Because it is an extremely volatile asset, several investors like to trade cryptocurrency. Trading cryptocurrency can give you much higher returns if you can time the market right. It can be more profitable than traditional investments.
Often, cryptocurrency traders have one of two goals: to make a profit in USD or accumulate Bitcoin.
It is pretty easy in a crypto bull market for your portfolio to increase in USD value. But for Bitcoin value, it is more challenging to increase.
You can trade altcoins against Bitcoin on exchanges like Coinbase pro to track your portfolio’s Bitcoin.
You can risk losing your crypto to the market by actively trading your cryptocurrency.
It’s not uncommon for traders to lose their money quickly trading cryptocurrency since its prices are so volatile. This is why several crypto enthusiasts just hold their Bitcoin.
Take a look at these five steps of trading cryptocurrency.
1. Make a cryptocurrency brokerage account.
You will need to open an account with a cryptocurrency brokerage unless you already own it.
Some of the best cryptocurrency brokerages on the market are eToro, Gemini, and Coinbase.
All these three options provide a simple user crossing point and a diversity of altcoins to select from.
You will need to provide your crypto brokerage with your identification details to open an account. It is the same as making an account with the stock brokerage.
When setting up your account, your social security number, address, date of birth, and email address are some of the common information you need to provide.
2. Fund your account
You will need to connect your bank account once you’ve signed up with a crypto brokerage.
Through wire transfers and debit cards, most crypto brokerages offer bank funding.
To fund your account, wire transfer is typically the cheapest option. It is because it is free on Coinbase and Gemini.
3. Pick crypto to invest in.
Several traders of cryptocurrency allocate most of their capital to Ethereum and Bitcoin. So trading with technical indicators can be easier as these cryptos move more predictably than smaller altcoins. Several traders allocate a portion of their capital to smaller altcoins.
Even though small mid-market cap cryptos are chancier than large market cap cryptos, they provide higher upside potential.
In a matter of months, many small altcoins have risen to over 1,000, making them attractive savings for risk-tolerant savers.
4. Choose a strategy
Most traders when buying and selling cryptocurrency, consider multiple factors. But there are plenty of trading indicators to choose from.
You may need to consider purchasing a cryptocurrency trading course if you are new to investing.
You may have already had a strategy you use to trade if you are an experienced trader. For cryptocurrency, stock trading strategies are also commonly used.
Elliot Wave Theory is a personal favourite trading strategy that many traders use.
It works particularly well for speculative assets like cryptocurrencies. It is because it focuses on the psychology behind the market.
5. Store your cryptocurrency
You will have to store your funds on the exchange to have access to them if you are actively trading your cryptocurrency.
You should get a cryptocurrency wallet if you are buying your cryptocurrency to hold for the mid to long term.
These wallets come as hardware wallets or software wallets.
Hardware wallets as they store your crypto on a physical device offline, offer the best security, but both are secure.
The great hardware wallet is called a ledger. Several investors trust to store their crypto assets on it.
There are many options if you are looking for software wallets on Google chrome, Android, and iOS that are free to use.
When it comes to cryptocurrency brokerages there are several options. But Coinbase is a great option for new investors. It has a free cryptocurrency conversion feature where you trade your crypto for any other token supported by Coinbase.
Using the tips provided above, you can now safely trade on cryptocurrency. And as I stated, cryptocurrencies are digital assets that are powered on the Blockchain. This technology stores a ledger of every transaction of the cryptocurrency on each node.