance, they have an academy that guides you on all the basics of crypto and Blockchain. It is called the Binance academy. It also gives you lessons on trading strategies. All this is offered for free.
CRYPTOCURRENCY TRADING – HOW TO TRADE FIAT TO CRYPTO TRADING
Most exchanges have options on how their traders can purchase digital currency using fiat. The process has about five steps. Firstly, open an account with an exchange where you will be buying and selling your crypto. You should also verify your identity. Next, identify the Fiat currency that you would like to use. Then, proceed to deposit fiat cash through an identified payment gateway. Finally, you can convert fiat to cryptocurrencies. In some instances, you will have to identify the cryptocurrency you would like to purchase before proceeding to the fiat deposit process. There are usually numerous cryptocurrencies you can purchase, with dominant ones being BTC, ETH, BSV, and XRP.
It is important to note that since the crypto industry is highly volatile, the price you pick for a specific cryptocurrency may change even before you finalize the deposit process.
Some of the payment methods you can use to deposit cash into an exchange are Bank transfer, Use of mobile/online payment systems, use of debit and credit cards.
Fees vary from one exchange to another. However, the use of a credit card as a way of purchasing cryptocurrencies is one of the most expensive ways of purchasing cryptos. Some exchanges may charge a fee of up to 10% when using credit cards.
CRYPTOCURRENCY EXCHANGES – WHAT TO LOOK FOR AND HOW TO GET STARTED
1.Geographical area: Check if the exchange is supported within your jurisdiction. If it is not supported, it may be hard to verify your details and so making deposits and withdrawals may not be possible.
2.Security: Ensure that the Exchange is secure. Check the amount of crypto that is set aside on the hot wallet and how much is set aside in the cold wallets.
3. Pairs traded; Different platforms offer various pairs from which one can choose. It is prudent to go for exchanges that offer diversity in their trading pairs.
4.Trading Volume: You can also check the cryptocurrency trading volume within different exchanges. Trading volume is critical as it determines whether you can easily get in and out of trades.
5.Reputation: The reputation of exchange and reviews about an exchange matter. Check what users say about the exchange’s customer support, fees, deposit and withdrawal process. This should give you a rough idea about the exchange in general.
6.Exchange rates: Every cryptocurrency trading platform has a specific exchange rate, varying from one Exchange to another.
7.Payment methods: Exchange platforms will offer payment methods ranging from credit and debit cards, bank transfers, crypto-to-crypto exchange, and wire transfer, among others.
HOW TO START CRYPTOCURRENCY TRADING
To start cryptocurrency trading, you’ll need to have an account with an exchange. The next step is verifying your account. Once you are done, the next step is depositing cryptocurrency on to your account. If you do not have any cryptocurrency then you can deposit fiat through the approved payment channels. You can then proceed to the exchange and start trading in whichever pairs you may have chosen. If you have BTC as your deposit currency, then you can use this as a base currency and trade other pairs such as ETH, XRP and BSV.
You may have to check how to place trades before embarking on this as the process may at first seem daunting. However, once you get accustomed to it, you will be able to place BUY and SELL orders with ease. Some platforms like Binance have multiple interfaces that cater to different levels of traders. For example, if you are a beginner, then you can use a basic interface that is direct and easy to understand.
Some platforms allow you to trade on leverage. This is basically multiplying the amount of cryptocurrencies you would like to trade with a factor, say 3, and trading them. It can be a lucrative deal if you know what you are doing. If you are a newbie, engaging in this is not advised unless you can afford the high risk of losing money rapidly due to leverage.
Other platforms also allow for Crypto CFD trading. CFDs are complex instruments that allow you to trade on a particular asset without necessarily owning it.
How to get an online wallet.
For an exchange like Coinbase, opening an account is simple signup. Just access the exchange through their official URL and then sign up for an account. Once you login, you will be automatically assigned a wallet and will be able to access multiple coin offerings. Some of the cryptocurrencies that you can access from your account are BTC, ETH, XRP and Bitcoin Cash (BCH). It is important to note that Coinbase has multiple interfaces and products, so if you may want to access a professional platform for trading in cryptocurrency, then you can be redirected from the basic interface.
Get a general understanding of the crypto-market and trading strategies.
Acquaint yourself with trading tutorials or even check the exchange itself if it has a section where you can learn trading basics. Most exchanges have sections that allow traders to learn more about trading where they offer lessons on trading strategies.
UNDERSTANDING HOW TO PROTECT YOUR CRYPTOCURRENCY
- Some of the key highlights in how to protect your cryptocurrency are: Always ensure that you use a safe and secure internet connection. Do not click on links that you suspect or are not sure of as this may lead you to unknown sites and you may end up losing your money and digital currencies.
