How to Become a Cryptocurrency Trader? Secrets and Recommendations
Trading on cryptocurrency exchanges is becoming increasingly popular as digital assets are still classified as “new and unexplored” instruments. If in Australia already more than 70% of the population have an idea of what cryptocurrency is, then in Europe more than half of the population only remotely heard about it.
Discovering new opportunities for earning income, newcomers start trading on cryptocurrency exchanges without understanding the details. The result of this approach is one – they lose money, disillusioned with cryptocurrency as a mechanism for profit. And often they also fall victim to scams.
Of course, the basic rule of trading can be reduced to: “Buy cheaper, sell more expensive”, but the question is how to find out when the value of cryptocurrency falls and when it rises.
It will be necessary to study the basics of trading. And trading cryptocurrencies to some extent can be called investments, in the short term.
In order to become a cryptocurrency trader, you need:
- Choose the crypto broker or exchange you will use.
- Choose cryptocurrency pairs, which you are going to trade.
- To analyze selected cryptocurrencies, study the growth and fall charts of their value, and study the current situation in the market.
- Delve into trading tools and strategies to improve trading efficiency.
Let’s take a closer look at these details.
Choosing a cryptocurrency broker for trading
Cryptocurrencies are traded on cryptocurrency exchanges or through cryptocurrency brokers. According to the website Coinmarketcap.com, there are 227 cryptocurrency trading platforms, but in reality there are many more.
When choosing, you should pay attention to the following categories:
- simplicity of the interface;
- the need for verification;
- support for the language you need;
- features of deposit and withdrawal of funds;
- supported cryptocurrency pairs.
The choice of a cryptocurrency broker can be called individual, since it all depends on how convenient the interface is and how you personally work.
! It is also important to make sure that you went to the website of the cryptocurrency broker, and not to fraudulent websites, the interface of which is made like a copy of a popular cryptocurrency broker!
Choosing cryptocurrency pairs for trading
Returning to the site of Coinmarketcap.com, today there are more than 2,000 cryptocurrencies, so it is clear that all of them will not be used in trading. You need to select the most promising pairs. And there are a number of secrets.
- Beginners should choose pairs that include cryptocurrency and fiat currency. Accordingly, the rate of fiat currency is more or less stable, so it is easier to conduct analytics. Popular options for beginners are BTC/USD, ETH/USDT, etc.
- In addition, the currency pair should actively trade in the market so that the trader can make an instant transaction on buying or selling without wasting time.
- The importance of having a large amount of supply and demand is also explained by resistance to high rates. The big players do not have a serious influence on the value of cryptocurrencies, which are actively traded in the market, which is not to say about those altcoins, the offers for which are much smaller.
For example, FXOpen broker offers a 43 pairs with BTC, BCH, EOS, Ripple, Monero, LTC, etc. for trading. This is a good solution for beginners and experienced traders.
Remember that trading is always a risk, as well as any type of investment, so it is recommended to start with small amounts.
Exploring the situation on the market and cryptocurrency charts
Of course, it is impossible to predict exactly when a particular cryptocurrency falls, and when it does not, but it is necessary to study the overall dynamics of the market to understand what events can lead to the fall or, conversely, the growth of cryptocurrencies.
The first category includes all sorts of legal prohibitions and restrictions, the collapse of the stock market, as well as the fall of the Bitcoin rate, followed by other cryptocurrencies. The increase in value can be caused, on the contrary, by legislative approval, various agreements, the renewal of the platform, etc.
Therefore, traders need to be aware of cryptocurrency news.
Charts of changes in the value of specific cryptocurrencies can be associated with certain events, understanding for yourself, in which cases you should expect a fall, and in which – growth.
Such work does not guarantee 100% success, but industry knowledge and the ability to conduct analytics are very important for the trader. In addition, there are different strategies for both beginners and professional traders.
In the initial stages it is recommended to buy cryptocurrency at the time of approaching the minimum values or at the beginning of low growth, when the cost is significantly below average. The sale takes place when the rate is approaching the maximum values, but if there is an active growth, there is a possibility of breaking through the maximum boundaries.
It is noted that on average traders earn about 100% of profits per month, but for beginners this figure often does not exceed 50%.
The benefits of trading as an investment tool
Trading as an investment in the short term is beneficial in terms of possible profit in any situation – whether it is a fall or an increase in value. However, in the first stages there is a high probability of losing money, so it is recommended to study on small amounts. It is also important to develop yourself professionally, namely, to read specialized literature, to listen to the opinions of experts, to study all sorts of strategies, as a successful trader can become only if you have a professional approach. Amateurs lose money very quickly and are disappointed.