How to Start Crypto Trading: A Beginner's Guide to Crypto Trading
The world of cryptocurrency can be an intimidating place for newcomers. There are plenty of complicated terms and concepts to wrap your head around, not to mention the dizzying array of different currencies you need to understand to trade them successfully.
Even something as simple as buying your first few tokens can seem like a challenge. Any new industry is going to have its fair share of challenges when it comes to making it accessible and user-friendly for newbies. New initiatives often have insider terminology and structures that make them difficult for anyone who isn't already well-versed in their intricacies.
Crypto is one of those industries, but thankfully there are plenty of excellent resources out there that make it much easier than it could be. This guide will provide you with information about how to get started with crypto trading, what to do and what not to do.
What is Crypto Trading?
The simplest way to describe crypto trading is the buying and selling of cryptocurrencies and tokens. Trading crypto is different from holding coins like Bitcoin or Ethereum because you're actively buying and selling them in order to make a profit on the price changes. Trading crypto is often done through exchanges that let you buy and sell crypto using different currencies, including USD and INR, and stablecoins like USDT and USC.
There are tons of different types of trading strategies. However, there are some common ones that you'll see used by most people. These include day trading, swing trading, scalping, and long-term investing. Each of these strategies focuses on a different aspect of trading, and they all have their own unique advantages and disadvantages.
Why Start Trading Crypto?
There are plenty of reasons you may want to start trading crypto. You may have been keeping an eye on the industry for a while, and you're now ready to take the plunge into actual trading. Maybe you've seen some of the insane returns that some people have gotten by trading crypto and want a slice of that action for yourself. Whatever your reason for getting into crypto trading, here are some of the many benefits you can expect from it.
Volatility
Crypto trading offers you the potential to make a lot of money. Some people have made millions from crypto trading. You can potentially earn thousands of dollars from trading, even if you're dabbling in it as a small side project. Such extravagant returns are due to the heavy volatility and young and inexperienced retailers that might either ad your portfolio to reach great heights or destroy it at once.
An open to all ecosystem
Crypto trading gives you the freedom to work from anywhere. No matter who you are or what your background is, you can make money trading crypto. You don't need to be based in a major city or have a particular skill set.
Hedge against inflation
Crypto trading offers you the potential to grow your investment. Unlike fiat currencies such as USD, crypto grows in value over time. If you start trading now, you have the potential to grow that invest significantly in the future.
Get The Right Tools
Before you do anything else, you need to make sure that you have the right tools for the job. Your success as a crypto trader will depend heavily on the tools that you use. Here are a few essential tools that you should have before you get started.
A trading platform
This is where you'll execute your trades and track your profits. There are tons of different trading platforms out there. You'll want to find one that suits your individual needs. An ideal trading platform of your choice will depend on many variables that you need to fill, do you prefer DEX or CEX, what kind of coins you want to trade, if you wish to trade in derivatives like options and futures, or how much leverage you want to use and so on. But more on this later.
Trading tools
You'll need access to plenty of different tools and resources to help you with your trading. You'll want to find tools that make crypto trading as easy as possible. For example, TradingView can be used for charting and CoinGabbar to get information about cryptocurrencies like volume, market cap, category basket, and much more.
A crypto wallet
Crypto trading doesn't just earn you money. It also lets you earn tokens. Some of these tokens will be extremely valuable and profitable. You'll need a crypto wallet in order to store receipts, coins, and other assets.
Finding the Right Platform for You
As we mentioned above, it's essential to find a trading platform that is a good fit for you. For starters, you can use CoinGabbar's mock trading platform to hone your trading skills. This will help you get a gist of the trading world that you want to put your money in, a life-like experience without the risk of losing money; pretty neat ain't it?
There are tons of different platforms out there, and each one will have its own unique advantages and disadvantages. It's essential to spend some time finding the right one for you. Here are a few features that you'll want to keep an eye out for when choosing a trading platform.
Fees
Please find out how much you'll be charged in fees on each platform before committing to it. Fees can add up quickly, so it's essential to choose one with a low cost to trade.
Liquidity
Liquidity refers to how easy it is to trade on a particular platform. You want to make sure that you find a platform that has plenty of liquidity. This will make it easier for you to trade on the forum.
