Last Updated on January 11, 2021 by harsh vasistha
Crypto Trading Tips – beginners guide to cryptocurrency trading to earn like a pro 2020
Cryptocurrency trading or crypto trading can be highly profitable if you play your cards well. In this guide, we will discuss all the necessary facts associated with cryptocurrency trading. And what all the resources, tools, strategy, and tips required for beginners to get into the world of trading cryptocurrency and ultimately earn like a pro crypto trader.
Cryptocurrency volatility is a traders dream. If the market movement pattern analyzed correctly, then a huge profit can be made in a short span of time.
But make no mistake volatility doesn’t mean profit is guaranteed, where there is high volatility, there’s high risk.
The human mind, which excels at pattern recognition, struggles with random outcomes. Hence even expert, Forex or crypto traders find it difficult to recognize the Cryptocurrency market pattern.
Why Cryptocurrency Trading is profitable?
Cryptocurrency trading has major benefits over trading Forex, stocks, and commodities. So below listed points explains why the trading cryptocurrency is far simpler than forex trading
1.Bitcoin & Altcoin (Global Currency) –
Bitcoin and altcoins are a global currency. Any central government does not control it. So it doesn’t depend on any given country economy or policies. Bitcoin currency is not a fiat currency.
Cryptocurrencies can be sent from one user to another without any involvement of the third party like banks. Cryptocurrencies can’t be printed, unlike regular money.
When central bank print lots of money, inflation goes up which makes the currency value going down. Since there is a finite number of Bitcoins ( 21 millions of them) and the same hold true for other Cryptocurrencies.
So supply-side can’t be increased which makes cryptocurrency trading less prone to inflation.
2. Crypto Trading Is Available Round The Clock 24/7 –
Cryptocurrencies can be traded non-stop 24 hours 7 days a week. Unlike forex, stock, and commodities which only operate during business hours and closed on weekends. Cryptocurrency trading remains active round the clock.
3. Cryptocurrency Is Volatile –
Cryptocurrencies volatility can results in a high return on investment (ROI) in a short span of time. Hence, a crypto trade can yield high profit within a few hours.
Cryptocurrencies also the cheapest asset to trade as there are minimal fees on cryptocurrency trading platforms compare to traditional exchanges for forex trading.
Cryptocurrency deposits and withdrawals are also quick, and documentation is not as hectic as in traditional forex trades. You just need to have any cryptocurrency in your trading account wallet, and you can start trading.
4. Leverage At Crypto Trading Platforms
Leverage trading means you can start the crypto trade way more than your capital investment.
Top cryptocurrency trading platforms like Bitmex, ByBit, Binance, and OKEx offer leverage up to 1:100. For example, every 10 $ you invest, you will have the possibility of trading cryptocurrency worth 1000$ at those exchanges
Likewise, other crypto trading platforms like e-toro or Whaleclub, every $10 let you trade crypto worth $250. While forex trading platforms generally do not offer such leverages.
The first major rule to cryptocurrency trading is finding the specialized altcoin trading platform.
When it comes to investing the money everybody wants the secure, user-friendly and renowned altcoin trading platforms Just as the number of altcoins is increasing in the market so are the trading platforms.
Hence finding the right crypto trading platform is not a piece of cake. The problem is that not every cryptocurrency trading platform is legit and can be trusted.
If any Crypto trading platform run away with your coins or shut down, then there is no way you can get your Cryptocurrency back.
Prerequisites for choosing a specialized cryptocurrency trading platform
1. Regulation & Security –
A trading platform should be regulated by concerned authority then only it can be trustworthy. The security of the cryptocurrency platform should be the utmost priority
2. Fees –
Fess generally express a percentage of the transaction amount and an average cap of around 0.30%. Most cryptocurrency exchanges offer a volume-based fee structure means if you buy or sell a large volume of altcoins you have to pay smaller fees.
Some exchanges use ‘maker-taker’ fee model. Because every transaction costs fee so one has to find platforms which best fitted for a profitable trade.
3. The number of altcoins –
Higher the number of altcoins and fiat currency available to trade, higher the legitimacy of a cryptocurrency exchange
4. Trading volume –
Trading volume is also a major factor in the verge of finding a right crypto trading platform.
The high trading volume provides you an insight into that cryptocurrency trading exchange, that people are willing to spend their money on that trading platform.
This justifies the reliability and good business practices of that network.
5. Reputation and Longevity
Reputation and longevity of a trading platform help in building trust especially for beginners.
Below are the few trusted cryptocurrency trading platforms which are best suited for the crypto trading
- Bitmex – One of the reputed trading platform available worldwide (Best suited For the US, Europeans, and Indians)
- PrimeXBT Trading platform
- Binance Exchange – The Highest daily trading volume (Available worldwide)
- ByBIT derivatives exchange– The Lowest fee derivatives trading platform (Highly suited for Indian and European residents)
- Coinbase pro Exchange – One of the Best for the US residents
- Cex.io Exchange – Available worldwide
- OKEx Exchange – High daily trading volume
Ways Of Cryptocurrency Trading
Generally, there are two types of crypto trading approach.
