What Is The Best Way To Trade Cryptocurrencies
Step 1: Choose how you want to trade Cryptocurrency
Trading using CFD which is a contract in which you agree to exchange the difference in the price of a cryptocurrency from when you first open your position to when you close it. You are speculating on the price of the market, rather than taking ownership of the cryptocurrency.
Alternatively, you might decide to buy a cryptocurrency, which means that you take ownership of a portion of the digital currency outright, with the intention of holding it in a digital wallet and profiting if it increases in value
Step 2: Open an account.
Unless you already own cryptocurrency, you’ll need to make an account with a crypto brokerage. Coinbase, Gemini and eToro are among the best crypto exchange on the market. These three are easy and simple to use, the interface is user friendly. Open an account and secure it to do that you need to verify it with your personal details like names and house of residence and all other necessary information.
Step 3: Fund your account.
Once you’ve signed up with a crypto brokerage, you’ll need to connect your bank account. Most crypto brokerages offer bank funding through debit cards and wire transfers. Wire transfer is typically your cheapest option to fund your account, Coin base offers the facility for free. You can fund your account through agent as well.
Step 4: Choose a crypto to invest in.
Many traders invest more in Bitcoin and Ethereum. These cryptos move more predictably than smaller altcoins, so trading with technical indicators can be easier. Though the movement is predictable, because they are now the giants coins in the industry they move very slowly in terms of percentages. Other traders allocate a portion of their capital to smaller altcoins. Although small mid-market cap cryptos are riskier than large-market cap cryptos, they offer higher upside potential. Many small altcoins have risen over 1,000% in a matter of months, or even in days some overnight which makes it cool for low capital investors.
Step 5: Choose a strategy.
There are a plethora of trading indicators to choose from, and most traders take multiple factors into consideration when buying and selling cryptocurrency. If you’re an experienced trader, you may already have a strategy you use to trade stocks. Stock trading strategies are also commonly used for cryptocurrencies. For instance the same Elliot Wave Theory that works best in currencies also works in crypto because its basically psychology.
Step 6: Choose a Trading plan
Having a trading plan is crucial to success for any trader but even more so for cryptocurrency traders because the market can see high amounts of volatility. This is a double-edged sword: volatility makes the market extremely attractive, but difficult to trade, This is the main reason why your trading plan must include risk management tools and your goals together with a methodology.
Step 7: Store your cryptocurrency.
In case you make profits, you’ll have to store your funds on the exchange to have access to them. If you’re buying your cryptocurrency to hold for the mid to long term, then you should get a cryptocurrency wallet. There are software wallets or hardware wallets. Both are secure, but hardware wallets offer the best security, as they store your crypto on a physical device, offline.