Supported currencies
You want to make sure that the trading platform you choose supports the crypto coins that you wish to trade. Make sure to check for any that you want to change in the future that may be outside the platform currently.
Exchange
The idea of cryptocurrencies was a decentralized ecosystem, but the current decentralized exchanges could be more scalable and hence not very preferable, especially for retailers with a small portfolio. Therefore, most opt for centralized exchanges that are cheaper but need to contain the real essence of blockchain tech.
Choice of trading
As a trader who prefers safety, you would want to opt for spot trading; as a user of trading bots, you would opt for arbitrage platforms. Similarly, the higher you want to take a risk, the higher you would wish for leverage, which means you would like to opt for derivatives trading platforms.
Trading Strategies
Different trading strategies are going to be more successful in other markets. It's essential to find a system that works well in the current crypto markets. Here are a few systems that you may want to try out.
Day trading
Day trading involves actively trading coins throughout the day. It's a high-risk strategy that consists in making many small trades throughout the day in hopes of capturing small gains on each one. This strategy is generally best in volatile markets.
Swing trading
Swing trading is a strategy that is more passive than day trading. It generally involves watching one or a couple of coins closely and waiting for them to drop in price. It's best in relatively stable markets.
Scalping
Scalping is a high-risk strategy that involves making many small trades throughout the day. This strategy is best in highly volatile markets.
Arbitrage
Arbitrage is engaging in discrepancies in liquidity across different liquidity pools and exchanges and making money from the difference. This strategy requires a high level of alert or trading bots.
How to Start Trading Crypto: Step-by-step guide
There are a few steps that you'll need to follow in order to start trading crypto. Fortunately, most of them can be done online from the comfort of your own home. Here are the steps you need to take.
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First, you'll want to get yourself a crypto wallet. Make sure to keep it securely stored and away from prying eyes. You can read more about storing crypto assets in a wallet in our guide about crypto wallets.
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Next, you'll want to pick a trading platform and sign up for an account on it. Remember to choose a platform that is a good fit for you and has low trading fees. -
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After that, you'll want to link your trading platform account with your crypto wallet. This will allow you to transfer coins in and out of your account and start trading.
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Now is the time to start researching different coins and tokens that you want to trade. Make sure to do some research and find coins that have the potential to grow in value.
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Once you've picked your coins, it's time to start trading! Remember to track your profit and losses closely. It's easy to get caught up in the moment and make rash decisions, so it's important to remain level-headed.
Dos And Donts For Budding Crypto Investors
Start small and keep your costs low.
Crypto trading can be highly profitable. However, you don't have to make a fortune to start earning money from it. In fact, you can start with just a few dollars. Only spend what you have to, and start small. It's easy to get caught up in the hype and start trading with more money than you can afford to lose.
Never go with emotions.
There are two popular terms - FUD and FOMO, Fear Uncertainty and Doubt and Fear Of Missing Out; you cannot hop on a moving train nor hop out due to peer pressure. Always trust your trades; there is no meaning in trying to close an open trade or getting on the wagon because you see that that particular crypto coin is pumping. Always Do Your Own Research and be confident about the trades you pick.
Always use a stop loss.
Stop loss is a significant order type that might protect your assets from losses from trades that went in a different direction than intended. Traders need to set the stop loss, which will automatically hit if the price of an asset hits a certain predetermined price.
Now that we've gone through all the basics, here are a few tips for newbies who want to start trading crypto.
Don't put all your eggs in one basket.
If you start trading with all of your money in one trade, you're going to be in for a world of hurt if that trade goes wrong. It's important to diversify your investments and spread them across several different coins or tokens.
Don't try to time the market.
Trying to time the market and guess when it's going to go up or down is a notoriously inaccurate strategy. This is especially important to remember in volatile markets.
Take calculated risks
The market offers more than 1000x leverage. While more leverage gives you more buying and selling power, it brings up the liquidation price, a volatile market is your friend in such situations, but it is also your worst enemy since one bad trade might wipe your collateral. That is why it is important that you take calculated risks, the risks you can bear.
Conclusion
Crypto trading is a great way to earn extra money or even build a full-time income. It's important to keep in mind that crypto trading is not for the faint of heart. It's a high-risk industry, and it's easy to lose money if you don't know what you want.
