How to Start Cryptocurrency Trading on an Exchange?

Cryptocurrencies is one of the notable examples of innovation in the domain of finance. Starting from Bitcoin, the crypto revolution has spread throughout the world with many people becoming cryptocurrency holders. Do you want to start cryptocurrency trading and join the biggest technological revolution of this century? Anyone can learn how to trade cryptocurrencies with comprehensive guides and training courses. You can start crypto trading in few simple steps on any crypto exchange of your choice. However, the difference lies in how you prepare your trading strategies. Let us discover the ideal approach to begin crypto trading from scratch.

Remember that this post does not qualify as investment advice and you should do your own research before investing in cryptocurrencies.

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Understanding the Fundamentals of Cryptocurrency Trading

Cryptocurrencies are virtual currencies created to operate without the influence of centralized authorities and third-party intermediaries. As a result, cryptocurrencies will have a standard value, irrespective of the location. With multiple cryptocurrencies prevailing in the market, you might end up confused while picking an option for trading. 

The best way to find answers to “How do I start crypto trading as a beginner?” would involve learning about cryptocurrency fundamentals. Almost all cryptocurrencies use blockchain technology to maintain a transparent and decentralized record of transactions. Once you learn the technical aspects of cryptocurrencies and their working, you can take the first step in crypto trading.

Cryptocurrency trading is the process of buying cryptocurrencies at a specific price and selling them when their price increases. It is almost similar to stock trading albeit with a different class of assets. Crypto trading has opened up many opportunities for traders as evident in the examples of early Bitcoin buyers. 

Steps for Cryptocurrency Trading 

The decision to invest in cryptocurrencies is an extremely challenging one, even for seasoned crypto veterans. How can beginners go through the crypto trading process without any risks? First of all, you must know that crypto trading is risky, irrespective of the type of crypto asset you choose. You must learn crypto trading best practices and use your instincts to find the most rewarding options. The following steps can help you start crypto trading as a beginner with the assurance of safety.

• Pick a Trusted Cryptocurrency Exchange 

Just like stock trading happens on stock exchanges all over the world, cryptocurrency exchanges are platforms to trade cryptocurrencies. You can think of crypto exchanges as marketplaces where you can buy, sell and manage cryptocurrencies. As a beginner in crypto, you may experience some difficulties understanding how crypto exchanges work and how you can use them. Interestingly, comprehensive guides and tutorials on crypto exchange fundamentals can solve that problem.

Beginners should know that a reliable crypto exchange is one that offers security, transparency and responsive support systems. Some of the notable crypto exchanges for beginners include Kraken, Gemini and Coinbase. While these options are the best crypto exchanges in the market, you should review their details before choosing one. The other important factors that you should check in a crypto exchange include the trading volume, asset storage and security and performance record in last five years.

• Create Your Account on the Exchange 

Once you have picked a crypto trading platform, you can begin the trading process by signing up on the exchange. You must set up a secure account that you will use for trading. The account setup process requires an identity verification process in which you have to provide your email address, essential personal information, and other details. Your account on the crypto exchange represents your identity and connects your crypto assets directly to you.

• Add Fiat Currency to the Account 

After creating your account on the crypto exchange, you might think about the next step. Beginners must know that they can buy cryptocurrencies with fiat currency on a crypto exchange. You can deposit fiat currency in the wallet of the crypto exchange or your own crypto wallet. With money in your wallet, you can buy any cryptocurrency you want and join the world of crypto trading. 

• Start Crypto Trading 

You can use the fiat currency in your crypto wallet to buy cryptocurrencies on crypto exchanges. The cryptocurrencies will have ticker symbols that you can recognize only after learning about the names of coins that you want. For instance, the ticker symbol of Ether is ETH and Bitcoin is BTC. The process of buying cryptocurrencies involves typing the amount of cryptocurrencies that you want to buy. 

One of the recommended crypto trading strategies for newcomers focuses on buying a fraction of a bigger coin or few assets within their budget. The selling process is almost similar to the buying process in which you have to specify the amount of cryptocurrencies that you want to sell. You can also trade your cryptocurrencies for another cryptocurrency or convert their value into fiat currency. Most of the traders opt for buying and selling frequently during periods of price fluctuation in the crypto market.

• Monitoring the Account and Trade History 

The most distinctive trait of cryptocurrencies is their extreme volatility. The prices of crypto assets can go up and down abruptly without any prior warning or notice. Therefore, crypto traders monitor their accounts continuously to keep an eye on the value of the cryptocurrencies they own. Monitoring helps in identifying trends and recognizing new patterns across different cycles of the market. The crypto market generally goes through cycles, such as accumulation, markup, distribution and downfall. 

Beginners must know that experienced traders adopt different processes for every market phase. You will gradually discover the strategy that will work the best for you. The trading strategy will provide a clear impression of the ideal time for buying and selling cryptocurrencies. The strategy can also help in identifying the ideal time to withdraw money from your portfolio to reduce losses or achieve profits.  

• Withdrawing Your Cryptocurrencies

You can find dedicated ‘transfer’ and ‘withdraw’ options on crypto exchange interfaces. The two options allow seamless movement of crypto assets between the exchange and your crypto wallets. On top of it, they also facilitate easier conversion of cryptocurrency to fiat money. Users should follow the protocol of the crypto exchange to withdraw their cryptocurrencies to a wallet.

Build Your Crypto Trading Knowledge

Almost anyone can become a crypto trader if they have money to invest in the crypto market. On the other hand, a true crypto trader is one who knows effective ways to capitalize on opportunities in the crypto market. You cannot just start cryptocurrency trading and expect profits to come in right away. It is important to learn the different approaches for crypto trading and adopt the right approach according to your goals. The following types of crypto trading approaches are the common choices you may come across in the market.

• Long-term Trading 

Long-term trading, as the name implies, is a crypto trading strategy in which the trader holds on to their cryptocurrencies for longer periods. You can draw some similarities between long-term crypto trading and crypto investing. However, there will be significant time difference between long-term crypto trading and investing. The crypto assets invested in long-term trading strategies will be more susceptible to unprecedented market changes. 

• Short-term Trading 

Many people who want to learn crypto trading also tend to turn towards short-term trading in the initial stages. Short-term trading involves holding your assets for a day or a month alongside selling and buying according to short-term changes in value. The limitations of short-term trading include requirement of more time, effort, research and preparation. It is also important to remember that short-term trading can be extremely stressful for a beginner when the market takes unprecedented turns.

Recommended Pointers for Crypto Trading as Beginners

The sole objective of many beginners behind pursuing crypto trading ventures is profit. You will also think of making quick gains through cryptocurrency trading when you read about the crypto market. However, everyone does not become successful in cryptocurrency trading. You must pay attention to certain factors to ensure that you achieve desired results as a crypto trader. 

One of the most crucial factors that will define your crypto trading experience is the crypto exchange. You have to pick a crypto trading platform which offers security features, an intuitive user interface and competitive fee structure. On top of it, you should also review the security features offered by the crypto exchange before making the final choice.

While the crypto exchange will take care of most of the trading, you should not ignore the importance of crypto wallets. You will need a secure crypto wallet for storing your cryptocurrencies and managing them according to your preferences. Some crypto exchanges offer in-built wallets and you can also find private wallets with additional features for better security.

Final Thoughts 

The process to start crypto trading is extremely simple and anyone can become a crypto trader with minimal training. In the long run, your chances of success in crypto trading depend on your strategies. You have to come up with personalized crypto trading strategies derived from your personal experiences. On top of it, you should pay special attention to choosing the right crypto exchange for a better trading experience. Learn more about the best practices for crypto trading and prepare for success right now.