Cryptocurrency is often seen as having a high barrier to entry. While it’s true that there’s a fair bit of a learning curve and understanding different currencies can be overwhelming, you shouldn’t let that stop you if you’re interested in trading crypto. As public interest in cryptocurrency has increased, the viability of trading different currencies has grown, too. If you’re ready to begin trading cryptocurrency but aren’t sure where to begin, here are some helpful tips.
Choosing an Exchange
Much like the stock exchange for traditional currencies, crypto exchanges are where you can buy, sell, and trade cryptocurrency using fiat. Fiat is simply the term the crypto community has given to the traditional currencies you use on an everyday basis. When choosing your first exchange, you’ll want to opt for one that’s user friendly and has a good reputation amongst traders.
One of the best exchanges is Coinbase, which also happens to be one of the largest. Its interface is incredibly easy to navigate and it offers 100% crypto insurance, which is practically unheard of on other exchanges. There’s also a very sizable Coinbase community that’s always open to assisting newcomers with their initial trades. The online resources and how-tos about the exchange are only expanding.
Which exchange you chose will have an impact on the available currencies they support. For example, if you opted for a Coinbase account, you’ll be able to purchase both Bitcoin and Ether through the exchange. Services like CoinMarketCap have market features designed to show you exactly where each currency is traded which is helpful if you’re looking to purchase some of the smaller altcoins.
Most exchanges accept credit card purchases or bank transfers. If you’re looking to acquire your currency quickly and aren’t concerned about transfer limits, a credit card will be your fastest method. However, if you’re looking to purchase coins in bulk, bank transfers often come with the benefit of much higher transfer limits. The drawback is these transfers often take up to a week to clear, so if you’re interested in day trading options, it might not the best method for you.
Initial Trading Strategies
When it comes to cryptocurrency trading for beginners, it’s better to start conservatively and err on the side of simplicity. This the smartest way to protect your initial investments and still see growth. One of the most popular beginner strategies is known as the Top Ten strategy. To execute this strategy, you invest 50% of your capital into Bitcoin and spread the other 50% amongst several of the next largest coins. Then, either monthly or quarterly, you check to see which coins are still in the top ten and which fell out. Sell the ones that fell out and use the money to buy the ones that held. While this won’t net you the largest profits, it’s akin to always betting on the winning horse.
If you’re interested in more speculative trading, you should research the business models behind the coins you’re purchasing and invest in the ones you believe will be the most successful. Based on your research and the historical data available, you can then purchase coins when their prices are low and hold them until you see a favorable selling point. While it’s less secure than betting on winners, such a method offers the potential for higher profit margins.
No matter which coins you purchase or which trading strategies you test, it’s always best to start with a smaller scope in mind. Cryptocurrency has a bit of a learning curve and it’ll take time for you to figure out all the tools of the trade. If you’re trading conservatively and have done your research, you’ll soon be trading like a Wall Street executive in no time.