Cryptocurrency is a new and exciting industry that has taken the world by storm. It can be challenging to learn how to trade and invest in cryptocurrency, but it is possible if you do your research and take the time to understand the technology and how its works.
Trading cryptocurrency can yield significant returns in mere hours or days with minimal investment, so understanding how it works is essential for anyone who looking for make money in this cryptocurrency industry.
If you’re reading this, I’m confident that you are interested in trading cryptocurrency. If yes, then you are most welcome! This article will walk through everything that a beginner needs to know about how to trade cryptocurrency.
I’ll cover topics like what is crypto trading, and how does it work? How to get started with trading, and what techniques you need to know to become successful. So, let’s begin with the basics!
What is Cryptocurrency?
Cryptocurrency is a digital currency that is used to secure transactions between people. The most popular cryptocurrency is Bitcoin and Ethereum. The total market cap of the cryptocurrency space sits at over $800 billion as of this article being written. So basically, there’s much money to be made here.
For the sake of simplicity, I’m going to exclude talking about cryptocurrency mining in this article. Because you won’t be able to start trading straight away; instead, you’ll need to learn how to buy and sell cryptocurrency.
How does cryptocurrency trading work?
Trading cryptocurrency is the same as any other stock market there you can make money by buying low and selling high. There are some fundamental differences, though.
Cryptocurrency is purely digital currency, meaning it has no physical representation. This means when you buy Bitcoin nobody can take your Bitcoin away from you later. It’s the same if you were to invest in gold, there isn’t anybody walking around with your gold in their pocket.
This allows us to make some exciting trades. Imagine you believe in the future of cryptocurrency, but only in a few specific ones you want to buy. You can buy one cryptocurrency or as many as you want and then sell them after they’ve gone up in value, cashing in on your profits.
Pros and cons of cryptocurrencies
Pros of Crypto
Price fluctuations make for great market opportunities
First up is the price movement. Cryptocurrencies are infamous for their volatility, which means that if you time your trade correctly, you could make much money in a concise amount of time.
Cryptocurrency markets never close.
This means while you’re sleeping or away from your computer, there’ll always be somebody on the other side of your trade. This can be both scary and exciting!
Transaction fees are significantly lower than fiat currency.
The best example of this is Bitcoin. While a bank transfer or or other online transaction might be instant, it’ll cost you a fee to act. This means that there isn’t much left for you by the time when you’ve made your purchase! Cryptocurrencies, transaction fees are minimal than traditional transection , but you’ll need to find an exchange that supports this (I’ll talk more about exchanges later).
You get to keep your anonymity.
Finally, there’s the fact that while this is a public ledger, nobody knows who you are unless you tell them! Anyone can protect their interests and identities without fear of repercussion.
Accessibility of cryptocurrencies is on the rise.
Finally, with more and more companies accepting cryptocurrencies as a legitimate form of payment, it’s becoming easier to get your hands on some. This means that it might be worth going out and looking for a job that pays in cryptocurrency!
Cons of Crypto
Cryptocurrency markets are unregulated
If you’re trading on your own, there’s nobody to protect you if something goes wrong in the crypto market. While this can be scary, we’ve got each other! Most of the cryptocurrency community love helping each other.
Prices aren’t backed by anything physical.
Cryptocurrencies are entirely digital, it lacks the weight that many people look for when investing their hard-earned money. For example, a gold bar, has well-known value because many people recognize gold as being a high-value commodity. However, cryptocurrencies have no physical representation, so it’s hard to tell if they’re undervalued.
You might lose your money.
Remember; this is a high risk that you take when investing. Nobody can predict the future, and nobody knows what will happen next in crypto market. This means that it’s up to you to decide when the right time is to invest!
Your computer could get hacked or destroyed
By hacking, I mean somebody who wants stole your crypto wallet. This is a risk, just like with regular currency if you are not serious about.
It’s not very accessible to people who aren’t computer savvy.
This means that if you don’t have access to the Internet, you won’t enjoy its benefits. This makes cryptocurrencies very unfair to those people who can’t get online and computer savvy.
Cryptocurrency markets are volatile.
Finally, cryptocurrencies are famous for their volatility. Means that its value could go up or down. If this happens while you’re asleep, you might wake up to find out that your investment has lost a significant amount of value!
How many cryptocurrencies are there? What are they worth?
As of 2022, there are over 6000 cryptocurrencies in the world. However, you might be shocked to find that some of them are valued at less than one cent! This means that if you invest $1 (USD) in the wrong currency, it could be worth nothing within a month or less.
It’s important to remember, though, that this isn’t just a risk when investing in cryptocurrencies. You can lose your money just as quickly by taking a gamble on the stock market as well! This is because cryptocurrencies are valued based on supply and demand. If nobody wants them, they’ll become worthless. If everybody wants them, the price will skyrocket.
Learn how to trade cryptocurrency
Learn about the market
The first step is to learn about the market properly. This means reading the news, checking cryptocurrency prices, and understanding how it all works.
One great way to start is by going on CoinMarketCap. Here you’ll find a list of cryptocurrencies ranked by their current value within the market. Once you’ve found a currency that interests you, click on it. Here you’ll find the name of the cryptocurrency, as well as its current value in USD.
To stay up to date on a cryptocurrency’s value, check it on CoinMarketCap once a day. If its value goes up by more than 5% within 24 hours, consider investing in it.
Learn how to read graphs
Once you’ve found a cryptocurrency that interests you, head over here to find the corresponding graph page; here, you’ll see how much the cryptocurrency has gone up or down in value over a day, a week, a month, or a year.
