6 months ago

How to Get Started with Cryptocurrency Trading

With Bitcoin, a new behemoth of an industry was born. The world may not have seen it right there and then, but cryptocurrencies have turned into the fastest-growing sector in the economy. The appeal of digital currencies being free from any regulations has been the primary driving force behind it.

Since its inception, different groups of people have benefited from crypto. The early adopters received returns on their holdings, while companies like MicroStrategy and Tesla capitalized on it later.

Then there are traders. People with swift fingers and enough fundamental knowledge can benefit from regular price fluctuations. Take the Shiba Inu coin price, for example. This meme coin rallied 49,000,000% in 2021 alone. Even if you managed to capture a fraction of this parabolic rally, you will have enjoyed an enhanced experience.

But this is an exceptional scenario. You must capture the essence of trading first to get into this volatile industry, regardless of what coin you trade.

Cryptocurrency Trading Basics

Trading, in its essence, is the art and science of buying and selling assets. Crypto trading might be new, but it’s a practice as old as commerce itself. From commodities to stocks, everything is subject to trading.

However, the meteoric rise of cryptocurrencies has opened a new frontier in trading. Take Bitcoin or the infamous Shiba Inu coin, for example. They both offer a unique blend of volatility and liquidity that you rarely see in traditional markets. This combination makes them an attractive option for traders looking for quick returns.

Then, there is the decentralized nature of cryptocurrencies. It’s a global trading platform that operates 24/7. The crypto market’s volatility, along with round-the-clock availability, can lead to large price movements within a short period that typically offer high return potential.

What You Need to Get Started

Well, you don’t need much in terms of equipment when it comes to trading cryptocurrency. However, you need a pretty deep knowledge and understanding to actually benefit. We’re only saying this because 95% of traders lose money regularly simply because they don’t focus on the fundamentals hard enough. So, here are a few of them.

Risk Management

In trading, risk management is everything. Finding the ideal risk-to-reward (RR) ratio based on your strategy is ultimately the key to success.

The sole purpose of risk management is to protect your portfolio because if you lose your portfolio in one or two bad trades, there will be no more trading. But if you maintain consistency, you’ll succeed.

Fundamental Analysis (FA)

From a coin’s whitepaper to threads on crypto X (formerly known as Twitter) to global macroeconomic shifts, everything is part of the fundamental analysis. It’s the fundamentals that drive market sentiment, and it’s sentiment that controls the price of assets.

You must learn how to interpret the available information. Spoiler alert: it’s going to be an uphill battle.

Technical Analysis (TA)

Once you get the hang of fundamental analysis, you can shift your focus to technical analysis. This is where the price charts and the fancy lines come into play. It’s also an uphill battle as you have to figure out which indicators and patterns suit your trading style the best.

Best Platforms to Trade Crypto

Primarily, there are two major types of platforms – the centralized exchanges (CEX) and decentralized exchanges (DEX). Binance, for example, is the biggest CEX in the world and it handles a whopping 92% of all spot Bitcoin trading.

In terms of DEX, Uniswap is the undisputed king. Besides the majority of mainstream coins, this Ethereum-based exchange is home to many trading pairs such as beam/WETH and ETH/HEX.