Cryptocurrency is a digital currency where encryption techniques are used to regulate the generation of units, verify the transfer of funds and secure the transactions. As it is a decentralized currency, it uses blockchain technology which makes it safe and secure.
Cryptocurrencies have gained immense popularity in the recent times. There are thousands of cryptocurrencies available on the market today. Some of them are popular whereas others are not so popular. If you are planning to join this bandwagon, you need to know about certain things before you venture into trading.
Here are some points that will help you make an informed decision:
1) Know about the risks involved in cryptocurrency trading:
Cryptocurrency trading involves high risks as well as potential rewards. You may lose all your money if your trades go wrong. Hence it’s important to understand how they work and how they can benefit or harm you before deciding whether or not to invest in them
2) Do your research before investing:
Before investing in any cryptocurrency, you need to do thorough research about its history, pros and cons and its current value in the market. You should also find out whether it has any future potential or not? You should also look for information about other cryptocurrencies that compete with theirs.
3) Understand how to read charts and graphs
Before you can begin trading cryptocurrencies, you need to understand how to read charts and graphs. This will not only give you an idea of where the coin is heading in the near future but also help you make better decisions about when to buy or sell a particular coin.
Cryptocurrency trading is all about timing and predicting the next move of a coin. To do this effectively, you need to know what each chart means, how it is calculated and when to use its indicators for making decisions on whether or not to buy or sell a particular coin.
4) Identify which exchange platform has low fees
There are several types of cryptocurrency exchanges available today; some have higher fees than others but offer more perks such as no limits on withdrawals or deposits along with advanced features such as margin trading. If these are important factors for you then choose an exchange that offers them at competitive rates because they will save you money in the long run!
5) Don’t get greedy
One of the most important things for any type of investor is not being greedy when trying to maximize profits or minimize losses by selling at the wrong time or buying too high or low during a dip or rally in price action. This can be difficult for anyone who doesn’t have experience with investing as it requires patience, discipline and emotional control in order to avoid making emotional decisions.
6) Familiarize yourself with technical analysis tools such as MACD, RSI etc
The cryptocurrency market is highly volatile and prices can change rapidly due to news or rumors about a particular coin. Technical analysis tools allow traders to analyze historical price movements and predict future trends. These tools can help you decide which coins are likely to increase in value or decrease in value so that you can buy low and sell high.
7) Learn how to use stop losses and limit orders.
A stop loss is an order that is executed at a specified price to prevent further loss on your position. A limit order is an order that sets a maximum price at which a trade can be executed.
A stop loss could be used if the market moves against your position and you want to limit your losses. A limit order could help you buy cryptocurrencies at attractive prices.
8) Don’t invest everything you have in one cryptocurrency.
If you have all of your money invested in one cryptocurrency, then it becomes difficult for you to trade with other coins if something goes wrong with it. If this happens, then it will be challenging for you to take advantage of other opportunities that arise in the market because all of your investment capital will be tied up in one coin.
9) Be patient
Cryptocurrencies are still in their infancy, so there is a lot of volatility. If you invest in a cryptocurrency that has had a huge run up, expect it to cool off before it heats up again. The same goes for altcoins, or alternative currencies. All currencies have run up and fallen at different times, and this is true for cryptocurrencies as well.
10) Don’t panic!
Volatility isn’t just with cryptocurrencies — it’s something that can happen in any market. Remember that the value of your portfolio can drop quickly and dramatically, but it can also rise. Don’t let market volatility scare you away from investing in cryptocurrency; instead, take advantage of it by selling when prices drop and buying when they rise again.
11) Be careful about exchanges
You may want to buy bitcoin from an exchange or online broker instead of trading on an exchange directly (see below). That way you don’t have to worry about storing the currency after purchasing it (though some exchanges offer wallet services too). Many major exchanges also offer digital wallets for their users who want more security.