- If possible, try to store your crypto in a cold wallet.
- Make sure that you keep your private keys safe-preferably offline.
- If you happen to have an online wallet, make sure that you use a strong password.
- Have multiple wallets. Once for day to day transactions and some others that you rarely access unless when making deposits or withdrawals.
HOT STORAGE VS. COLD STORAGE
Hot wallets are called hot because they are connected to the internet while cold wallets are offline. Examples of hot wallets are the wallets that are offered by exchanges and mobile apps.
Cold wallets include paper wallets and hardware wallet solutions.
Both wallets have their own pros and cons. When it comes to accessibility, it is easier to access your funds from hot storage in the short term as compared to cold storage. However, cold storage is considered safer.
Also, hot storage stores quite a large amount of data compared to cold storage. This is due to the computerized cloud storage that may allow unlimited storage space compared to a hard drive.
CRYPTOCURRENCY STORAGE SOLUTIONS
There are three main brands of hardware wallet devices: Trezor, keep key, and Ledger. Trezor was the first hardware device produced in large numbers. It was known because of its ability to recover the device’s content if the device was stolen. Also, the device would automatically generate new public addresses.
A paper wallet is also a form of cold wallet that allows you to store your private key on paper. This is a very effective method of bitcoin storage. As long as you have access to your private key on paper, you can always store your BTC on this wallet.
Other storage solutions are exchange wallets, mobile wallets and desktop wallets. These are generally considered to be hot wallets as they can be easily accessed online.
CRYPTOCURRENCY TRADING: CRYPTO-TO-CRYPTO
Crypto trading is basically trading cryptocurrencies with other cryptocurrencies. This may involve BTC or USDT as a base currency and trading it alongside other trading pairs like BTC/ETH, BTC/XRP and BTC/BSV. You are basically looking at the value of the other currency in relation to the base currency. Binance is one of the largest cryptocurrency trading exchanges that support crypto to crypto trading. The platform supports over 150 coins. Some of the top listed cryptos you can trade on this platform are BTC, ETH, USDT, and the platforms native token, BNB.
WHERE TO TRADE CRYPTOCURRENCY?
This exchange is a large trading platform based in the United States. This Cryptocurrency Exchange supports bitcoin and other digital coins such as Bitcoin Cash, Ethereum, and Litecoin. To transact with Coinbase, you will need to open a trading account with them and link your bank account to it. This will enable you to deposit fiat currency and buy or sell crypto. More so, Coinbase charges a 1% fee on US transactions while doing a bank transfer. Their wallet can be accessed either through the web app or through a phone. It is also very secure since it uses two-factor authentication. Finally, they store 98% of the digital assets offline.
CRYPTOCURRENCY TRADING: TECHNICAL ANALYSIS AND FUNDAMENTAL ANALYSIS
Two significant types of analysis help one to interpret the market trend correctly. We have technical analysis and fundamental analysis
In essence, technical analysis, as the word suggests, looks at past data and real statistics such us movement and volume of the crypto in question. The data will help in studying the previous trends and predict the price movements of an asset. On the other hand, Fundamental analysis is a general analysis of all the things that affect the final value of an asset.
Technical analysis is the process of predicting a price movement using historical price charts and statistics. This involves looking at the previous chart formations during a period of time, say daily, weekly, monthly or annually. From these previous formations, you can get patterns that can help in predicting future price movements,
Identifying previous patterns on price movements of a digital asset such as BTC is a key component for any trader as these price movements are cyclical. Traders use this form of analysis to identify areas of support and resistance from where they can make their trading decisions.
HOW TO USE THE MOST POPULAR TECHNICAL INDICATORS
This is a technical indicator that looks at recent price movements to know whether the asset has been overbought or oversold. The indicator hovers between 0-100. In the event that the RSI is over 70, then it implies that the asset has been overbought and it may start falling in price. In the event that the RSI is below 30, then it implies that that asset has been oversold and it may reverse in price and start rising.
Volume analysis is basically analyzing the number of units of an asset that have been sold or bought at a particular time. Traders can look at this to know whether the price may go up or come down. If the price continues increasing and the volume continues to increase, this could point that there may be a continuing bullish trend or that a reversal may be coming soon.
Hopefully, you have enjoyed today’s article. Thanks for reading! Have a fantastic day! Live from the Platinum Crypto Trading Floor.
Earnings Disclaimer: The information you’ll find in this article is for educational purpose only. We make no promise or guarantee of income or earnings. You have to do some work, use your best judgement and perform due diligence before using the information in this article. Your success is still up to you. Nothing in this article is intended to be professional, legal, financial and/or accounting advice. Always seek competent advice from professionals in these matters. If you break the city or other local laws, we will not be held liable for any damages you incur.