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In about a decade, cryptocurrency has revolutionized the investment and fund-raising world. Billions of dollars have been raised and a good number of investors could not more satisfied. With such impressive results trailing cryptocurrency, those who are yet to go with the rising flow are seeking out beginners guides to assist them to get in and settle in. If you are among the several intrigued by the concept of cryptocurrency and the ways of trading such Cryptocurrencies the likes of Bitcoin, Ethereum, and Monero, then this article is the guide you need. Discussed below is everything you should know about crypto trading.
1) What Really Is Crypto Trading?
When we talk about cryptocurrency trading, we are simply referring to the interchanging of cryptocurrencies. To better understand how it works, cast your mind to how foreign exchange works. The two are essentially the same. Like in Forex you are at liberty to sell and buy a cryptocurrency for another. For instance, you can trade, Altcoins or bitcoin for Euro and USD. In this way, you can be actively involved in the cryptocurrency market without actually diving into mining. Things are made significantly easier as you don't need any technical know-how, computing ability or energy.
Additionally, reports show that the amounts of cryptocurrencies have skyrocketed in recent times and there are currently over a thousand five hundred Cryptocurrencies in existence. Flowing from the above, for the purpose of crypto trading, you can purchase many of the coins with the use of a major and long-standing cryptocurrency such as bitcoin and Ethereum. Having said that, let's look at the ways of purchasing crypto.
2) How Is Cryptocurrency Bought?
As explained above, the concept of crypto trading thrives on the exchange of cryptocurrencies. Such exchange also flows into how cryptocurrency is purchased. Crypto exchanges come in two classes which are the decentralized class and centralized class. Decentralized exchanges mean trading is peer to peer and automated. Such exchange cuts across Bitshares, IDEX, OasisDex, and Waves. For decentralized exchanges, they operate under a trust less society which is primarily driven by smart contracts. This means that for maximum security, you can store up your cash in private and personal wallets. However, when opting for decentralized exchanges, you have to be cautious so as not to lose your private keys. Losing the keys would automatically result in your funds going with the wind.
Centralized exchanges, on the other hand, refers to a place you can keep your funds stored up with reputable providers and also go ahead with exchanging major coins like bitcoins. Unlike decentralized exchanges, you cannot use private wallets, hence the risk of losing your funds if you forget your private key is eliminated. That being said, let's explore things you should look out for when seeking to buy coins.
3) What You Should Look Out For When Buying Coins:
The task of purchasing coins can be daunting especially if the coins in question are new to the crypto scene. To avoid making mistakes in your purchases, what is most important is that you do some research. Familiarize yourself frequently with the news on coin telegraph, go on and gather as much information as you can on the coin in question, look out for independent ratings. Basically, find out all you can before investing any funds. After investing, you should closely look out for price changes. The idea behind this is to understand the price fluctuations so you will be able to set a favorable time to sell out. Consequently, losses are mitigated and profits are secured.
4) Where Is The Most Favorable Place To Store My Crypto?
In crypto trading, picking out a suitable place for storing your coins depends largely on what your intentions and priorities are. There are essentially two wallets for crypto storing. These are the cold wallet and the hot wallet. Hot wallets are useful if you desire to access your crypto coins regularly for the purpose of completing transactions on time or making a seamless transfer of funds. Cold wallets, on the other hand, is useful if you aim to save coins for a rainy day. Your coins would be kept offline, most likely on a USB stick. Furthermore, if you are going to be actively involved in crypto trading, it's most likely that you would have a lot of Cryptocurrencies. You should, therefore, look for a wallet that has the capacity to store dozens of coins.
5) Ways Of Learning Crypto Trading.
There are essentially two ways of learning crypto trading. The first is learning by doing whereby you try trading by using popular coins and a reliable exchange. The second option is learning by attaching yourself to a mentor or a reliable community. While the first method is good, the second method is more effective for those who want to achieve much in little time. You can get yourself attached to a reliable community by joining telegram which contains various groups.
On a final note, crypto trading is not as frightening as it seems, with an understanding of the rules and with a mentor or a community to put you through, you would be good to go. That said when trading you should try to mitigate loss and protect profits by watching the rise and fall of the prices of the cryptocurrency you are trading with. This way you would be able to make sales when the price is up. Secondly, spread risk over different portfolios so that if one crashes, it won't affect the others. Thirdly always check and recheck your numbers before making a trade.