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5 Steps for Trading Cryptocurrencies for Beginners

27 November 2019 15:41, UTC
5 Steps for Trading Cryptocurrencies for Beginners
By Michael Dehoyos

Cryptocurrencies can be confusing, unpredictable and frustrating unless you know how to deal with them. Here are five simple steps towards parenting cryptocurrencies and earning regular, reliable investments.

Know what you’re doing

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Learn, learn, learn. The more knowledge you have about trading, the better your position will be. Start off with the theory behind cryptocurrencies: make sure you know your candlestick chart from your spread chart from your depth chart. Then, make sure you’re following the latest news and developments, so you’re not caught out. Once you know about the environment, you can start looking for a platform to trade on. Make sure you do your research here too: don’t set up an account on anything you’re not comfortable with, and use a dummy account if you’re unsure to begin with.
“To keep your knowledge up to date, become part of the community. Join forums and subreddits about trading and cryptos, and just like you’d diversify your portfolio, diversify your news sources so that you don’t miss out on news or innovations,”
explains Jules DIRK, a crypto writer at Brit Student and Write My X. But bear in mind that big investors sometimes use social media to their own uses, unloading their less profitable currencies onto new traders. Don’t act on any news until you’ve assessed the situation.

Set your limits

Don’t set out to trade everything every time. There are hundreds of cryptocurrencies in circulation, it’s easy to spread yourself too thinly and restrict your potential earnings. To begin with, pick one or two cryptocurrencies that you will commit to until you’re seeing a regular profit.

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Another essential is to have clear stop loss and target levels. If you’re not sure what this means, go back to point 1. Knowing when to get out is just as important as knowing when to start, if not more so, and setting an educated target level guarantees you profits if the cryptocurrency starts to rise.
  

Start small

If there’s one piece of advice you can take away from this article, it’s DON’T PUT ALL YOUR MONEY INTO CRYPTOS. No matter what the whales of the market might say, it’s never a good idea to put all your eggs in one basket. Start small until you are familiar with how the market fluctuates. When you earn something off that initial investment, cash out and use the profits to invest again, building on what you’ve learned.
“Sometimes a price seems affordable, and that’s enough motivation to throw money at a currency. But affordability is not as important as potential. Look at the market cap rather than the price of individual coins,”
says Darren ATKINS, a tech blogger at 1Day2Write and NextCoursework.

Plan to expand

Once you’ve started, you want to start spreading those eggs into exciting new baskets. The first thing everyone will tell you is to expand your profile, but diversifying without a plan is a road to disaster. Diversify correctly, though, and you reduce your risk on every trade. Choose carefully: there are lots of currencies aimed at people looking for quick cash, but much fewer with real-world uses. Look for cryptos that make sense with your finances and lifestyle.

Once you’ve picked your winners, start trading small. Regular small trades are the safest and surest way to earn on your investments, so don’t look at big one-time payoffs. Look for the currencies with the highest daily trading value.

That being said, diversifying sometimes can’t save you from a dip in the market. The value of all cryptocurrencies is linked to their king: Bitcoin. If the value of BTC to USD goes down, so does the value of all other cryptos. This means diversifying beyond cryptocurrencies is still essential, just in case disaster strikes.

Don’t lose your head

Take it slow! Don’t fall prey to sudden changes in the market, hoping to get rich quick. If there’s one thing in common with cryptocurrencies, it’s that they’re wildly unpredictable. Use the knowledge you’ve gathered, rely on hard data, and make small reliable trades rather than banking on big sporadic payouts. Slow and steady makes you money. And, above all, don’t be greedy!

About the author:
Michael Dehoyos is a specialist in social media analytics at PhD Kingdom and Academic Brits. Having achieved an UAL Level 3 Extended Diploma in Performing Arts from the London Brit school, Michael’s life took a turn when he discovered his passion for writing at Essay Help. Michael now aids companies with their digital marketing strategies.

Image courtesy of Investing Haven

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