Long-Term Cryptocurrency Trading –
The first is long-term crypto trading which is known as ‘buy and hold.’ In this method crypto trader study price trends of an asset over an extended period and hope that asset price will increase in the future.
This approach is based on an assumption. Long-term crypto trade is proving profitable as you can see the boost in the Bitcoin price recently (overall annual growth of Bitcoin is about 4000% in the year 2017) and so does the price of popular cryptocurrencies like Ripple coin, Ethereum coin, Litecoin crypto, and more.
As more and more people are adopting cryptocurrencies thereby creating more demand. Which will eventually lead to an increase in the Cryptocurrency price?
Short Term Crypto Trading –
The second is short-term trading where a trader buys the coin and hold it for a short period before selling them.
Short-term traders rely on real-time data feeds and liquid markets to enable rapid entry to and exit from trades.
There are three to four approaches for short-term cryptocurrency trading.
Day trading –
In this method, transactions are completed within a day. A crypto trader buys a cryptocurrency and sells it in a short span of time. No transaction is held overnight.
Swing trading –
A cryptocurrency trader uses this method when an asset is most volatile. This method uses technical trading signals to look for the turning point in short-term trends.
Traders make the profit on the daily swing of the price of BTC whether upward or downward. Swing trading can prove to be very profitable in a short span of time if a crypto trader learns to read the technical indicators.
Here cryptocurrency traders attempt to profit from minute to minute moves, often capitalizing imbalances in order-book to make a heap of minor gains. Traders tend to read charts of 5 minutes or less to make the profit using scalping.
Guide to Cryptocurrency trading – 15 Essential Crypto Trading tips for beginners
1. Trade crypto With A Clear Strategy
Start a crypto trade with the right mindset and a clear strategy.
Trading is a zero-sum game i.e for everyone who benefits someone else loses from another side.
This determines that not everybody makes fortunes with trading cryptocurrency.
The cryptocurrency market is driven by large investors, and they eagerly wait for new investors to make mistakes.
There are always risk associated with cryptocurrency trading. No matter how much you have prepared or accomplished in crypto -trading
Therefore, you must calculate the percentage of risk you can afford. Never invest money which you can’t afford to lose.
2. Stay Up To Date With Trending Cryptocurrency News
Buy the rumor, sell the news. If you want to make a consistent profit by cryptocurrency trading then it is very important to follow the recent Crypto-market news. Sometimes it allows crypto traders to predict up’s and downs of the Cryptocurrency market.
For example, if a big country ban Cryptocurrency or a reputed crypto trading platform got hacked. It may make the price go down.
And if established business integrated with Bitcoin or friendly regulation announced may make the price rise.
3. Guide To Trading Cryptocurrency — Fundamental Analytics Of Crypto Trading Asset
Analyze the critical data of Cryptocurrency which affects the price like a number of wallets, a number of active wallets, number of transactions per day, cryptocurrency trading volume, number of supported exchanges, etc can help to predict the value of the coin.
You can check the advanced technical analysis of wide variety of trading aasets at sunshineprofits.
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4. Crypto Technical Analysis
Technical analysis means studying chart patterns to predict the future price of a cryptocurrency. Technical analysis is purely based on the past (price and volume pattern) and trends of the coin.
A technical analyst will analyze the past patterns and trends which will indicate the direction of price movement.
They will look for continuous patterns as well as repeated patterns of a coin to analyze whether the trend will be ongoing or it will reverse at this very point.
In short, technical analysis uses mathematical formulae by studying past chart patterns and trends of a coin to forecast its future price movement.
Trading View is one of the most popular crypto charting and technical analysis tools for crypto traders of all crypto markets. They have integrated with a few of the world’s best cryptocurrency exchange sites and the results are super impressive.
Trading view online charting tools have both free and paid subscription and free program is more than enough for beginners.
Coinigy is another cryptocurrency technical analysis tools but offers much more than Trading View analysis tool.
On top of their charting service, Coinigy uses custom data feeds to closely integrate with over 45 cryptocurrency exchanges. You can also set up SMS text alerts on custom events as well as execute trade orders across supported cryptocurrency exchanges and much more.
Coinigy does not offer a free plan but has a 30 day free trial if you signup using the below link
Watch this handy “Coinigy Charting 101” video to get a hang of the basics of charting and technical analysis.
5. Trading The Trends
‘Make trend your friend until it ends.’
If I explain it in simple words, here, you have to simply read the long-term price trend then trade in that direction.
Generally financial market has long-term price trend in which overall motion of price will be in one direction for weeks, months, and even years.
Of course, the price will move up or down all the time, but an apparent trend will be visible.
6. Beginners Should Start With Minimal Investment
Only trade with funds you can afford to lose. If you are new to trading cryptocurrency then there are very good chances that you will lose.
But with practice and time, you will eventually make the profit in the future. Gain as much experience as you can because there is no alternative to experience. Don’t give up. Ultimately you will come out with your strategy and will become a professional cryptocurrency trader.
7. Stop Being Emotional Think Like Professional — Target, And Stop
You should set a clear target level for taking profit and stop loss level for cutting losses.
