4 ways to start crypto trading

So, you’ve heard about the breakout rally by bitcoin and other cryptocurrencies that started around December last year. Now, you want to catch the wave and learn crypto trading. Well, you’re not alone. As cryptos become more mainstream, countless new traders want to get a piece of the market. 

However, before you even open an account in one of the top crypto exchanges, you need to face the fact that success in the crypto market doesn’t happen overnight. Despite the opportunities brought on by big swings in crypto prices, it’s not easy to make money in this market.

It would help if you’re prepared before diving into crypto trading. Whether you’re an experienced or newbie trader, it’s best to kick off your crypto career with a fresh cup of coffee, a comfortable chair, and an all-inclusive beginner’s guide to cryptocurrency. You can’t expect to succeed in crypto trading if you don’t even know the nature of digital currencies. Once you’re done with the basics, you can set your attention to learning crypto trading.

What Is Crypto Trading?

A trader buys and sells crypto assets based on price fluctuations. Trading is primarily done in a crypto exchange platform. This is where the action happens and the part where you make or lose money. So, it pays to do more reading and whip up a second cup of coffee.

Other than learning the basics of cryptocurrencies, you don’t have to confine yourself to just reading through texts or watching videos on crypto trading. You can get a firsthand feel of what it’s like to trade cryptos, minus the risks. By using a crypto trading sim, you can simulate live trading strategies and test your skills without spending real money. Crypto simulators are often free to use.

4 Ways To Start Crypto Trading

The following are the most common ways to start crypto trading. 

1. Fiat Money-to-Cryptocurrency Trading

Before you can trade cryptocurrencies, you first need to convert your fiat or government-issued money to crypto. Keep in mind that most, if not all, exchanges have set minimum deposit requirements before you can enter the market or do live trading.

Interestingly, merely converting your fiat money to a digital asset can be considered trading in its most basic form. Suppose you have $10, and you exchange it for the same amount of bitcoin. A few hours later, the value of your bitcoin has risen two folds, net of fees. So, if you pulled out of the market and withdrew your dollars now, you get $20. That’s a 100% increase in the value of your money. And you haven’t even traded cryptos with cryptos yet.

You can convert fiat through a crypto exchange. Fortunately, there are many exchanges available now. Also, some have already closed shop after they got involved in various controversies. That’s why you must choose which crypto to sign up with. To help you out, here are some tips on how you judge a good exchange:

• Safety: Reputable exchanges will always have some form of KYC (know-your-client) guidelines. It’s a way to verify that you are who you say you are; you need to present a valid ID. Exchanges with KYC processes are safer than anonymous exchanges. 

• Reputation: Check the reviews about the exchange platform you’re planning to join. If they’re not involved in any crypto controversy and their customers are happy, then you may be looking at a reputable exchange.

• Availability: Not all exchanges can do business in all jurisdictions. Hence, before you sign up, make sure that the crypto exchange can operate in your country or area. 

2. Contract For Difference (CFD) Trading

CFD is a derivative trading tool that allows investors to make money based on the difference between the crypto’s value at the time the investor entered the CFD (open position) and its current value when the investor pulls out (close position). CFD is all about price movements, so if you go this way, you must be on top of cryptocurrency trends expected to happen this year. 

One good thing about CFD trading is that it gives the trader maximum leverage by allowing a large position to be opened even with small capital. In other words, you get full exposure in the crypto market by putting up a small deposit. Plus, you can go long (buy) or short (sell) regardless of the market’s movement. Essentially, you’re betting on whether the price of a cryptocurrency will rise or fall. 

You can trade crypto CFDs even without crypto exchanges as you’ll only deal with a broker. Due to the nature of CFD trading, it can be risky for new traders. 

3. Day Trading Crypto

As a crypto day trader, you put out orders to buy and sell crypto multiple times a day. When your trading day ends, you count your winnings or losses. It’s a faster way of making money. 

The crypto market’s high volatility makes it a good platform for day trading. The major cryptocurrencies can experience several ups and downs in a day, meaning traders have more opportunities to open and close positions every single day.

In day trading, your mantra will be to buy low and sell high. So, you’ll wait or look for low-priced cryptos to buy. Then, sell them when the market prices for those cryptos rise. Some big traders think that day trading offers small income opportunities. But considering that you’ll be buying and selling crypto assets several times in a day, those small winnings can add up to sizeable profits. The trader’s goal is to have more wins than losses in a day.

4. HODL or Long-term Crypto Trading

HODL is a slang term in the cryptocurrency world. It means to hold on to your bitcoin and other crypto-assets for the long haul or at least for a year. Traders and investors who adopt the long-term strategy believe that the value of cryptos will continue to rise despite their wide price fluctuations.

Suppose you were among those who bought one bitcoin in 2010 when it was only $0.08 per coin. Today, that coin will be worth $50,000. That’s a value increase that’s hard to beat by any commodity or asset type. 

One of the advantages of long-term trading is that you don’t need to learn technical stuff. You just buy your crypto assets and wait for the prices to increase. 

Bottom Line 

The goal of crypto trading is to increase the value of your investment. You can start with fiat-to-crypto trading, day trading, CFD, and HODLing. Take note that before you put money in the market, it would be best to learn as much as you can about cryptocurrencies.

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Editors’ Recommendations:

• CFDs – The best way to invest in cryptocurrencies
• What is the minimum amount you need for trading crypto?
• What is a cryptocurrency exchange?
• 5 steps you should take before you start trading online