7 Tips to Help You to a Good Start in Crypto Trading
When it comes to investing, cryptocurrency has progressively become a solid option. Even though the market is volatile, the return on investment is what acts as the main driving force behind the decision to actually invest.
Trading in crypto is different from your standard shares trading in the sense that there is no regulatory body to govern the market. The whole operation is overseen by the community itself, and once you initiate a trade it cannot be reversed.
For this reason, crypto trading can be quite tricky and overwhelming especially for first-time traders. If you fall in this category, fear not as we will share with you seven tips you can implement in your crypto trading to ensure a smooth start.
1. Make Sure to Pick a Reputable Exchange
Before you start buying cryptocurrencies, you need to do proper research when deciding who you will do all your exchange with. This step is essential as it will:
- Have a direct impact on the source you go to in order to buy crypto
- Impact your trading strategy
- Influence the crypto community you will eventually become involved with
At the start of your crypto trading, you need to keep one thing in mind — buying your crypto from a trusted and reliable source. You have to get out of the mindset of getting the best deal and choose an exchange medium that has the best reputation. Even if it will cost you more in the end, long-term it will provide you with peace of mind and security.
As we mentioned before, the crypto market is not regulated by a governing body. This means one thing — scammers are abundant. Since all transactions in the market are final, this means there are no banks you can call, no chargebacks, meaning there is no way to get reimbursed should anything go wrong. So, getting a sweet deal in crypto might mean you are getting scammed.
The most trusted exchange at the moment is Coinbase. We recommend using this platform as it will give you the assurance you need that your funds are secure. They also have a support team at the ready to make sure all your questions are answered.
2. Go For Simple Rather Than Complicated
When you start trading, you will most likely be bombarded with ideas for trading strategies from all over the place. You must remember that before you dive into the complex trading strategies you might have heard about on social media, it is far better to stick with a strategy that is easy to implement and adapt along the way.
As a good strategy to start off with, we recommend going with the tried and tested method of portfolio indexing and rebalancing. This particular strategy has been used by financial institutions for decades so you can rest assured that it is guaranteed to bring results.
3. Closely Monitor the Market Cap
The simplest mistake to make as a beginner in crypto trading is to make an investment into a coin based on its market price at that moment. You cannot base your acquisition strategy solely on this. Instead, you need to pay close attention to the circulating supply.
Essentially, when deciding on your next investment, you are well advised to look at the percentage of overall market cap you are purchasing. The closer your chosen coin is to the market cap, the higher the selling demand will be for that particular coin in the future.
4. Build a Diversified Portfolio
This particular tip should be of no surprise. It goes without saying that if you put all your money in one basket, it is one sure way of losing it all in no time. For a solid base to start your investment, you need to divide your investments into more than one cryptocurrency.
Distributing risk to a number of assets will allow you to easily make adjustments to your positions and manage your portfolio accordingly.
5. Keep Your Assets in Cold Storage
We know we keep banging on about it, but the cryptocurrency market is volatile and you never know when the sky might fall even though you have been smart and put all your assets in a reputable exchange. Everything can be lost through a hack at a moment’s notice.
Our recommendation is to keep your investments off the exchange as much as possible. One option for an easy-to-use mobile hardware wallet is the Ledger Nano X.
6. Develop Your Trading Techniques on a Demo Account First
Before you get into the real deal, we highly recommend practicing your craft on a demo account first. Doing this will give you an idea of what you are about to get into. Once you are satisfied with the results of your portfolio and of your tried trading strategies, you can go right ahead and choose a coin and exchange platform to begin trading.
You can have a look here for a good demo account to practice and see what makes the most sense for your crypto trading plans.
7. Technical and Fundamental Analysis Are You Best Friends
Technical and fundamental analysis are two strategies that, if used together, can provide you with the best option to maximize your return for each coin tradable.
Essentially, technical analysis is focused on studying charts and graphs in order to identify when to sell or buy. Fundamental analysis on the other hand is focused on the big picture. It looks at the overall market and pinpoints how external assets can affect the price trend of a particular investment.
Ready to Begin Your Journey in Crypto Trading?
We hope that this article has provided some clarification and encouraged you to give crypto trading a go. Although volatile, the crypto market can be a solid source to maximize the potential for your hard-earned cash.
Following the tips discussed will provide you with a good start to trading in cryptocurrency. However, if you still think that you are in need of more expert advice, why not contact us today and enroll in one of our courses that are guaranteed to jump-start your journey with crypto the right way.