If you have not heard about Bitcoin, you might be living in an alternate universe. The good thing is that you don’t have to be a developer, tech geek, or big investor to get into the cryptosphere, but you do need some basic 101 knowledge of Bitcoin trading.
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Once you’ve chosen to invest and trade in cryptocurrency you must understand that it is a very volatile market. It is fairly common to see a 30% or 40% swing in the market on any given day. A good practice is to make sure you never invest anything that you cannot lose. That may sound defeatist, but with high risk comes the chance to win big or lose it all if you’re not smart.
It’s true that the volatility of the market and huge price swings can be used to your advantage – if you’re on the right side of things. But if you’re on the wrong side, you could also lose a lot of money fairly quickly.
In Bitcoin Trading 101, there are two ways to go about trading in the crypto market: Approach the market as an investor or enter as a trader.
Investor Approach
A good practice for the investor approach is to purchase a cryptocurrency and hold on to it. Typically give it a few months or even a few years and keep an eye on the valuation over time. An investor is usually not concerned with the short-term daily or hourly fluctuations in price. Look more toward the monthly, yearly and whole history to see how the market trends. A steady overall decline should indicate that it’s a bad buy, but a steady incline in the historical charts could indicate a nice profit over time.
Trader Approach
Traders typically focus on short-term profit and use the volatility of the market to sell in and out of a trade for quick profits. The traders mantra is to buy low and sell high! Make sure you have a plan with a goal for your profits (and losses). Keep an eagle eye on the charts and trends. If it’s available in the crypto exchange, set your stop-loss limits.
Where to get Crypto
So, in order to trade or invest in cryptocurrency, you first need to get some in your possession. If you’re brand new to crypto trading then this might seem overwhelming – but it’s really not.
One of the most reliable and trusted ways to purchase cryptocurrency is through Coinbase.com where they have easy set up and KYC to set up your account and get verified. We should point out that Coinbase is a cryptocurrency broker, exchange, and a wallet. From the website or mobile app, you can easily link a credit card or your bank account for quick money transfer into your Coinbase account and make your first crypto purchase. Coinbase currently offers Bitcoin Cash (BCH), Ethereum (ETH) and Litecoin (LTC), and more tokens are being offered on a regular basis.
Certainly there are several other avenues to purchase cryptocurrency, but for now we’ll stick with Coinbase.
Be Smart
Like anything, watch for the market trends. Buy crypto low to get the most bang for your buck. Keep in mind that there are fees associated with your transactions. Using your bank account has smaller fees than credit cards. Both options give you nearly instantaneous transactions to buy crypto.
If you want to approach the market as an investor, you can leave the coins in your wallet and check it now and then. It is almost guaranteed to expect a natural rise in the value of BTC over the years; that is when you time your entry and buy into a bullish trend.
Exchanging your coin
If you are on Coinbase, you can easily exchange your cryptocurrency with a different one within your Coinbase app. There is no fee to do this if you remain on Coinbase, however, if you want to transfer your tokens to an external exchange then there are some steps to ensure you do it correctly.
First, consider those crypto exchanges exactly how you would the stock market. Bittrex, Binance, and OKEx are just a few exchanges. Bear in mind that some exchanges are limited to which countries they serve, so do your research. Bittrex is often recommended for their reliability and easy user experience, but visit other exchanges to see which one serves your needs.
Once you’ve created an account and have set your verification levels with the exchange, you will need to transfer some of your newly purchased crypto and deposit them to your exchange wallet. You must be very careful to select your deposit address for the correct token or you risk losing your funds.
Most addresses will have a QR code that can be scanned for transactions between your exchange wallet and your phone app. If not, be sure to copy/paste the address – do not try to type it because a wrong address will either throw an error or you’ll be sending your funds to a very happy person…who isn’t you.
Now that the tokens are sitting in your exchange wallet, it’s time to scope out the exchange. Get familiar with the tools. Hopefully you’ve already done some research on the tokens that interest you. With well over 800 coins available to trade, there are a lot of choices. Consider which ones you want to HODL and which ones you want to utilize for best profits. Study the charts, figure out where your buy and sell price points are, and set your trade options. Once on the exchange, it’s really not that different from a traditional stock market exchange.
One other important thing to remember: NEVER leave your funds in a crypto exchange wallet for long-term storage. If you’re HODLing for awhile, seriously consider the purchase of a hardware wallet. That is the safest way to ensure your funds are not stolen or hacked, which is a possibility on a more vulnerable exchange.
That’s it for the fundamentals of Bitcoin trading. Do your research. Trade with confidence. Know your limits. Make some money!
Disclaimer
Content provided by CryptoTraderNews is for informational purposes only, and should not be construed as legal, tax, investment, financial, or other advice. All information is of a general nature. As always, there is risk with any investment. In exchange for using our products and services, you agree not to hold CryptoTraderNews Pro, its affiliates, or any third party service provider liable for any possible claim for damages arising from decisions you make based on information made available to you through our services.
It is now left to you to decide how you want to trade, either as an investor or as a trader. We recommend it that you do a lot of research before you decide on how you want to play the game.
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