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Cryptocurrency is a mode of payment that circulates without interference from central monetary authorities such as banks and governments. While they’re often used for investment, cryptocurrencies can also be traded for goods and services. You can trade in cryptocurrencies if you aim to speculate on the price without owning the asset.
Cryptocurrency trading is ideal if you don’t want a maximum deposit limit, pay deposit or withdrawal fees, want multiple exchange exposure from one account, or enjoy tax benefits. You also get to enjoy cryptocurrency volatility, 24/7 trading, improved liquidity, ability to short or long sell, leveraged exposure, and fast account opening. Here’s how to start trading cryptocurrency.
1. Choose a cryptocurrency exchange
A cryptocurrency exchange is a platform that facilitates cryptocurrency trading. It acts as an intermediary between sellers and buyers. Cryptocurrency exchanges are user-friendly, reliable, promote user anonymity, prevent market manipulation and mitigate hacking risk. You can choose to trade on websites or mobile apps such as the Netcoins App.
When choosing a crypto exchange, consider factors like whether they offer leverage or derivatives, the order types they allow, and how seamlessly they can integrate with crypto trading bots. You should also consider fund security, the number of cryptocurrencies available, transaction fees, and the complexity of trading on the platform.
2. Fund your account
Upon identifying the ideal cryptocurrency trading platform and opening an account with them, you’ll need to fund your account to start buying and selling cryptos. You can use a bank wire transfer, online bill payment, or use your debit card.
3. Choose a cryptocurrency to trade
With so many cryptos in the market, you may find it challenging to choose one to trade. Do independent research and focus your attention on the market and circulation cap. Look at the crypto’s performance history and its stability. When picking a cryptocurrency to trade, determine your risk level and consider diversifying your investment to strengthen your portfolio by investing in two or more stable digital coins.
Look out for potential (ICO Initial Coin Offerings) offerings as they need you to depend on your understanding. Active digital currencies like Ethereum and Bitcoin are more predictable than smaller coins. However, you can choose altcoins and still make a good profit. Choosing the right crypto to trade may result in lucrative returns.
4. Choose a trading strategy
Since crypto trading may involve many pitfalls and risks, choosing a trading strategy helps you gain long-term benefits, make trading fun and safer. Some of the strategies that can get you favorable returns are day trading, scalping, high-frequency trading, dollar-cost averaging, range trading, building a balanced portfolio, arbitrage, and avoiding trading based on hype. You may also consider investing in a crypto trading course to educate yourself better.
5. Store your cryptocurrency
Store your cryptocurrency on the trading platform for easy access if you’re actively trading. When buying cryptos to hold in the mid or long-term, you should have a cryptocurrency wallet in either a hardware or software form. While both wallets are secure, hardware wallets are safer because they don’t store your cryptos online.
Endnote
Cryptocurrency trading can be a lucrative venture, especially when investing in the right coins. Use the above tips to guide you as you start your crypto trading journey.