If you’re reading this blog, I suppose you’ve already made up your mind that you want to invest in cryptocurrencies. The crypto industry is undoubtedly one of the most rewarding sectors if you make the right calls. However, things are easier said than done, and success is often hard to come by. You will have to have an in-depth understanding of what cryptocurrency trading is all about, and this cryptocurrency trading guide for beginners will help you with that. While you’re reading this, there could be hundreds and thousands of people who would be reaping the benefits from their crypto investments. So, let’s not waste any more time and delve directly into the subject, after all, you’ve got money to be made!
Understanding Crypto Trading
Until there were more cryptocurrencies available, the only option that potential investors like you had was to purchase Bitcoin and hold it till its prices surged. As more and more cryptocurrencies began coming in, people began trading them. The fundamental of crypto trading is simple- purchase a cryptocurrency and exchange it for another cryptocurrency hoping that the coin that you trade it for will see an appreciation in its value.
Trading cryptocurrencies requires a platform, called the cryptocurrency exchange, where buyers and sellers can find each other. For instance, if you possess Bitcoins that you wish to trade with Ethereum, the exchange will help you get in touch with someone who owns Ethereum and wants to trade it for Bitcoins. For that, you will have to pay a small fraction of the entire transaction to the exchange as the transaction fees. The trick lies in trading only what you can afford to lose. There are many beginner courses on cryptocurrencies that will offer you the same advice.
Now let’s get on to the two different kinds of trading, i.e. short-term trading and long-term trading.
When you buy a cryptocurrency but quickly trade it, it’s called short-term trading. The advantage of short-term trading is that you can make substantial gains in a short span. With hundreds of cryptocurrencies available today, you will always find a buyer for your coin. On the downside, you will have to monitor the crypto market because of its high volatility closely. Also, if you are a beginner, you will have difficulty in reading charts and graphs, which is crucial if you want to make money through short-term crypto trading. You should be ready to accept losses because no one can make profits all the time, especially if they’ve just begun trading. Additionally, you will have to make substantial investments if you want high returns through short-term trading. If you’re a beginner, you might not be too comfortable with that idea.
The term ‘HODL’ has found parlance amongst crypto traders and enthusiasts in recent years. The term first came into being when a crypto investor typed ‘I am Hodling’ in an inebriated state. Of course, he was trying to say that he was going to hold his cryptocurrency. The idea behind ‘hodling’ is that although the market is volatile, crypto prices would enhance significantly over an extended period. The best example of ‘hodling’ and earning massive revenues through it is Bitcoin. If you remember, Bitcoin was trading at $0.35 in 2011 and went on to hit $20,000 in December 2017. The people who held onto their Bitcoins from 2011 to 2017 could have had a chance to earn a profit of 57,000%. Now that’s massive!
Long-term trading truly allows you to become a crypto trader as you would neither have to keep a tab on complex graphs and charts nor understand them. As you will be holding your coins for a long time, you can check the prices whenever you’re free. All you need to do is wait.
Moreover, with long-term trading, you need not make huge investments to earn massive profits. Here, I’d again like to quote the Bitcoin example. People bought Bitcoins for virtually nothing and look how much they stand to gain even when the market is going through a severe bearish trend.
However, like short-term trading, long-term trading also has its share of disadvantages. As long-term trading doesn’t require you to keep an eye on the market, trading charts, and graphs, you might miss out on any information or notification about possible regulations that could bring down the price of your cryptocurrencies. In the worst case, your coin may never recover from that point, which will lead to your investment going down the drain. On the flip side, your coin could see a sudden spike in its prices. Since you won’t be monitoring the prices regularly, you can miss out on the opportunity to sell your coin. Therefore, you’ve got to keep yourself on the top of the latest cryptocurrency news to make profits as well as secure your investments when the market crashes.
Now that you know the basics of short-term and long-term trading, let’s get on to the main part, i.e. how to become a crypto trader.
How to Begin Trading Cryptocurrencies
If you want to trade cryptocurrencies, you have to have some coins first. So purchase a coin from a cryptocurrency exchange, preferably Coinbase or Kraken where you can buy Bitcoins with a credit card or debit card. I’d suggest you go for Bitcoin as it is the most sought-out cryptocurrency even today. Now let’s assume that you choose to purchase Bitcoin from Coinbase. You will first have to create your account on Coinbase with a strong password. Also, your phone number, email, and the account will have to be verified before you can begin trading. For your identity verification, you can upload your driving license or any of the government-issued cards.
After the verification, you will have to add your card details and payment method on Coinbase. Once that is done, you can proceed to purchase Bitcoins. When you have Bitcoins to trade, you will need to open an account on a cryptocurrency exchange. I’d recommend Binance as it has more than 100 cryptocurrencies available on its platform.
Creating an account on Binance is as simple as creating one on Coinbase. Provide your phone number and email ID, and choose a username and password. Once your Binance account is up and running, you will need to deposit the Bitcoins into your Binance account. For that, go to your Coinbase account and send Bitcoins to your Binance wallet by entering your Binance wallet address. The fund transfer shouldn’t take more than 15 minutes.
Cryptocurrency Trading for Beginners on Binance
When you’ve logged into your Binance account, open Exchange and then click on Basic. Now click on BTC on the right side of the page and enter the coin that you want to purchase. Let’s assume that you wish to buy an ABC coin. Now click on the pair of BTC/ABC, which will direct you to the main trading screen.
To carry out a trade, scroll down and find Buy ABC. You will have to determine whether you want to place a Limit Order or a Market Order. For a Limit Order, you will have to specify the price that you want to trade at. You may or may not get the price quoted by you matched. If you go for the Market Order, you will have to accept whatever current rate is available on Binance.
After you have chosen between a Limit Order and Market Order, enter the number of ABC coins that you want to purchase. Once you’ve entered the number of ABC coins you want to buy, click on Buy ABC. Congratulations, you’ve just made your crypto trade.
Hopefully, this beginners’ cryptocurrency trading guide will have provided you with all the information you need to carry out a cryptocurrency trade. Just remember that whichever coin you choose to trade in, do thorough research on them. Don’t go by what others say. Often companies spread misinformation in the market regarding their coins or their rival’s coins.
People also rely on Youtubers a lot these days. But like other people, Youtubers can also be paid to promote or denounce a particular coin. Always do your share of the research before you invest in a coin. Keep in mind the pointers that I’ve discussed in this blog. If you go by the tips provided in this cryptocurrency trading guide, you will be able to generate at least some profit out of cryptocurrency trading.
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