There are a variety of ways of making money in the crypto space. You could choose to mine, invest in projects, offer your skill sets to individuals or companies for a fee or ride the volatility of crypto for financial gains. However, for the purpose of this guide, we will focus on how you can start trading cryptocurrency.
What Is Crypto Trading?
The concept of crypto trading is similar to that of Forex trading but with some peculiarities that have often scared off new entrants or traditional traders. Like forex trading, traders can buy a currency and trade with others to make profits. In the case of crypto trading, these currencies are in digital forms and their inherent volatile capacity is second to none.
The Steps Of Becoming A Crypto Trader
Apart from understanding the concept of ever-fluctuating nature of the crypto market, intending crypto traders must acknowledge the peculiarities that set crypto apart. From storing digital assets to exchanging them for either fiat or other cryptos, herein lies technicalities that sets crypto trading apart from conventional trading activities. As such, the ideal approach is to start small, get a feeling for the processes and tools before jumping into the deep end.
Choose A Coin To Start Your Journey
You must have read somewhere that some traders make the bulk of their profits from lesser known coins because they offer unprecedented price fluctuations. While this is a given, you should remember that trailing a more assured or proven path is the best way to start your crypto journey. Having said that, it is advisable that you start trading with the established coins such as bitcoin and Ethereum. This a simple way of mitigating the risk that comes with trading unproven coins, especially since you are still learning the ropes.
One of the most striking differences between fiat and digital currencies is the way we store them. Unlike fiat currencies, cryptocurrencies do not depend on financial institutions. Instead, storing crypto entails that crypto owners have what we call wallets where they can temporarily or permanently store crypto. For crypto traders, it is advisable to combine the seamless transaction features of hot wallets and the security-oriented benefits of hard wallets.
Simply put, hot wallets allow traders to execute time-sensitive trades on-the-go; however, this option is highly susceptible to crypto thefts. On the other hand, hard wallets are mostly offline, which means that it is less vulnerable to security issues. To this end, a crypto trader could use a hard wallet to store his/her holdings and transfer a fraction to a hot wallet (on crypto exchanges) for his/her daily crypto trading activities.
Once you have chosen a coin to trade and set up your wallet, then it is time to sign up to a crypto exchange. Crypto exchanges are where all the action takes place and they are the access points to the crypto market. Interestingly enough, the number of crypto exchanges has exploded while choosing the best one for you could require a bit of research by reading through unbiased crypto exchanges reviews. For us, we believe that beginner-friendly crypto exchanges are the best fit for new entrants as they offer user-friendly interface, less technical tools and allows the exchange of fiat currencies to crypto. Regardless of your choice, ensure that you go for exchanges with good reputations and set up 2FA security for all your accounts.
Also, you should note that KYC requirements are mandatory on reputable exchanges. In addition, bank confirmation could take some days, that is if you are looking to pay directly from your bank.
Similar to conventional trading style, you can exercise a series of trading strategies, depending on your affinity for risks and how much time you are willing to dedicate to crypto trading. However, two strategies that you should consider are:
Long-term trading: This requires the acquisition of crypto in the hope that its current value will multiply in the future. As such, the life span of each trade could last for as long as 5 years. Needless to say, this approach requires patience and traders do not necessarily have to dedicate a chunk of their time to monitor the market. On the downside, this strategy relies on predictive market analysis that could be wrong and would render the time and fund subjected to such trades futile.
Short-term trading: This strategy entails that traders capitalize on the short burst of prices, as the crypto market has consistently shown that it thrives on volatility. As expected, this would require a level of commitment to price monitoring and a bit of automation, so as to keep up with the market. While this strategy promises instant profits, it is riskier than the long-term approach.
For serious-minded people willing to explore crypto trading, there is no escaping the psychological and analytic processes that translate into sustainable profitability. The skill of trading crypto relies on a carefully nurtured understanding of the pitfalls that could derail your money-making objectives. Hence, as a new entrant, you will need all the help you can get. This is where we come in. We at VCT have a knack for creating the right template for crypto traders to enjoy stress-free trading experience. Let us help you make your crypto trading journey a profitable and a lasting one.