Imagine you want to try yourself in crypto trading, but you don’t know how to approach this market yet. For almost 13 years of the existence of Bitcoin, millions of people from all over the world have integrated into this industry. But anyway, on a global scale, the digital economy is only at the initial stages of development, so many people still do not know how to get started with cryptocurrency.
In this article, we will touch on this topic in as much detail as possible, and after reading it, you will have a clear algorithm of actions, a set of criteria that you need to pay attention to and name a cryptocurrency exchange platform that is worth attending to.
The First Steps On Your Way To Crypto
Here are the main steps to prepare yourself for crypto investment:
- Minimum knowledge in finance. You should understand that you can lose your first investment when you first try to invest in the digital coin market – probably every beginner trader lives through it. Therefore, at the very beginning of your journey, it is better to use crypto demo trading. Visually, trading on a demo account is no different from a real one. The same set of tools will be available to you, but in case of an error or unpredictable market movement, you will not lose a cent.
- Pick an exchange. First, conduct research and check the reliability of crypto platforms. It is best to choose among big crypto exchanges; they usually have a high level of protection and provide a larger range of financial instruments. Find out if it has ever been hacked and how many people are trading on it. Find out if the crypto exchange works in your country or city and how fast it works. Another important point is the presence of an active community in social networks and a good support service. It’s great if the platform had an online support chat where people could ask questions and get help quickly.
- Financial management. After the first training steps with “wrappers”, you can switch to real money. At this stage, you should calculate how much you are willing to invest. Use financial knowledge and skills: you can use crypto as one of the savings options. For example, part of the funds is in the bank, part is in cash, and part is in cryptocurrency. You should not invest all the funds you have in cryptocurrency (as in any other financial instrument). With the experience of trading in this market, you will begin to understand how you can make a profit, and you will be able to earn an income consistently. However, it is extremely important to study cryptocurrencies carefully before investing. There is no minimum amount you can start trading, and it can be as low as $10. You can always participate in activities on social networks and promotions on the platform. Active users are always rewarded.
- Keep your investments safe. Don’t forget about security – when registering, create a complex password, create a separate mail for the crypto platform and enable two-factor authentication (2FA). The biggest crypto exchange platforms often ask users to pass KYC. To do this, you need to take a selfie against the background of a passport and a photo of the document, and your data is tied to your account. In the case of an attempted account theft, KYC will help save your funds. Support will ask for a photo of documents to verify that it was you who changed the password or invited the withdrawal of funds.
Also, you should decide if you will trade actively or intend to be a passive investor. Beginners access all the functionality for trading immediately after registration on a crypto exchange, but before doing something, you need to understand what risks this or that instrument carries.
Crypto Demo Trading by WhiteBIT
One of the most promising platforms on the market is the WhiteBIT platform. It offers a wide selection of trading tools, but at the same time, it has an intuitive and easy-to-follow interface. WhiteBIT is ideal for beginners as it provides a crypto trading simulator feature.
That is, you do not have to replenish your deposit with real money immediately after registration – instead, you may start test trading. The demo account has no restrictions, and all actions also take place in real time, allowing you to hone your skills before trading cryptocurrencies on real markets and with real money.
How to Trade Safely on Big Crypto Exchanges?
Now there are many different tools on the market that help inexperienced users to start with cryptocurrency trading. One of these tools is copy trading. It is a method of trading in the financial markets which allows you to copy the transactions of other experienced and successful traders automatically. You rely on the decisions of the trader whose trading statistics you have studied, he makes trades, and you only need to keep track of his success and your copied trades.
Another trading option for beginners is when you allocate funds, buy a little bit of different popular cryptocurrencies and see how they develop. Logically, it is most profitable to buy in a falling market (as, for example, now, in December 2022), when the price of assets can fall even up to 90%. When buying in a falling market, you must understand that this is a long game, especially if you entered the market at the wrong time. If you distribute your funds correctly, the prospect of earning in the future is quite large. But here, you will need to be patient because you may have to wait several years.
Does It Worth Invest in New Coins?
There are examples when coins took off and then fell sharply, but now this happens less often. One recent example is the Luna coin and the FTX exchange token.
In the case of investing in coins, it is imperative to stay on topic. So, in 2020, Elon Musk tweeted about the Doge cryptocurrency, and after that, it skyrocketed. If you constantly read the news of the crypto market, then at some point, you will begin to understand how it works and determine what is popular now and where you can earn money.
