Listen : Audio version of this article
Cryptocurrency trading began after Bitcoin came into the limelight. Early entrants made handsome profits after the major cryptos significantly increased their value, led by the famous Bitcoin. since then, cryptocurrency prices have been unstable in rising and falling depending on traders’ moods in the crypto market.
At first, cryptocurrencies were simply digital codes with no real corresponding physical value. Their value was and still is determined by those dealing with the coins. You can have a coin rise sharply in value today depending on how traders perceive it, and have it drop flat losing its entire value the next day.Crypto/platinum and a few other crypto tokens are changing the idea of cryptocurrencies altogether. You can now have commodities that can be pegged to real physical value like gold and platinum.
This idea will certainly change the mode of crypto trading in 2020. Unlike a few years ago when the price of crypto rose depending on the euphoria in the market without anything of value, crypto trading will now be determined by the usefulness as well as demand and supply of their corresponding value. You can now make a follow up of real trade to decide the crypto commodities to buy or sell. Here are some more tips on how to trade crypto in the coming year. Keep in mind that trading is not for the soft-hearted, and be ready for anything. You can hit it big today, and lose everything just as quickly.
Learn Crypto Basics
Before you even think of investing your hard-earned money in this industry, make sure you know at least the basics of what crypto trading and crypto is all about. Understand what a cryptocurrency is a trading platform, an exchange, a wallet, and how all that works together in this particular business. Get knowledge on which factors affect crypto markets to determine the price of the various cryptocurrencies. With this knowledge, you can then proceed to try out the market, but with limited funds.
Know Different Types of Trades
In the cryptocurrency market, there are two main ways you can trade crypto. You can buy these digital coins from various exchanges, and keep them as your own, expecting that they will rise in price at a later date. In this case, you will need a wallet to store your coins safely, since most exchanges are always at risk of getting hacked. Get to understand how different wallets work so that you can determine the most appropriate one to use based on the coins you buy. This method is also referred to as speculating.
The second method of trading cryptocurrencies is through CFDs or contracts for difference. CFD is a form of derivative trading that will require you to go through a CFD broker. In this type of trading, you enter into a contractual agreement, where you get to bet against the behavior of the coin or coins you are trading. In this case, you either go long or short depending on the direction you presume the price of the coin will go. It is also this type of trading, that allows you to leverage your account, where you can stake more than the funds you have deposited. Just know that as much as you stand to gain a lot through this option, you can lose equally as much if not more.
Don’t Put All Your Eggs in One Basket
The crypto market is extremely volatile. Volatility means that there is a sharp surge in prices over a short period. You can have a coin trading at about $300 now, then find it at $500 a few hours later or lower. You need to know how to use this aspect of volatility to your advantage. A good way is balancing the two methods of crypto trading, where you buy and keep some coins to sell later, and use some of the funds trading CFDs. You should also not focus on one particular coin, just because it seems to be the popular one at that particular time. A good way is identifying several active coins, then reading the performance history and monitoring their current performance. Buy a mix of this coin to cushion yourself from major loses. Do not be greedy. Try and make small gains through this balancing and you will eventually hit it big. The trick here is patience and growing your portfolio. Many traders lose out the first few months of trading since they enter the trading based on euphoria instead of taking their time to study and gauge the market.