Over recent years, cryptocurrency has taken a sturdy foothold in the world of trading and has become a force to be reckoned with. Still to this day, the cryptocurrency markets are standing strong and have drawn in many traders to try their hand on this relatively new marketplace. Getting started in the world of crypto is not difficult but developing a good understanding of the way in which crypto trading works can take some time and patience. Here we’ve listed some of our best tips as to how you can get started as a cryptocurrency trader and what you need to know to avoid making some of the most common mistakes.
Develop A Strategy And Plan
When it comes to trading and the promise of making money, it can be very common for people to jump headfirst into their first trades to scratch that itch. However, we highly recommend tempering your excitement just a for a while as you consider how you’re going to get started in the crypto market. Once you get the hang of it, you’ll find the whole system is fairly easy to deal with, but as a beginner you can slip up very easily. Instead, take a step back and assess the whole situation. Don’t just jump into investing in a new coin expecting it to take off like Bitcoin. First, you’ll want to consider the traits this new coin has. Is it linked with any particular professions or industries? And has it seen any success yet? Investing in currencies that have proven themselves so far is much safer, but of course, the chances of them skyrocketing again are slim.
Don’t Tunnel Vision One Currency
The chances are you’re going to choose a favourite cryptocurrency and want to stick with it over your time as a trader. But as with other trading markets, the smart thing here is to diversify your trading portfolio and invest in a number of different cryptocurrencies if possible. Spreading your investments out reduces your risk of losing everything if one of these investments turns bad, and with a volatile market such as crypto, you’ll want to be prepared for any event like this. On a more positive note, having your investments spread out also gives you a higher chance of making a profit, especially if a particular currency really takes off in a similar to Ether and Bitcoin.
Conduct Good Risk Management
The best tip any trader can give you, which has strong links to the world of gambling and casinos, is to not invest more than you can afford to lose. As much as people don’t want to link the world of investment to gambling, you are still technically betting your money, hoping the value of that stock or cryptocurrency will increase. Of course, there is less of a random element as stock prices are dictated by a multitude of external factors rather than sheer luck and statistics, however unexpected events can occur causing more unexpected losses or gains. With this in mind it’s essential that you set limits for yourself and be prepared to lose those investments without it heavily impacting your life.
Maintain Your Dedication
Trading isn’t a get rich quick scheme, no matter how many romanticised success stories you’ve heard. This means that if you’re getting involved in crypto trading, or any trading for that matter, you’ll want to make sure you’re prepared to stick with it for a while. At the end of the day, you have to remember that it can take years to see a substantial profit from a particular investment and this is another reason why people choose to diversify their trades to have a better chance of putting money into something that finds success.
Understand The Law And Seek Guidance
Due to being relatively new, and more importantly, very profitable, the cryptocurrency market is currently undergoing serious scrutiny from governments for various reasons. Currently one of the largest concerns facing cryptocurrency owners is what taxes they may be liable to pay. Things like capital gains tax on all losses and gains are required to be paid, and for those that have gotten lucky as first-time investors, matters like this can seem confusing. A great idea is to have the guidance of a trusted, accredited accountants and tax advisors such as the family-run team Hodge Bakshi, who can help to ensure you’re not going to make any critical mistakes and get into trouble.
Consider Using Automated Systems
Trading can be incredibly time consuming and while you should be keeping a strict eye on your trading platform, it’s important that you think about ways in which to manage your trades when you’re unable to do so manually due to travelling, work, or technical difficulties. In preparation for issues like this, you should think about utilising an automated trading system, especially one that offers you a dedicated server to keep your trading accounts online and operating at all times. An automated system can provide you with the means of buying and selling at set prices, automatically, to avoid missing preferable deals when you’re away. Because of things like technical difficulty risks though, it’s still very important to keep checking your trading accounts regularly to make sure no mistakes are being made.
Get To Grips With The Jargon
One thing that can really put potential traders off is the seemingly complex visage that cryptocurrency has created for itself. Technical jargon and unnecessarily complex explanations of the way in which crypto and the trading of it works acts as a barrier to many potential traders and can cause people to turn away quite quickly. Before reading up on guide and trading tips, it’s important that you can discern your fiat’s from your ICOs so that you don’t become lost and feel deflated by the time you’re at a stage where you could start trading. Find a quality crypto jargon guide online and get reading, so when you’re faced with these unusual words and terms you will have a much better idea of what people are talking about.
Avoid Scam Sites
You may be surprised by how many people fall for scam emails today, and there are more cropping up in recent years than ever before so do everything you can to avoid being caught by an investment scam. It’s so important to remain vigilant and vet every message you get. If something seems too good to be true, it generally is. Ignore emails regarding cryptocurrency except from people you trust and can verify. A Google search can help you discern whether or not something is a scam or not, and don’t forget to avoid opening untrustworthy links or downloading attachments as these could be methods of gathering your personal information.
Keep Learning New Things
Once you understand the basics of cryptocurrency and the way in which trading these currencies works, your education doesn’t stop there. It’s important for you to know the market inside and out to practice as an efficient and knowledgeable trader. This will ultimately give you a better shot at identifying good deals and great trading opportunities. Make use of the extensive number of online resources from experts but be careful as to whose advice you take. Only listen to trusted, respected experts who don’t have an ulterior motive such as promoting a particular trading platform.