Cryptocurrency has boomed in popularity over recent years and has become a viable addition to any trading portfolio. However, experts still suggest investing no more than 5% of your cash total because of the high volatility. That being said, with governments, banks, and businesses backing the likes of Bitcoin and Ethereum, the future of crypto trading looks bright; here’s how to get started.
Pick a Trading Method
There are two different ways of trading cryptocurrency – buying into the coin through an exchange or speculating prices using a CFD platform:
- Exchange route. Open yourself a digital wallet and find a crypto exchange, which will let you buy and sell coins. You manage the asset yourself and you need to manage it according to market predictions.
- CFD platforms. If you’re already trading in other markets, CFD is the easiest option. You agree on the price of an opening contract and pay any difference when you close the contract. You won’t own the crypto asset, but you can still benefit from the market.
Each method has merit, and the option you choose will be largely based on your trading style.
The crypto landscape operates differently from more traditional financial markets, so it’s essential to learn the jargon and understand how to navigate. Cryptocurrency is decentralized, which means there’s no governing body – transactions and management are carried out through a p2p network called a blockchain.
The crypto market is notoriously volatile, which makes it even more important to grasp how it moves. You will need to keep updated with current government regulations, blockchain forks and initial coin offerings (ICOs), and breaking news.
Make a Plan
Before you dive into crypto trading, you will need to set up your Workstation Desktop and create a plan. Unlike any other market trading, a large part of your crypto strategy will be risk management, which will tell you what to do after making significant losses. Further, you need to outline all your analytical methods, which are vital when it comes to crypto trading.
Open an Account
With your plan in place, which will detail whether you’re using CFD or crypt exchanges, you need to open an account. No matter which option you’ve chosen, you should compare several providers to make sure there are no hidden costs and you’re getting the best rates. As part of this process, we recommend searching for reviews, which will help verify a platform’s authenticity. Further, as a beginner, you should find a site that has plenty of beginner information. For CFDs, we suggest using IG, and eToro if you’re searching for an exchange.
Make Your First Trade
All that’s left is to monitor the markets and decide on your first trade. We suggest starting small and working your way up once you build confidence. However, you should always be prepared to suffer losses – all crypto traders do at some point.
Crypto trading can be exciting if you follow this guide for getting started. Remember, whether you’re using an exchange or CFD, educate yourself and create a solid trading strategy before diving in.
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