Cryptocurrency trading is a way to make money. It can also be a way to lose money, but that’s true for any investment strategy. We’ll explain here how you can take advantage of crypto trading to build a portfolio that makes you money while protecting yourself against some of the risks involved in investing in cryptocurrencies.
Open a high-interest savings account
If you have money in crypto, the best way to make more is by depositing it into a high-interest savings account. That is because you can use your crypto as collateral to get higher interest rates on your money than if you were keeping it in a regular bank account.
Find some websites that offer high-interest savings accounts. Many different websites provide these services, so shop around until you find one with the best rate for your needs (usually between 5% and 10%).
Open an account with one of those sites and fund it with some of your cash (or any other currency) before depositing any crypto funds there—this is called “cashing out” because the funds are now in another currency than what they started as (crypto).
Doing so gives us an extra layer of security against losing our money if something goes wrong at either end of this process. For instance, cashing out into fiat makes sure we don’t lose anything due to price fluctuations while also providing enough time should something go wrong while transferring from one place to another.
Invest in an exchange-traded fund
Exchange-traded funds (ETFs) are investment funds that track a basket of assets. They’re similar to mutual funds, but they’re traded on an exchange like stocks, allowing you to buy and sell them throughout the day. ETFs also tend to have lower fees than many other investments, making them an appealing crypto trading option.
Investing in ETFs is a good way for beginners to diversify their portfolios and easily invest in multiple sectors. Several different types of ETFs let you invest in everything from commodities, such as gold or oil, all the way down to individual companies like Apple or Google. These vehicles make it easy for beginners with minimal experience who want some exposure but don’t want to spend all their time researching individual stocks or market trends.
Buy your own crypto
If you’re looking to buy crypto with fiat currency, this is the option for you. However, if your bank accepts Credit Cards and you’re comfortable with a high degree of risk, buying crypto on an exchange like Coinbase or Gemini might be right up your alley. These exchanges also facilitate traditional crypto trading, which may prove beneficial.
Suppose you don’t want to deal with the headaches associated with storing or investing in cryptocurrency directly (or at all). In that case, one of the best ways to play it safe is by buying shares of companies involved in cryptocurrencies. The risks here are much lower than if you were holding onto coins yourself—but so is the reward potential.
When buying crypto using other forms of payment than fiat currency (i.e., not cash), one must first convert their money into BTC before sending it over to another trader’s wallet address(es). This process can take time depending on which wallet they use; some exchanges will allow users to transfer funds directly, while others will require manual intervention from both parties involved due to stricter security protocols (and also because banks take longer).
Trade crypto derivatives
If you’re looking to invest in the cryptocurrency market but don’t want to own any coins, there are other ways to make money from crypto. One of these is trading derivatives.
Crypto derivatives are a way of investing in cryptocurrencies without actually owning them. One can do this through CFD (contracts for difference) or futures contracts. While they share many characteristics with their stock market counterparts, there are some key differences that investors should know about before entering into a contract:
- They’re not thoroughly regulated by the SEC.
- They’re not necessarily FDIC-insured.
- The CME or CBOE may not cover them.
Build a diversified portfolio
The most important thing you can do to stay on top of the crypto trading game is to diversify your portfolio. That means that rather than putting all your money into one coin, spread it out over multiple cryptocurrencies. It will help reduce your risk and improve your chances of making money.
Diversification doesn’t just apply to investing in different types of crypto coins but also when choosing which exchanges to trade from; specializing in various types of exchanges is a good idea. Some exchanges offer more coins than others, so make sure you’re using one with a wide range for trading: something like Binance or Coinbase Pro would be ideal here!
If you have time on hand, then manually trading on each exchange may be another option for diversifying your portfolio (although this takes up quite some time!). Also, remember that when done properly, automated trading bots can apply this same principle automatically without any extra effort from yourself or other humans involved!
Trading cryptocurrencies is a great way to make money. You can trade them yourself or invest in an exchange-traded fund (ETF). You can also buy some of your own coins and sell them later when they increase in value. Another option is to invest in derivatives such as futures contracts and options.