Learn how to find undervalued cryptocurrencies
So you’ve found a cryptocurrency that’s going up significantly in value? Consider investing! But don’t just throw your money at it without proper research. It might be going up right now, but if nobody else wants it, you might lose out. This is why it’s essential to find undervalued cryptocurrencies that have high demand.
If you’ve found a coin that’s going up in value, check the graph to see if its value has previously dipped. If so, this could be an indication that it’ll rise again! On the other hand, if it has dropped significantly before but is rising again, you might want to invest.
Be careful about pump and dump schemes.
Due to the volatile nature of cryptocurrencies, it’s not uncommon for somebody to artificially inflate their own currency’s value by encouraging people to buy.
This is called a pump and dump scenario, where scammers will excite their currency through online communities like Twitter or Reddit. Then, once enough people have bought into the currency, they’ll sell off all of their coins, resulting in a significant loss for most people.
Don’t risk take risk more than you can afford to lose.
Remember: cryptocurrencies are incredibly volatile! So you might wake up one morning to find that your investment is worth much less than what you originally put in.
Therefore it’s a good idea only to invest money that you can afford to lose. But, of course, you shouldn’t get reckless either and support more than you can safely get away with losing.
Don’t start investing in cryptocurrency expecting to make millions overnight. It’s best to start small (i.e., $200-500) and slowly work your way up over time. On the other hand, don’t let significant losses scare you either.
This is part of the risk that comes with cryptocurrency investing! Unfortunately, preventing yourself from losing all your money can also mean preventing yourself from starting to invest in the first place.
Stay up to date on the news.
Don’t just rely on CoinMarketCap for information. It’s also a good idea to sometimes check cryptocurrency news sites, forums, and social media for valuable insights.
As a beginner, it can be hard to discern valuable information from clickbait. Luckily there are a few online communities that you can find valuable insights from.
Join online communities.
Reddit, Twitter, and forums are great places to ask questions about cryptocurrency. If you have a question about cryptocurrencies in general try to find your answer from google or youtube.
Why are cryptocurrencies so popular?
Cryptocurrencies are attractive to investors for several reasons. For example, they can be easily transferred between different people without involving banks. They’re also transparent since all transactions are recorded on blockchains that everybody can see.
Due to being unregulated by national governments, the value of cryptocurrencies is solely reliant on their popularity among users. Because a government does not back it, it’s also not influenced by politics.
Since cryptocurrencies are a relatively new phenomenon, they haven’t been tested by time yet. However, as more and more people start using them, popular currencies could become even more valuable over time.
The thing is that people will only want to use cryptocurrencies if they’re helpful or valuable in some way, so cryptocurrencies must constantly be evolving to keep up with the needs of users. If nobody uses a coin, it’ll eventually become useless, and its value will drop significantly.
Are cryptocurrencies a good investment?
The problem with cryptocurrencies is that they’re highly volatile, which makes them difficult to predict. People often get excited when they anticipate a rise in value and buy before the price of their currency rises, but it can just as quickly crash if enough people want to sell off their coins simultaneously.
This means that there’s much potential for cryptocurrency but also many risks. For example, it’s very easy to lose a lot of money if you’re not careful! But, on the other hand, with some careful planning, it’s also possible to make a fortune.
On top of this, if a cryptocurrency has enough users, it will slowly start to gain value over time. So, for example, if many people use Bitcoin, its value will gradually increase until it is more valuable than it was previously.
Are cryptocurrencies legal?
There’s much debate about whether cryptocurrencies themselves are legal. But, of course, since they’re decentralized, they aren’t bound by national laws.
However, it’s illegal in most countries to buy and sell goods with non-national currencies (or ones that the government hasn’t approved). So, although some online stores accept Bitcoin for payment, most places that sell goods for cryptocurrencies are operating in a legal gray area.
Since cryptocurrency markets aren’t regulated or controlled by national governments, it’s up to the users to protect themselves from scams and hacks. But, unfortunately, it’s also possible to lose all your money if you don’t keep your coins safe!
Frequently Asked Questions
How do you start investing in Bitcoin with little money?
You won’t necessarily need much money to get started with Bitcoin, but it does depend on whether you consider yourself a small or large-scale investor.
If you’re willing to invest around $100-$500 per currency, it’s easy and cheap to buy Bitcoins through some of the popular exchanges such as binance. However, if you’re a serious investor, you’ll want to buy a large number of Bitcoins, which will cost more.
How much money do you need to start a cryptocurrency?
If you want to get involved with trading crypto, you’ll have to trade it for other cryptocurrencies. This means that you should start by investing in something like Bitcoin and decide whether or not you’re willing to spend more money on other currencies after that. How much money and time you’re willing and able to invest will determine how deeply you want to get involved.
Is it possible to day trade crypto?
yes its possible. If you want to learn how to day trade cryptocurrency, I recommend starting with smaller cryptocurrency coins. This way, it won’t take as much to make a profit, and you will learn how it works without risking too much money.
Once you feel comfortable trading smaller coins, you can trade bigger cryptocurrencies like Bitcoin or Ethereum for more significant profits.
Can you invest $5 in Bitcoin?
I don’t recommend investing any money that you can’t afford to lose. So, for example, if you want to invest $5 in Bitcoin, make sure you only put the amount of money you’re comfortable losing if things suddenly go wrong. But $5 is a minimal amount of money to invest, so maybe you should aim for something a little bigger.
If you are considering investing in cryptocurrencies, it is vital to understand the pros and cons. Though they have been around for a few years now, there are still many misconceptions about what they are worth or how to trade them.
Luckily, we’ve compiled some of our best trading tips and resources on this blog so that you can learn more about cryptocurrency before making your decision.
Feel free to reach out with any questions! Good luck finding which investments work best for you and enjoy reading these expert-backed reasons why cryptocurrencies might be good investment opportunities too!