Anyone who is looking to become a part of the crypto trading world must first understand what cryptocurrencies are and how they work. Having basic knowledge about the subject before getting into it can really help you trade like a professional from the beginning.
When we look at cryptocurrencies, we realize that they are among the finest creations of the digital world. There has never been anything created like crypto assets and it isn’t even surprising to see why they are increasing in popularity by the day.
Since the introduction of Bitcoin in 2009, more than 1600 different digital coins have been created. While not all of them garnered the same popularity as Bitcoin, they certainly helped raise awareness about what digital currencies are, how they work and what they can be used for.
Over the years, as people became aware of the technology that underpins digital currencies, their acceptance on a global level has surged upwards.
Today, cryptocurrencies are not only used as a medium for online payment, but they are also used as valuable assets for trading.
The Basics of Trading Cryptocurrencies
Bitcoin was the first ever digital currency to be created. It was founded on blockchain technology and introduced to the world by Satoshi Nakamoto. At that time, Bitcoin was only used as a payment system. Since there were no other digital currencies available at that time, it wasn’t possible for anyone to trade Bitcoins. Therefore, investors also didn’t have any interest in Bitcoins.
But, after a couple of years, a number of other digital coins were created which made trading possible. People started buying and selling digital coins hoping that the coin they were investing in would increase in value.
When trading first started, people would need a cryptocurrency exchange to buy and sell digital currencies. Actually, an exchange is the place where buyers can be matched with sellers and where successful transactions can take place. For example, if you have Bitcoin and want to exchange it for Litecoin, then you will need to sign up with an exchange that will match you with someone who is looking to exchange Litecoin with Bitcoin.
Cryptocurrency exchanges charge a small fee for successful transactions taking place between buyers and sellers. In fact, they facilitate hundreds of thousands of transactions on a daily basis allowing billions of dollars’ worth of currencies to be exchanged. Many people who were the early adopters of digital currencies have already made a fortune. There are also many people who have taken up digital currency trading as a full-time business.
Did you know?
Traders use a variety of tools to help them execute successful trades. This also includes making use of software systems which scan the crypto markets and send signals to traders, alerting them about the right time to trade. Trading tools have become really popular over the years because they help traders optimize the gains and earnings.
How To Choose The Right Trading Platform?
After you have gained a good understanding of the crypto industry, it is time for you to start investing in crypto assets. But, the first thing that you need to do in order to buy and sell digital coins is to choose the right trading platform.
Today, there are numerous platforms available which you can use to trade cryptocurrencies. If you are a complete beginner, you will have to buy digital coins using fiat currency such as dollars or pounds. But if you already have coins such as bitcoin, you can use the exchange to trade other digital coins such as Ethereum, Litecoin, Dash, etc. With so many different platforms available, you will be able to find one that caters to your specific trading needs.
However, it is crucial for you to pick the right trading platform to ensure that you have a fruitful and rewarding trading experience. So, what are the things that you need to look for when choosing a trading platform? Let’s take a look.
Availability of Coin Pairs – some exchanges offer just a few coins, while others offer a wide variety of coins. So when you start, always look for an exchange which offers more diversity. This will give you more coin options to buy and sell.
Liquidity – always look for a platform with high liquidity because this is where you will be able to connect to a large number of buyers and sellers. High liquidity will also ensure that you get better price on your coins and faster processing of transactions.
Security Measures – the safety of your coins and funds is important and therefore you have to ensure that the exchange you are going to sign up with offers a high level of security. The minimum security level that you should be willing to settle for includes cold storage, 2-factor authentication, email encryption and transaction verification.
Support Service – crypto trading takes place in a fast-paced environment which can give traders, especially new ones a great deal of anxiety and nervousness. You may also encounter issues related to verification, withdrawals, deposits and so on. Therefore, it is crucial that the platform offers responsive and quick customer support service. High quality support service will ensure that your issues are resolved quickly and that you have a seamless trading experience.
Transaction Fee – if you are planning to trade constantly, you must look for a platform that charges low transaction fees. It is important that you compare the fees between different platforms because when you pay less for the transactions, you will be able to increase your profitability on each trade.
The Most Important Crypto Coins
Since its release in 2009, Bitcoin still remains the leader of cryptocurrencies considering its user base, popularity and market capitalization. But, there are other digital coins as well which have performed incredibly well and can be used for trading. Some of the other valuable digital currencies include Ethereum, Ripple, Litecoin, ZCash, Dash, Monero, Bitcoin Cash, NEO, Cardano and EOS.
If we go by the trend, we can safely assume that digital assets are here to stay. While some of them may crash in time to come, some will definitely emerge as market leaders and create better investment opportunities for traders.
Not many people know, but cryptocurrencies were initially introduced as a peer-to-peer electronic cash system. The first digital currency which was Bitcoin was not created as a currency, but as a payment system that was decentralized and would prevent double-spending.
Mistakes to Avoid
One of the most common mistakes that traders make is that they trade too often. They think that in order to gain more, they need to trade more. They don’t realize that every trade they execute requires proper planning and research. It is crucial to observe the market before making investments because if you don’t make wise decisions, you will end up losing your investment capital fairly quickly.
Another common mistake is that they don’t use any strategy at all. remember, the digital currency market is unpredictable and if you step in without a strategy, you will lose your investment. Using strategies that have been proven to be successful will help you plan your trades and execute only the profitable ones.
Expecting unrealistic results can prove to be very dangerous, but sadly a large number of traders enter the online digital currency trading arena with expectations that are not feasible. They believe that they can become a millionaire overnight. It is true that some people have made a fortune out of trading digital assets, but these people were the early adopters and they invested at a time when digital currencies were not so popular. Today, times have changed and trading has become riskier than it ever was. The markets have become unpredictable due to high volatility and sadly, people tend to lose more than they gain. So if you are planning to become a part of this trading world, it is important that you come with reasonable expectations. You should expect decent and reasonable returns from your investments.
Some Other Trading Tips
Regardless of how hard you try to monitor the changing conditions in the marketplace, it will be challenging for you to generate consistent returns. This is the reason why trading robots are growing in popularity these days.
Trading robots are exceptional tools which monitor and analyse the markets consistently and provides the best opportunities for you to trade. They eliminate irrational errors and emotions and therefore are able to help traders enhance their results and gains. Trading robots function on the basis of algorithms and technology which allow them to make trading decisions with precision. Even when the markets are volatile, they help traders avoid common mistakes, make smart decisions and execute winning trades.