Grace Malik 
What is Cryptocurrency trading?
Before going directly to cryptocurrency trading, let us understand the meaning of trading. Trading is the economic concept of purchasing and selling assets. The assets may consist of products and services being traded between the parties.
Cryptocurrency trading, however, involves purchasing and selling cryptocurrencies on an exchange. It is speculating on a cryptocurrency’s price movements through a Contract for Difference (CFD) trading account or purchasing and selling the underlying currencies through crypto trading.
CFDs are leveraged derivatives, so you can trade cryptocurrency price movements without owning the underlying cryptocurrency.
When trading derivatives, you can buy if you believe the value of a cryptocurrency will increase and sell if you believe it will decrease.
However, since your profit or loss is still determined based on the total magnitude of your investment, cryptocurrency trading increases both your gains and losses.
In contrast, when you purchase cryptocurrencies on an exchange, you actually buy the tokens. You must establish an exchange account, deposit the entire asset value to initiate a transaction, and store the cryptocurrency tokens in your personal wallet until you are ready to sell.
This guide explains cryptocurrency trading strategies and introduces you to cryptocurrency trading platforms and applications, trade components, trading techniques, and the role of technical and fundamental analysis in developing a comprehensive trading strategy.
Is it safe to trade cryptocurrency?
From various perspectives, trading cryptocurrencies is not risk-free; therefore, you must understand how to protect yourself.
The vast majority of cryptocurrency trading platforms are unlicensed, first and foremost. Therefore, your funds are at risk if you use an unlicensed platform.
This is why we recommend eToro, which is regulated by multiple top-tier licensing bodies and authorized to offer cryptocurrency brokerage services to US citizens.
Next, you must consider the possibility of incurring a financial loss due to your trading activities. Both stop-loss and take-profit orders must always be executed for proper capital management. The storage of your cryptocurrencies is a further precaution that you must take.
Ultimately, when utilizing a trading platform, the provider is responsible for securing your digital currencies. It is essential, therefore, to evaluate the platform’s security controls. eToro provides a custodial wallet service that employs institutional-grade security procedures.
This means you do not need to be concerned about safeguarding your private credentials. eToro has an internal risk management department entrusted with preventing financial crime against its consumers.
Why trade cryptocurrency?
When trading cryptocurrencies, you are speculating on whether the value of your selected market will rise or decline without ever actually acquiring the digital asset. This is achieved through the use of derivatives such as CFDs.
Here are some advantages of cryptocurrency trading are:
- Security
- Volatility
- Accessibility and Volume
Security
Cryptocurrencies are very safe because they are built on blockchain technology, which makes it almost hard to hack or change transactions. In addition, since transactions are unrelated to personal data, cryptocurrencies provide better privacy and anonymity than conventional investment means.
Volatility
The top 10 cryptocurrencies, including Bitcoin and Ethereum, are the subject of intense short-term speculative interest, which causes their values to fluctuate drastically. Due to “clusters” of volatility, any asset that increases in value significantly is statistically likely to keep improving or decreasing in value.
For instance, volatility is expected to remain high tomorrow if it is high today. What this indicates is that there will likely be speculative opportunities in cryptocurrencies throughout the year, either in terms of purchasing or selling short.
Accessibility and volume
The more significant cryptocurrencies should pique your curiosity for a second reason: several of them, including BTC and ETH, reached many all-time highs in 2017.
The historical analysis demonstrates that when stocks of new firms reach notable new all-time high prices, they often continue to rise. This may provide a trader with a profitable statistical advantage and act as a guide for trading Bitcoin and other significant cryptocurrencies.
There is good news for cryptocurrency traders: an increasing number of brokers now provide trading in Bitcoin, Ethereum, and Ripple. And as a Bitcoin trader, your alternatives expand weekly, and you can use leverage.
The Beginners Guide to Trading Cryptocurrency
There are a variety of strategies for trading cryptocurrencies. To begin trading cryptocurrencies, you must comprehensively understand what they are and how they work.
You must adhere to the correct procedures when trading cryptocurrencies as a beginner. Here are some measures you can follow to initiate your cryptocurrency trading journey:
- Enroll in a cryptocurrency exchange
- Fund your account
- Invest in a specific cryptocurrency
- Select a trading strategy and start trading
- Store your cryptocurrency securely
Enroll in a Cryptocurrency Exchange
As a beginner, the first stage is to search for the most reputable cryptocurrency exchanges. Unless you already possess cryptocurrency, you must create an account with an exchange.
Binance, Coinbase Kraken, CoinDCX, and Gemini are among the most popular.
Opening a crypto-trading account is comparable to establishing a brokerage account. Know Your Customer (KYC) requirements stipulate that you must provide your address, date of birth, social security number (in the United States), and email address when creating an account.
Just make sure to provide the necessary information. To create an account with a cryptocurrency exchange, you must provide personal information, just as you would with a traditional exchange.
Fund your account
After creating an account in one of the Cryptocurrency exchanges, the next stage is funding the account through the utilization of debit cards and wire transfers.
You can contribute funds to your digital wallet with ease. Wire transfer is also one of the most affordable account funding methods. Coinbase and Gemini are two cryptocurrency exchanges that offer free wire transfers.
Invest in a specific cryptocurrency
Because Bitcoin and Ethereum are more predictable than other minor coins, most cryptocurrency investors invest in them.
Many cryptocurrency investors invest a portion of their funds in altcoins. Despite being more hazardous than large-cap cryptos, small- to mid-cap cryptos possess more significant upside potential.
Select a trading strategy and start trading
Choosing a trading strategy is a crucial step in trading cryptocurrencies. Combining the correct fundamental and technical analysis with trading indicators makes it possible to achieve high profits in cryptocurrency trading. However, if you are a newbie, you can go on to enroll in a cryptocurrency trading course and become an expert.
However, if you are searching for a cryptocurrency trading strategy, you can attempt cryptocurrency auto trading with software. Depending on your investment objectives, cryptocurrency trading algorithms implement a procedure to generate the highest possible returns.
With automated cryptocurrency trading, you can make money quickly, retain your currencies, or diversify your portfolio conservatively, neutrally, or aggressively. You can actively investigate cryptocurrency trading on some websites while automating it on others.
Store your Cryptocurrency securely
It is necessary to store your cryptocurrency in a secure location. For this purpose, either software or hardware digital wallets are available.
For the security of your cryptocurrencies, Hardware wallets are recommended because they hold your cryptocurrency on a device that is not connected to the internet.
As an active Bitcoin trader, you must retain your funds on the exchange to access them. For example, you should have a Bitcoin wallet when acquiring cryptocurrencies for the medium and long term.
Conclusion
The cryptocurrency markets are volatile and speculative, making this an ideal investment sector for short-term speculators.
After reading this guide, you should know how to approach cryptocurrency trading with a risk-averse mindset, as we have covered numerous strategies to outperform the market, even for beginners.