However, it is important to distinguish between the expressions of famous people that can affect the value of coins and just informational noise. Jesse Powell, CEO of the Kraken crypto exchange, said that before the end of this year, he would be able to buy a sports Bugatti for one bitcoin. The cost of such a vehicle is $2-3 million. Such ambitious statements are just informational noise.
There is a concept of “hype market”: you have heard about a coin and want to buy it. Other people do the same. Usually, the chance to earn is much higher if you bought a coin before the hype or at the moment when its price was falling.
Also, no one can guarantee that the coin will not fall in a few days or even hours. But you can focus on open data. If you enter the name of the coin on the site, you can find out its rating, available volume, and total capitalization. It is believed that the higher these indicators, the more reliable the coin is.
Should a Novice Trader Invest in NFTS and Blockchain Games?
The NFT market is very complex, especially for novice users. Here, those who create NFTs most often earn. It is very important to understand which projects will succeed and which will not. It is an even bigger risk than with BTC. You can buy an unpopular NFT and stay with it forever in case no one else buys it.
This NFT picture market essentially founded NFT technology. They are likely to continue to be used. The technology helps determine the copyright holder and check whether the original thing is in front of you.
For example, when buying Adidas sneakers, you scan a QR code, and NFT comes to your wallet. That is confirmation that your shoes are original. Perhaps this technology will be used in medicine and for checking a passport or driver’s license, but this is a distant prospect so far.
Talking about the gaming industry, which has integrated NFT and blockchain, analysts believe this segment will be trendy. Now you can try your luck in the early stages of the project, especially if it is a game without investments. It is important to understand that there is a specific pyramid effect here: when the number of users increases, newcomers will receive less profit. But this is an exciting option to try your hand at.
The Main Strategies to Work with Crypto
Buy and hold strategy. This strategy is popular among people interested in cryptocurrencies and those who want to invest in digital or physical assets (gold, real estate, art, etc.). The bottom line is that you buy an asset at a point where the value is at a minimum level and then sell at a time when the price reaches a maximum. With cryptocurrency, the same strategy can become profitable. The first step in this process is identifying the cryptocurrencies with growth potential. You must ensure that the purchase is made at a time when the digital currency price is low for a certain period of time. After the purchase, you will hold your digital assets and wait for the value of the cryptocurrency to rise. As soon as the cryptocurrency reaches its peak value, you will sell it and get a profit.
Crypto trading. Trading is another profitable option. When trading cryptocurrencies, you must choose a specific pair, such as BTC/ETH. You can then open a buy or sell position and close the trade at the appropriate time. Understanding this process comes after you practice crypto trading long enough.
Final Thoughts
So, let’s consolidate the information provided in this article. Investing in cryptocurrencies can be a great way to profit and increase your income. However, there are a few things to keep in mind. These tips help reduce risks and make more successful decisions when investing in cryptocurrencies.
- Allocate a budget that you can afford to lose. Before investing in cryptocurrencies, take a close look at your budget and finances. You should clearly know what financial losses are acceptable for you. Any type of investment comes with risk. Many people have lost all their investments in the past. If this happens, you should not remain without a livelihood. Thus, set aside only the amount you will not depend on in the coming days or weeks. This strategy also helps limit your losses.
- Do not borrow funds for investment. It is not secret that the cryptocurrency industry is unstable. That means you may lose money at any moment. For this reason, never use borrowed funds to invest in cryptocurrencies. In the case of a loss, you will lose your funds, but the debt will remain. Banks and lenders will also add interest to borrowed funds, resulting in more significant losses.
- Pick good crypto assets. At the end of December 2022, it was reported that there were 22,057 cryptocurrencies in the world. This number continues to grow. Some cryptocurrencies have made a splash, but this does not mean that each has great prospects. In fact, some cryptocurrencies have never generated interest or have not grown at all. Investing in them will result in losses or may jeopardize your investment. Thus, research and thorough verification of cryptocurrencies are decisive factors before making this investment. Check all the key aspects – the company behind the cryptocurrency, the technology behind the cryptocurrency, market cap, current value, and previous trends.
- Your investment portfolio should include different assets. One of the biggest mistakes people often make when investing in cryptocurrencies or any other type of asset is investing in only one coin. Of course, if the coin rises a lot, you can profit significantly, but things may not go according to your plan. When investing in cryptocurrencies, aim for a diversified investment portfolio. You need to diversify your risks to limit potential losses.
