What is cryptocurrency?
A cryptocurrency is a digital or virtual currency that is secured by cryptography and built on a decentralized peer-to-peer network or ledger called a blockchain. Cryptocurrencies are typically developed as code by teams who build mechanisms for issuance, often through a process, we refer to as bitcoin mining. Cryptocurrencies are designed to be free from the control of the government or any authority. Hence, decentralization. They are usually intended to be used as a means of exchange, but some, however, have other uses. A cryptocurrency could be linked to the value of a project. These are generally called security tokens.
Cryptocurrency is traded using a cryptocurrency trading account or brokerage account, so the first important step is to select a trading platform or the right cryptocurrency exchange. There are several trading platforms like Coinbase, Binance, FTX, Kraken, and KuCoin. A beginner trader can choose from any of them to begin trading. Once a trading platform has been identified, you can proceed to verify your identity by uploading all the required documents on the exchange and then fund your account once you are verified. When all of these are done, you can begin trading.
What exactly is trading?
Cryptocurrency trading means buying and selling cryptocurrencies for profit. The cryptocurrency market is open for trading 24 hours a day, so you can trade all day long. It is basically the trading of different crypto pairs against each other. So you buy a coin when it is low and sell it for another when it is high, and all of these can be done on the exchange or brokerage platform like https://crypto-engine.live/
Unlike traditional money, cryptocurrency only exists as a shared digital record of ownership, stored on a blockchain. Having a trading plan is crucial for success as the cryptocurrency market is also highly volatile, and though you would be told that the price of a cryptocurrency moves according to the forces of demand and supply, there are a lot more things that affect the price. These things could range from ICOs (Initial Coin Offering) to breaking news or government regulation, and this is why you need a plan, a strategy. Cryptocurrency traders, as mentioned before, usually speculate on price falls and increases. These traders can’t see the future, hence they speculate, but it’s not an open guess. They analyze the crypto market and there are two ways they do this. The first is a technical analysis of the market that focuses on the price movement of cryptocurrencies, and the second is a fundamental analysis that focuses on external threats to cryptocurrencies.
Tips for new traders
Start out small. As previously stated, the cryptocurrency market is very volatile, so as a beginner, I recommend that you take it slowly. Courses will teach you the theory so that when you actually start trading, it won’t be as difficult for you, but experience from actual trading will teach you what works for you.
Select a safe wallet. Your bitcoin wallet is where all of your virtual money goes. It is recommended for beginners to trade through a reputable broker like Coinbase and use the wallet they provide.
Research the market. If you go in blind, you’ll be buried underwater, nose-deep, and I mean that literally.
Choose a trading strategy. Bitcoin traders fall into various categories, which is why it is critical that you conduct research to determine what works best for you. The most common type of trader is a scalper, who makes multiple trades per day for small profits. Day traders are similar to scalpers but less active; they choose a specific day and then stay on the market all day, monitoring and buying. Then there’s the passive trader, who just wants to hold and make long-term profits, so if they see a coin with high growth potential, they buy it and put it in their wallet. So, decide which option is best for you.
Maintain a strict profit target. Before you place a trade, decide what your target profit will be and then close the trade when you meet your target. Many new traders end up losing much more than they bargained for because they wait for prices to peak, forgetting that the cryptocurrency market is highly volatile and can drop as quickly as they rise.
Diversify your holdings of cryptocurrencies. This! Don’t put all of your eggs in one basket; diversify your portfolio so that a profit in one can offset a loss in another.
Be wary of scammers. Be cautious and security-conscious.
Finally, remember to buy low and sell high.