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Cryptocurrency

10-Step Ultimate Guide To Cryptocurrency Tradings

Cryptocurrency, which has been a common sound wave recently, is undoubtedly gaining more grounds and spreading across the minds of several investors and traders. However, a good number of people are still in the dark when it comes to cryptocurrency trading despite the fact that it’s a good way to make money online.

There are a lot of take notes. And several considerations need to be made. However, often times, I advise people who are just starting to trade in cryptocurrencies is to prevent falling for scam ICOs, or Initial Coin Offerings, in a short period of time and glue to the more prominent cryptocurrencies such as Bitcoin, Eurotheum, and Litecoin. 

I have compiled some 10 key points that must be observed when trading cryptocurrency, read below:

The following are the 10-step guide to cryptocurrencies trading

1. Learn How Blockchain Works

A blockchain is a continuously growing list of records, called blocks, which are linked and secured using cryptography. By design, blockchains are inherently resistant to modification of the data and serve as a public ledger of transactions between two parties.

The decentralised and transparent nature is what makes blockchain highly secure and almost impossible to hack because a hack to one ledger would cause a discrepancy in the entire network that will be ignored. Functionally, to hack the ledger one would have to hack all the computers on a network at the exact same time in order to change the “average”. For a currency like bitcoin, this would mean millions of computers.

2. Learn The Top Currencies

As WE all know that Bitcoin is here to stay. What’s important to note is that bitcoin accounts for about 50% of the entire cryptocurrency market, and has the highest volume. It is undoubtedly the most important currency today.

The other two currencies I would pay attention to are Ethereum (~40% the size of Bitcoin, also known as “Ether”), and the smaller and more volatile Ripple and Litecoin. Despite a smaller market cap, Litecoin enjoys higher trading volume than Bitcoin Cash and Ripple, likely because it’s one of the three currencies accepted by the #1 digital currency wallet, Coinbase.

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3. Understand All Inherent Risks

Gold or the stock market. Cryptocurrency is still a young technology and faces many challenges. While I believe the overall trend for bitcoin is upwards, trading this currency comes with considerable risk. Bitcoin prices are highly impacted by public sentiment about the currency. It will continue to fluctuate as companies and financial institutions make decisions of how to incorporate (or not incorporate) it into their businesses and workflow. It’s also highly sensitive to regulatory changes, as I will get to in a minute.

There is also risk inherent in the exchange itself. Just like the cash in your wallet, the safety of your bitcoins or other currencies depends on your own diligence. While your bitcoins cannot disappear, the transactions are permanent and can only be refunded by the recipient. This means you should only do business with people and organizations you know and trust, or who have an established reputation.

Don’t forget that bitcoin transactions are stored publicly and permanently on a network, which means that anyone can see the balance and transactions of any Bitcoin address. However, only the bitcoin exchanges and/or the parties involved in the transaction can attach the addresses to a real person. So for the most part, the transactions are anonymous.

4. Read Bitcoin News Every Day

There are some great websites to check frequently for bitcoin news and discussion boards. The combined content there could keep you busy for at least a year. Check some of them below:

  • Coindesk
  • Bitcoin Magazine
  • Business Insider
  • The Street
  • Cointelegraph
  • Cryptocoin News
  • Quora
  • CNBC
  • Brave New Coin
  • Reddit
  • Bitcoin Talk
  • Crypto Insider

5. Open A Brokerage Account Such As Coinbase

Coinbase is one of the most trusted and well-known exchanges for buying and selling Bitcoin, Ethereum, and Litecoin. They are essentially a digital wallet for your cryptocurrencies, and their iPhone and Android app make sending currency and tracking prices super simple.

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What is interesting about Coinbase is that they meet all the regulatory requirements in the countries they operate, and they have two distinctly separate but integrated products: Coinbase for buying and selling bitcoin or sending them to friends, and Global Digital Asset Exchange (GDAX) for more advanced and precise trading.

6. Fund Your Account

Once you create an account on Coinbase (or another exchange), you will need to verify your identity by uploading a picture of your driver’s license or passport. This only takes a few minutes, then you can fund the account.

7. Buy And Sell Some Bitcoin!

Once your account is funded, you can go ahead and make your first purchase. Don’t forget that you do not have to purchase coins in full units. You can buy coins in fractions as low as one hundredth of a millionth, or about less than one-tenth of a cent at current prices. That makes bitcoin and other cryptocurrencies easy targets for speculation.

Coinbase does not charge to transfer bitcoin from one user to the other, which is the point of blockchain. But if you want to transfer money to or from an outside exchange, such as a US bank account, Coinbase charges a small conversion fee.

8. Graduate To GDAX (Global Digital Asset Exchange)

Once you’ve bought and sold a few bitcoin on Coinbase, you should graduate to the big leagues. Coinbase’s more advanced trading platform is called the Global Digital Asset Exchange (GDAX). It uses the same login and password as Coinbase, and you can easily transfer currency between the two platforms, which is really convenient. The GDAX features a pretty interface with real-time pricing data, order book, charting tools, trade history, and a simple buy/sell order process so you can at least pretend to be a pro.

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9. Study Charts To Find trends

If you, like me, believe that bitcoin and the entire market capitalization of cryptocurrencies will increase in value over time, then the goal is to collect as many coins as possible, getting in at the right prices, and build a strong diversified portfolio of crypto assets that you can hold.
In order to do this, you must “buy the lows” and let the profits run. I’d recommend entering and exiting positions gradually in case the lows get lower or the highs get higher. Avoid buying/selling in big emotional or reactionary swoops, and try not to trade more than a few times a week to keep fees down and give your bets a chance to perform.
One way to tell if a stock price is over/undervalued is by reading moving averages.

Also, pay attention to spikes in trade volume, as this may imply that strong sentiments of fear or excitement just entered the market.

The primary goal of these charts is to determine the general direction of the currency over a specified time period, and the prices at which you would be willing to buy and/or sell the currency before it takes a correction.

It’s important to specify a time horizon for your investment—such as short-term (7–14 days), medium term (1–2 months) or long-term (6–12 months).

10. Set Limit Orders, And Be Patient.

Once you are ready to place an order, you will accept the market price or set what’s called a limit order. Limit orders provide investors and traders with a means of precisely entering a position without bein a victim of fluctuating prices.

Once the limit order is set, be patient. Give the price time to fluctuate—testing highs and lows—and see if your limit order catches a buyer (or seller). There is no hurry to cancel you limit orders, so resist the urge to rapidly change your limit order prices.

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Fatt Kay

A Computer Addict, Seasonal Web Developer, Born-To-Be Content Writer, Computer Scientist By Force, Social Media Jagaban and an all-in-all Internet Gangstar.

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