Cryptocurrency trading explained: simply process of buying and selling crypto. Cryptocurrency trading is the equivalent of forex trading in the fiat currency world. Trading cryptocurrencies is done on a crypto exchange, which is analogous to a stock exchange. However, unlike stock exchanges, crypto exchanges run 24/7. The markets never shut down or take a break.
How to Trade Crypto
To begin trading crypto, a person has to choose a crypto wallet, as well as a crypto exchange where they can trade in crypto. Today, there are over 1500 cryptocurrencies. However, beginner traders should begin on a major coin such as Bitcoin, which minimizes the potential for wipeouts in the extremely volatile crypto markets. When you choose to buy and sell crypto, you can also download numerous wallets online that let you trade crypto for other crypto coins directly.
Signing Up for a Crypto Exchange Account
To trade on a crypto exchange, you will need to sign up with an account. As a beginner, you should begin to use the leading crypto exchanges in the world such as:
While these exchanges will require that you provide more information, they are also more secure. Besides that, they have better compensation programs in case anything goes wrong.
Most leading crypto exchanges require a lot of personal information when setting up an account. You will have to provide an address, identification documents, and more, through a process known as Know Your Customer (KYC).
Fund the Account
To begin trading in crypto, you will have to fund the account. This often entails connecting your bank account, mobile wallet, or debit card to the exchange account. When funding an account, bank wire transfers are often the cheapest option on major exchanges.
Choose a Coin
Once you have the funds in your account, you can now pick a coin in which to trade. While it is preferable to choose Bitcoin if you are a newbie, you can still conduct your own research. Through research, you can find a project associated with a coin, whose value might rise soon. The goal, in the crypto markets, is to buy low and sell high.
Once you pick a coin or coins, you can now start trading. Most exchanges have a minimum amount you can buy, which is often $20 on most exchanges. Besides trading in person, you can try using a trading bot to make trades.
Store the Crypto
Once you begin buying and selling crypto, you will need to look for a safe place to store your crypto. Storing all your crypto on an exchange is not wise. Instead, you should look to set up an offline wallet, which is a more secure option for storing crypto.
There are numerous crypto wallet types, all of which are much safer than storing all your funds on a crypto exchange. This is because if hackers manage to compromise the Centralized Exchange (CEX), they could steal all your funds. While the exchange might eventually compensate you, it may take some time, and you could miss profitable trading opportunities.