You may have probably heard of the term “Cryptocurrency.” But what is it? Well, simply put, it is a digital currency. You can even pay for different services in cryptocurrency. Yes, that includes paying bills as well – imagine taking care of the Spectrum billing with your crypto assets! However, the provider doesn’t offer that facility yet.
Another thing you can do with your crypto assets is to trade them. You can earn a pretty decent amount by doing it. The reason why so many investors like to trade crypto is that the market is highly volatile. It’s all about the timing. If you master the timing, trading cryptocurrencies can continue to give you good returns.
Approaching the Crypto Market in Two Ways
Cryptocurrency traders approach the market in two ways; they either accumulate crypto assets or trade them consistently to make a profit. When the market is in its bull cycle, the value of your assets can easily increase. However, you need to know that it is pretty difficult for the value of Bitcoin to increase. Why? Well, as stated earlier, the crypto market is quite unpredictable. Hence, it’s not a surprise to see the value of Bitcoin fluctuate rapidly. So, what should you do? Trade altcoins against it!
Since the crypto market is volatile, traders can lose money just as easily as they earn. Therefore, it is always suggested to proceed with caution and to calm your nerves whenever the market tanks. The best strategy in such a situation is to HODL or Hold On for Dear Life your crypto assets and not to sell for a loss! But do this only if you fail to time the market.
How to Trade Cryptocurrency
There are different steps one should consider before trading cryptocurrency. It is only going to help you survive the unforgiving market. Here are six steps you should follow:
1. Make a Crypto Brokerage Account
The first thing you need to do before thinking about trading cryptocurrency is to open your brokerage account. There are different brokerages in the market that you can try, such as eToro, Gemini, and Coinbase. All of these platforms have a user-friendly platform, allowing users to trade easily.
If you are interested in creating your account, you will have to provide your personal information to the brokerage. This can include your date of birth, address, social security number, and email address.
2. Add Funds to Your Account
Once you have created your brokerage account, the next step is to add funds. This can be done either by wire transfer or through a credit/debit card. If you are going for a wire transfer, then connect your bank account to the brokerage. It is the cheapest option. And it’s free on Gemini and Coinbase.
3. Select a Crypto to Invest Your Funds
This is the most fun part and also riskier. You should be careful where you invest. Most traders like to buy either Ethereum or Bitcoin. This is because these two coins move predictably as compared to the rest. So, if you are good with technical indicators, trading them should be a piece of cake for you.
There are some investors who like to take a bit of risk. And so, they invest in smaller altcoins. Although there is nothing wrong with that, you have to remember that going for them means you are exposing yourself to greater risk. But the reward will be equally fruitful. This is because smaller altcoins have the tendency to explode. Some of them have given more than 1000% return within a matter of months.
4. Think of a Strategy
After you have invested your funds in cryptocurrency, then it’s game on! Given the unpredictable nature of the market, you should be ready for absolutely anything. Many traders think of different strategies to gain a profit. For instance, they can resort to trading indicators and use them to make their moves. However, if you are new to the crypto space, it is recommended to get a trading course to tackle whatever the market throws at you.
Most of the traders use Elliot Wave Theory to make decisions. This strategy defines the psychology behind the market sentiment. Hence, it can work like magic for speculative assets like cryptocurrencies.
5. Consider Automated Crypto Trading
When you cannot think of a trading strategy, why not let bots do the work for you? Yes, you read that right! You can consider trying automated crypto trading with a platform that allows it. The trading bots will use the strategy on your behalf and give you the best result that will be according to your investment goals. This will allow you to make money quickly.
Trading crypto assets is a risky business. Therefore, one must be extremely cautious. Any wrong move can cost you your money. And since the market operates at a fast pace, the risk of losing your cryptos is quite high. If you think crypto trading is not for you, you can always invest in the coins you trust like Solana, ADA, Luna, and DOT and hold them from mid to long term. Once their value increases, you can simply sell them for a good profit!