How to Start Crypto Trading: A Beginner’s Guide

When Bitcoin was first launched in 2008, it was just an experiment a few enthusiasts knew about. Today, the cryptocurrency market is worth trillions of dollars and is a legitimate force on a global level. Every year, more and more people get involved with crypto trading, buying and selling Bitcoin, Ethereum, and countless other altcoins, trying to carve out a piece of that massive pie for themselves. But although the potential for profit is undeniable, there are numerous obstacles on the road to becoming a successful crypto trader. 

The crypto market is very demanding, and you will need the right knowledge, tools, and mindset to survive and thrive in it.

Understanding What Crypto Trading Is

The basic principle of crypto trading is the same one used on every other market in the world: buy low and sell high. The only difference is that the commodities you are buying and selling are completely digital and do not exist in a physical form. As such, you will need a set of different tools to accommodate your trades.

One key feature that distinguishes the crypto market from the majority of other trading places is that it is open 24/7. The crypto world doesn’t sleep and has no office hours. The market never closes, meaning you can make or lose money at any given hour. There are countless stories of people waking up only to find out they have become millionaires overnight. Unfortunately, the reverse is also possible.

There are several types of crypto trading strategies, including:

• Spot trading: Buying a cryptocurrency with the intention of holding it until you can sell at a higher price.
• Margin trading: Borrowing funds to trade larger positions, which can amplify both profits and losses.
• Futures trading: Speculating on a cryptocurrency’s price in the future without owning the asset.
• Arbitrage trading: Profiting from price differences across different exchanges.

As a beginner, most experts recommend starting with spot trading before moving on to more complex strategies.

Choosing the Right Crypto Exchange

The first step toward starting your crypto trading career is choosing the right crypto exchange. This is where you will buy, sell, and probably store your cryptocurrencies, at least in the beginning.

Crypto exchanges come in various shapes and forms, but for starters, you will want one that is reputable, safe, has a user-friendly UI, and has low fees. Sites like CryptoManiaks offer handy overviews of all major exchanges that can help you make the correct choice.

You will want to consider security measures, liquidity, range of assets, and regulatory status. Once you create your account, you can move to the second step.

Learning Market Analysis

Before placing your first buy order, you will need to learn how to understand and analyze the market. Two basic approaches are called Fundamental Analysis (FA) and Technical Analysis (TA). Both have their pros and cons and have their proponents among traders. As usual, a combined approach often works best, but you will need to roll up your sleeves and research both. 

Only when you have a basic sense of the market movements and trends, can you start deciding on your opening moves as a trader.

Building a Trading Plan

Successful traders rarely rely on instincts alone. Instead, they plan their steps carefully, and you will want to emulate them in this. Start by defining your goals and deciding which strategies will get you there. Make sure you have your entry and exit rules in place and follow them blindly. Knowing when to buy and when to sell is perhaps the most important characteristic of a profitable trader. Finally, decide on your risk tolerance.

Creating a plan and sticking to it is a very important part of being a crypto trader. Don’t let market noise distract you from it, regardless of how tempting the possibility appears.

Practicing Before You Trade for Real

There are numerous platforms that offer paper trading, a risk-free way of learning the ropes before you jump into the deep end of the pool. Paper trading is a demo mode that lets you trade with simulated funds. It is a great way of getting a feel of the market before investing your own money into it.

Conclusion

Becoming a crypto trader is an exciting proposition, but it is also one that requires education and patience. Don’t expect to retire after one big trade, since that will almost certainly never happen. Instead, do your research and build your portfolio patiently. That way, you have much better chances of making some real money down the road.