September 29, 2022

How to start trading cryptocurrency: simple steps

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Cryptocurrency is becoming an increasingly popular investment tool, but novice traders are often repelled by the first difficulties. We tell you how to take the first step and start trading digital assets.

Making money with cryptocurrencies is not easy. Installing a reliable application and immediately receiving an asset in a portfolio, as we are all used to, will not work. Difficult terms, long preparations and legal difficulties can confuse even an experienced investor. This material will help you take your first steps in the world of digital assets and teach you how to trade cryptocurrency.

Cryptocurrency: where to start
First, let’s define what a cryptocurrency is. This will help you understand what you will be dealing with – as with other industries, trading successfully requires a certain amount of expertise in the field.

In 2022, there are hardly any people left (at least in developed countries) who have never heard of bitcoin. Cryptocurrency, which began to conquer the world back in 2009, has already celebrated its tenth anniversary. But at the dawn of its existence, few could have imagined that bitcoin would become so popular.

Bitcoin, like any other cryptocurrency, is a file that is stored in a digital wallet. Each transaction with a token is recorded in an open database – blockchain. Thanks to cryptographic protection, the maximum level of security is ensured, so the same coin cannot be spent twice or copied.

Proponents of cryptocurrencies claim that they are safe and completely transparent. Opponents also express concerns that digital money can be used by criminals to transfer funds anonymously. However, cryptocurrencies, and especially bitcoin, are gradually starting to accept more and more legal companies.

Cryptocurrency security
Since we are talking about security, it’s time to remind you about the importance of keeping your data safe on the Internet. There are general rules in crypto trading:

use long and complex passwords;
change passwords periodically;
do not use the same password on different sites;
do not follow suspicious links;
do not leave personal data on sites you do not trust.
Particular attention should be paid to the private key and seed phrase that are generated when creating a bitcoin wallet (we will explain how to start it later). Your private key is a cipher with which you can always access your bitcoins. Accordingly, if someone else takes possession of it, then the coins will become his property.

Just as disastrous for your finances can be the consequences of losing a seed phrase. It is necessary to restore access to the bitcoin wallet in case of loss of the private key.

Cryptocurrency trading for beginners
We figured out the basics of cryptocurrencies and information security. Now let’s move on to the more practical part – crypto trading for beginners. You will need a cryptocurrency wallet (it is safer than storing coins on an exchange), as well as registration and a verified profile on a crypto exchange.

How to start a cryptocurrency wallet
A little higher, we already talked about the security of bitcoin wallet data. There are several types, each with its own pros and cons. Let’s look at all types:

Paper wallet. One of the easiest and most reliable ways to store cryptocurrencies. You can create such a wallet using offline services – applications that generate keys for a wallet without a network.

Since the paper is not connected to the Internet, the chances of your coins being stolen by hackers are minimal – unless, of course, you keep a photo of the data sheet on your phone.

At the same time, paper as a physical medium is exposed to the outside world. It can get wet in a flood, burn out in a fire, the text on it can fade from the sun. Therefore, ideally, this document should be stored in a fire and water resistant, dark place. Preferably, also in a safe so that they cannot steal it.

Hardware wallet. This method is highly secure – your keys will be stored on a small device, which is often well protected from physical impact. And besides, not connected to the Internet. A hardware wallet, like a paper one, is suitable for long-term storage – you can change dozens of smartphones and computers, and the keys will be stored separately from them at this time.

The main disadvantage of such a wallet is its price – good devices can cost more than a hundred dollars. In addition, the loss or theft of a hardware wallet can threaten the loss of cryptocurrency. It is worth noting that many devices have additional information protection, but this still does not guarantee the safety of data.

Mobile or desktop wallets. One of the most insecure, but most convenient ways to store cryptocurrency. Your coins will be available at any time – in the application for a computer or smartphone. Accordingly, it will be possible to make transactions faster than using other methods.

The security of a wallet application is lower than that of a paper or hardware one. First of all, because a smartphone or computer is almost always connected to the Internet. Accordingly, there is a risk of theft as a result of a hacker attack.

Registration on the crypto exchange and KYC
To start trading cryptocurrency, you need to register on a crypto exchange, where trading takes place. First of all, you need to choose an exchange – for this you should check its reliability. Examine whether the exchange has been hacked and how well it operates.

When you choose a crypto exchange that suits you, you will need to register on it. Usually the procedure itself is quite simple and is similar to registering on any sites – you need to provide basic information about yourself and email. Some exchanges will then allow limited use of the services, but for full trading you need to go through the KYC procedure.

KYC stands for Know Your Customer and translates as “Know Your Customer”. This is an important procedure that allows the exchange to make sure that it provides services to respectable clients who do not launder money through crypto trading. To complete KYC, you will need to verify your identity and address of residence with the appropriate documents.

Although such measures entail time costs and cause some irritation among customers, this is still a real way to prove the reliability of the counterparty. Therefore, study the requirements of the exchange before you start trading cryptocurrency on it – if there is no KYC, your funds may be at risk.

Basics of crypto trading
You have already opened and secured your wallet, registered on the exchange – it’s time to fasten your seat belts and start trading. There is no unambiguous and universal crypto trading strategy for beginners, but we will highlight the general provisions and give 5 important tips.

  1. Cryptocurrencies are an extremely volatile asset. Therefore, invest only the money without which you can live and with which you are ready to part forever. For example, investing all your savings in bitcoin at once is a bad idea that can end badly. Oleg Tsyvinsky, a professor of economics at Yale University, recommends keeping about 6% of your portfolio in crypto assets. In his opinion, digital assets can be a great diversification tool.
  2. Try to look at everything in the long term. Sharp drops in the rate for the crypto market are a common thing. Therefore, do not worry if you invested in a promising, in your opinion, cryptocurrency, and its value sank during the day.
  3. Remember that the outlook for the entire crypto market as a whole affects the demand for altcoins. When bitcoin starts to explode, the season of altcoins begins – their price pulls up next. And vice versa: when bitcoin falls, altcoins fall after it.
  4. Use market orders. Many exchanges allow you to place stop orders, which means that an order to buy or sell a cryptocurrency will be executed as soon as its value reaches the level you set. So you can immediately determine how much you are ready to lose – and applications will be automatically filled by a soulless machine that is not affected by emotions. There are also automatic trading systems, which are also called “trading robots”. They allow you to automate trading as much as possible, but remember that so far not a single such robot can completely replace a person.
  5. Follow the news of cryptocurrencies and follow the global agenda. The rates of bitcoin and ether, in particular, were influenced by such major events as the trade war between the US and China or the outbreak of the coronavirus pandemic. At the same time, it is important to understand that it is very difficult to predict the movement of the cryptocurrency rate against the background of the news, so rely on the forecasts of several analysts at once.

How not to lose all your savings
No one will give you an unequivocal answer to the question of how to trade cryptocurrency correctly. But if you heed the advice in this article, your chances of maintaining and increasing your investment will be slightly higher. Obviously, there are many factors that will influence your opinion about cryptocurrencies and your desire to invest in them.

If you have firmly decided that it is time to start trading cryptocurrencies, make every effort to ensure financial security. Only risk what you can afford to lose, make a trading plan and stick to your strategy.

If you want to learn more how to make huge income and passive income with cryptocurrency click here

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