It means before starting a crypto trade you should set a clear goal that at this profit level you will halt the trade. Stop-loss means setting the loss level when you will stop the trade.
Sometimes when a coin value is depleting than crypto trader assumes the situation will turn around and he will come out with a minimum loss or even profit.
But they fail to understand the high volatility of Cryptocurrency, in a matter of a few hours that coin can get dumped up to 100%.
This may make a crypto trader suffer a huge loss. So don’t allow your emotions get better of you.
8. Risk Management
Never put your all eggs in one basket.
Your trading capital should be broken into smaller lots for multiple positions at different price levels.
Manage risk across your portfolio.
Manage risk across your portfolio. Invest a smaller percentage of your capital in the non-liquid market.
For those crypto trades, we will assign greater tolerance.
9. Don’t Be Too Greedy — Better Go For Smaller Profits.
Before you embark on a journey to become a successful Crypto trader than think about this:
‘Pigs get fat, and hogs get slaughtered.’
It pays to be greedy, but not too greedy — or else you’ll get into trouble.
If you get too greedy like a hog, you can end up losing it all.
Never look for the peak of the movement.
Look for smaller profits that will accumulate into a big one.
10. Choosing The Right Cryptocurrency for Trading To Profit
Cryptocurrency is very volatile. Most Altcoins lose their value over time, in fact, sometimes very rapidly.
So always trade Cryptocurrency which has some weight behind them.
Therefore it means choose Altcoins which have high or medium daily trading volume and have a broad community with continuous development.
11. Avoid Crowd Sales (ICO)
ICO stands for Initial coin offering. Many newly launched crypto coins or going to launch coins offer a crowd sales for the investor, i.e., opportunity to buy it at a discounted price for a day or two.
This is done to increase the trading volume of the coin from day one.
Sometimes it yields a good profit for the investors as currency value doubled or tripled in respect to a crowd sale price.
So be cautious when a newly launched project offers crowd sales.
12. Use Hardware Wallets To Store Your Coins
After completion of the crypto trade never leave your Cryptocurrency on the trading platform for long.
It will be more secure to store your coins in a hardware wallet.
Where you can leave them without the worry of losing them.
Most recommended and trusted hardware wallets are Trezor and Ledger Nano S
13. Avoid trading cryptocurrency as your primary source of Income
This is a quite significant point.
Mostly traders are at their best when trading isn’t their main source of income.
This way, the emotional burden is easier to control and maintain if your day-to-day survival is not depended on it.
Otherwise, this can lead to some desperate and drastic decisions because eliminating emotion is significantly harder to do when one’s livelihood is at stake.
It may be beneficial to look into other legit ways of making passive income with cryptocurrency.
Conclusion – A beginners guide to cryptocurrency trading
Follow the above-mentioned tips and keep patience.
Cryptocurrencies are here to stay Even if you only buy and hold top cryptocurrency 99% of the time you will be in profit.
Crypto trading is not a rocket science Cryptocurrencies are very volatile hence crypto trader bound to make a good profit if the trader plays its cards well.
Get sufficient experience which you will only get by getting into crypto trade practically.
Keep patience, don’t panic and follow the above-mentioned tips I am sure you will make the substantial profit by the time via cryptocurrency trading.
There are few other cryptocurrency trading derivatives like the Binary options, Bitcoin CFD trading, Margin trading which I will discuss in another article.
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Frequently asked questions
Should I start trading cryptocurrency?
Yes, you can earn a decent amount of passive income with cryptocurrency. And Cryptocurrency trading is one of the best method to earn cryptocurrencies.
Just sure to follow the above guide and go through to the above listed crypto trading tips.
Remember Not everyone is making a profit via cryptocurrency trading. If you are making a profit then there will be someone who will be losing.
This is why its recommended to start with a smaller amount of money to test out the waters. Dont invest money which you cant afford to lose.
What online cryptocurrency trading software can be used?
There are multiple online cryptocurrency trading softwares serving different purpose. Chart analytics is a major component in any cryptocurrency trading strategy.
Below is the few crypto trading tools that are immensely beneficial for trading cryptocurrency. We will discuss them in detail in a new article
Trading view, Coinigy, TradingLite, Exocharts, Bitcoin visuals, Coinexpansion, Shrimpy
Should I join a paid group for trading?
Absolutely not. First of all, There is a pleothora of deep information available on cryptocurrency trading on the Internet.
We here at coinexpansion will also cover cryptocurrency trading extensively, so why not learn from that?
The second most important thing is your own Crypto trading experience.
Of course, reading the basics and fundamentals of cryptocurrency trading is of quite a significance but practicing trading on your own is far vital, so you can learn from your mistakes and find what works best for you and your crypto trading style.
Entering a paid group can prove to be a valid learning tool, but beware of scams and fake trading pundits. It is quite easy to fake trading results to gain followers for a paid service.
What are the best exchanges for crypto trading for beginners?
Cex.io, Binance, and Coinbase pro offers easy to use trading platform for beginners to get started their crypto trading journey.
Bitmex, ByBIT are the best margin trading platform for beginners to get board on margin cryptocurrency trading