If you are thinking of dabbling in cryptos this year, it may be the right thing to do provided you know how to go about it. But, information on crypto trading out there can be overwhelming for anyone, particularly a newbie. Cryptos have been around since 2009 when the first Bitcoin was launched by Satoshi Nakamoto; since, then, many coins and tokens have made their way into the crypto space. These have performed well in spite of the global pandemic which severely impacted economies all over the world. This positive development has been instrumental in driving people’s interest in cryptos even further. So, if you are a beginner, here’s what you should know to get started:
- Cryptocurrencies are not like your regular fiat currency. They are decentralized and secured through complex cryptography. Cryptos are neither issued nor controlled by governments or financial institutions, like banks. They are stored on a blockchain, a distributed ledger system which is verified by a network of computers worldwide. Besides the Bitcoin which was the first crypto to be launched, there are several others like the Ethereum and Ripple and even altcoins.
- Crypto trading and investing is not one and the same thing, even though they are used interchangeably. The end goal for both is the same no doubt, and that is to make money. But while crypto trading is designed to make profits in the short term, investing is for people who are willing to wait to get results. Here, traders do not mind waiting for years to get returns on their investments.
- When you take baby steps into crypto trading, you need to adopt a strategy covering mid to long-term trading and crypto investing. For this, you should ideally take time out to research well and analyze trades before choosing one. Those investing in the stock market would be familiar with investing tools; like technical analysis for analyzing trades. Similarly, in the traditional stock market, traders choose from different strategies like day trading, scalping, or swing trading. Crypto traders can also choose from these strategies or decide to hold onto their coins for the long-term. Or they can adopt auto trading bots like bitcoin buyers to facilitate their trading. When you choose trading bots, it automatically executes your trade without your active involvement. Visit: https://coincierge.de/bitcoin-buyer/ to know more. Just like derivatives and techniques have been around as stock market products, they can also be found in the crypto market. So, you may now trade Bitcoin options, futures, and leveraged tokens.
- Stocks markets are far more stable; its trade and market volumes are significantly higher. Even trading in NFT has spiked hugely, and so the number of people involved in buying and selling NFTs has also increased. As a result, the Bored Ape project has been widely accepted by the NFT users. While you invest in shares of publicly-listed companies in the stock market, you invest in a project/technology/idea in the crypto market.
- The benefits of crypto trading are the fact that it is open 24×7 and you can even use bots to trade on your behalf. Extreme volatility can mean better trading opportunities. For those who wish to keep their accounts private, crypto trading is a better option as you do not have to divulge your personal information. Registration processes are simple, quick, and hassle-free, and users can access products like futures, CFDs, and options easily.
- Beginners should understand the 2 main techniques for evaluating crypto assets; these are Fundamental Analysis (FA) and Technical Analysis (TA). They can complement one another or be used independently. FA considers both off-chain (exchange listings, community engagement, and government regulations) and on-chain metrics like network applications, hash rate, token rate, wallet addresses, network fees, etc. TA uses multiple technical indicators like moving averages, trading volumes, chart patterns, etc.
Beginners must trade with a plan to keep their emotions aside. The trading plan will help you identify trade timings, how to execute trades, manage risks, etc.