While Govt. regularity authorities all around the world are warning people not to trade or deal in cryptocurrency like Bitcoin or Ethereum, more are more people are getting attracted towards this new generation digital currency that sounds more secure and decentralized and out of Govt. control.
Many startups are raising funds via ICO route rather than going to investors. With increasing number of different type of coins there has been a rise in cryptocurrency trading. Like share trading people are making lots of money trading in crypto currency. You can also join the moneymakers and start crypto trading on your own. Here are useful tips on how to successfully trade on crypto exchanges.
Set up a crypto wallet
For beginners, the first step is to choose and set up your cryptocurrency wallet before picking the exchange to trade on. The crypto wallet is the place where you are going to store your encrypted passwords that represent coins. This is the same as storing your money in a bank account.
Pick the exchange to trade on
Crypto exchange is just like currency or stock exchange. You need to choose the place where you will trade cryptocurrency for the other Cryptocurrencies including fiat currencies such as the US dollar. It is important to note that crypto exchange is not a part of the regular stock exchange and is not the same as Wall Street or its exchanges although the general mechanics are the same. As the market grows, the number of cryptocurrency exchange platforms also keeps growing. When choosing a crypto exchange platform, it is important to look at and compare the various crypto platform fees since some cryptocurrency exchanges will require you to pay a certain percentage of each deal while some will ask you to pay for both income and outcome transactions. Pick what best suits you.
Diversify your trading portfolio to lower possible risks
Like any other investment, diversification ensures that you lower any possible trading risk. This involves distributing your money into many different Cryptocurrencies. Some may grow while some will fall hence you can balance your losses by not investing in a single bet. Cryptocurrency trading requires a lot of research since it involves tracking changes bearing in mind that there are many Cryptocurrencies. It is advisable to start with a few and later expand gradually. Market valuation is another important factor to consider when selecting your cryptocurrency. According to expert traders, there are three main types of valuation that define Cryptocurrencies namely:
– Large cap (Top 5 coins)
– Mid cap (These are coins bigger than $200 M)
– Small cap (These are coins smaller than $200 M)
Form a trading portfolio depending on the proportions that you are comfortable with. For instance, 34 percent in large cap, 33 percent in small cap and 33 percent in small cap. This is a good start although you can expand your portfolio on a monthly basis. Avoid holding all your currencies on the crypto exchange since it can be hacked which means that you are going to lose everything.
Do your research
If you want to succeed in crypto trading, get ready for research and tracking. Check the latest crypto currency ranking, news and the key indicators on a daily basis. Avoid being caught in the Fear Of Missing Out (FOMO) the next great opportunity in the crypto exchange space. Never be afraid to ask your fellow traders any questions that you may have.
Do not invest your last coin
The cryptocurrency space is largely volatile and there is always the probability of the market crashing. Cryptocurrencies are not centrally regulated and controlled and although blockchain comes with a feeling of market security for most traders, there is still nothing that can be done in the event that someone cheats you or you lose a coin.