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7 Tips for Getting Started with Cryptocurrency Trading

Bitcoin is the oldest cryptocurrency and continues to be the most substantial coin, with a market capitalization of $325B. According of March 2022, there were over 40 million Bitcoin addresses with balances and a total of 85 million cryptocurrency addresses including all altcoins addresses.

Most of these wallets are used in cryptocurrency trading, among the drivers of crypto adoption. It is an exciting venture and can be pretty rewarding. However, prospective traders should note that it can still be daunting.

Research and Update Your Knowledge

In recent years there have been several articles on cryptocurrencies and the success of crypto trading. Everything may look all good and straightforward but don’t get it wrong. It is more likely to make a significant loss if you rush to stake your funds. 

Before you can even decide to trade in digital assets, make sure you understand the theory behind digital currencies or at least the basics. Try to get a complete overview of cryptocurrency, including common terminologies and trading terms

Furthermore, learning about the different cryptocurrencies, the leading ones, and each coin’s trends is essential. Finally, it would be beneficial to understand the technical aspects of cryptocurrencies. This will prove immensely helpful in the end as you get started.

Create a New Wallet

Cryptocurrencies are not tangible sources of money. They do not exist in a physical sense. Traders never actually see or hold the assets in their hands. Everything happens virtually, and you only need a digital wallet

Each wallet has keys that you will use to control the assets held in the wallet. Individuals use them to store and trade their holdings. There are different wallets, but generally, they can be classified as hot and cold wallets.

Hot wallets are usually found online, so you need an internet connection. They are the easiest to use, but the downside is that they are prone to hacking. On the other side, cold wallets do not require an internet connection. Instead, individuals can print the keys to their wallets or scan a QR code. 

These are offline wallets and are thus much safer since they are not susceptible to hacking. However, storing your cryptocurrency holdings in cold wallets would be much better than having just a tiny proportion in hot wallets.

Find a Reputable Exchange Platform

Once you have your wallet, how do you trade without any cryptocurrency holdings? Exchange platforms will help you obtain your first digital coins. There are many exchange platforms in the market, so you need to be careful when choosing one. 

For safety reasons, it is recommended to pay higher fees than scammer platforms with lower fees. In addition, some platforms have wallets that support different cryptocurrencies, so you may not even have to create your wallet first. 

Sign up and exchange your fiat currency for its crypto worth. Therefore, you should research the coins supported by the platform first and see whether the platform supports the coins you want to trade and the fiat currency you are exchanging.

Create a Portfolio

The cryptocurrency industry is highly volatile, making it a significant risk for your stake. However, you can create a portfolio to spread the risks. Developing one may not be easy for beginners, but you can always find helpful portfolio development tips.

Select a few best-performing coins and include them in your portfolio. That way, you can make minor adjustments to each of them while monitoring them closely. If one of the coins goes down by any chance, you will not have lost everything.

Select and Automate Your Strategy

You can use many cryptocurrency trading strategies, and the choice depends entirely on you. Standard techniques include investing in the tokenized crypto fund, staking coins, portfolio indexing, rebalancing, and scalping.

In any case, no strategy guarantees a profit. Further, in most cases, crypto trading will require you to monitor the market all through, which can be pretty tiresome. Therefore, it would help if you select your best trading strategy and automate the process. 

Start Small

It is not advised to put all your eggs in one basket, and still, not a good idea to distribute all your funds in different cryptocurrencies. No matter how good your portfolio is or how perfect the strategy is, cryptocurrencies’ volatility is still in play. 

The value can shoot or drop massively within minutes, which could mean the end for you. Therefore, always invest what you are ready to lose. Besides, you are just starting cryptocurrency trading, so there is still much to learn. 

Investing little by little will help you understand the industry as you get through the wins and losses.

Be Patient and Avoid FOMO

If your interest in crypto trading is motivated by other traders’ success stories, you could easily fall into the trap of FOMO. FOMO refers to the fear of missing out. 

Some people giving testimonies could even be con artists trying to lure you into a particular trading platform. It is a common trick whereby individuals advertise a specific coin and how promising it is. 

The aim is to instill the fear of missing out on their victims. Crypto trading may be lucrative, but most probably, it won’t make you an overnight millionaire. So invest small and be patient to avoid falling victim to scammers.

Conclusion 

Cryptocurrencies are doing a lot for the world, but one thing that will always be uncertain is crypto traders’ outcomes. It takes a lot for a beginner to understand these digital coins. 

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The technology behind them, blockchain, is not one that an average person will easily understand. However, this does not mean crypto trading remains for the elite group. The seven tips above could be all you need to start trading with cryptocurrency.

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