Cryptocurrency trading is all the rage today. You need to understand the basic terms of cryptocurrency and technicalities of trading to become a successful trader. With the birth of new cryptocurrencies, the industry has gone wild with an increased number of traders trading cryptos every day.
The sole desire of traders behind trading is to become rich in a short time, which is a big misunderstanding nowadays. If you see successful traders making money in no time via trading, then there are many examples of traders who have been badly hit due to huge losses in cryptocurrency trading. If you want a substantial return on investment, you need to understand, implement and practice cryptocurrency trading principles or things you need to take care while trading, which I have discussed in this post.
If you have been into cryptocurrency industry for long but do not able to make a huge profit, go through this post and get some interesting ways to how to start your cryptocurrency trading.
What Is Cryptocurrency?
Cryptocurrencies are encrypted and decentralized currencies to transfer to investors. As they are intangible, it occurs only in electronic form. Experts call them digital assets that exist in the form of data. Cryptos transactions are faster than bank transactions and as simple as sending an email to a client.
Moreover, the transactions are free of credit cards and middleman and you just need to pay a minimal fee depending on the platform you use for trading.
A blockchain is a joint bookkeeping process or more of a public network of traders who mine and trade crypto coins. It’s a reliable network as coin holders have a copy of the ledger and its transactions. Each cryptocurrency has unique programming depending on the digital code.
Out of all cryptos coming live every day while existing cryptos setting the pace, Bitcoin is the digital gold within the world of cryptos. Companies behind these cryptocurrencies build software platforms and can create other currencies as well.
Most cryptocurrency investors use the following platforms.
Windows: Investors with personal computer use this platform.
Dropbox: It is used for storing data.
Fedwire: This platform is used to send money to financial institutions.
These platforms use different types of money you need to have to use them.
Windows: You need to pay in the US Dollar to buy a license for Windows. If your personal computer has Window, then the license fee is included in the purchase price.
Dropbox: You need to pay in the US Dollar to subscribe to it.
Fedwire: You can get access to it by paying a transaction fee.
All the systems mentioned above include a database.
Experts say that Cryptocurrencies have the potential to outpace the US Dollar and are likely to replace it, which you can use to buy above software. Cryptocurrencies give access to the database which is based on blockchain technology.
Requisites for cryptocurrency trading
- Learning then trading
Understanding the complexity of cryptocurrency is important for you to know the differences between various trading platforms, use crypto dashboards, gain industry insights, etc. You also need to go through Depth Charts, Order Book, Candlestick Chart, and Spread.
- You need to pay a platform fee
Different trading platforms have different rules regarding the trading fee, fiat currency, etc. You need to understand these rules as you may pay a percentage of each deal, or you pay for deposits and withdrawals to other platforms.
- Statistics can betray you
If your trading strategy depends on the predicted stock value, you cannot always assure success. Cryptocurrency statistics involve the technical analysis of past information to make predictions. The cryptocurrency industry is highly dynamic, and swings occur every day. Therefore, relying solely on graphs can mislead you in the future.
Different trading platforms have varying fee structures, and traders, most of the time, take advantage of the price difference to make a huge profit. You can be successful if you don’t get caught up by hidden charges. The exchange rate can change during transactions. You can minimize such type of potential risks by keeping fiat currency and cryptocurrency on both platforms. However, you will still have problems with high transaction fees, small available volumes for the price you want to invest in, and orders execution delays may continue to crop up.
- Distribute to lower risks
Dividing money into different cryptocurrencies can minimize risks greatly. Maintaining a diverse portfolio of tokens can insulate you from unpredictable market shifts.
- Be intelligent
Invest wisely in a trading platform, preferably one that keeps you updated with news feeds, statistics, experts views, and economic indicators (inflation graphs and compound monthly growth rate rankings are especially helpful). Prepare yourself to handle a sudden downturn. Smart investors also know what their next move is when the market goes south.
This post tries to remove the complexity from cryptocurrency trading. You need to understand that trading in cryptocurrency is not always profitable. The internet has many examples of investors who have become billionaires, and many investors have even lost their livelihood. It is all about the state of mind and knowledge about the trading, blockchain, mining pools, etc., which help move further.
Danish Wadhwa is an entrepreneur and growth hacker with more than seven years of expertise in data-driven marketing. He currently serves as CEO for the marketing agency Fly.Biz. He is a high energy individual fueled by a passion for helping businesses grow.