How to Trade Crypto in 2023 (A Beginner's Guide)Nov 02, 2022
Wanna Learn How to Trade Crypto?
So, you wanna learn how to trade crypto? Well, the world of cryptocurrency trading can be a little scary for new investors who are just getting started. Because crypto markets are so volatile, there’s no way to know what will happen next with any degree of certainty. Even experienced traders struggle to predict which coins will rise and fall next, so keeping up with the market is challenging. If you have been thinking about learning how to trade crypto, but haven’t quite figured out how to do it yet, this article is for you. In it, we’ll cover everything you need to know about trading crypto and how you can get started today.
What is Crypto Trading?
When people talk about “trading crypto”, they’re actually referring to buying and selling digital assets on cryptocurrency exchanges. Crypto trading is basically the same thing as any other type of investing, except that you are trading assets that do not physically exist. Instead of buying stocks or shares in companies that make tangible products, you buy digital assets like Bitcoin, Ethereum, and Litecoin. The value of these assets can change dramatically over time, just like any other asset class. Just like the stock market, crypto trading is a way to profit from the rise and fall of different assets. If you buy an asset when it is cheap and sell it when it is more valuable, you’ll make a profit. Of course, the same is true in reverse if you buy an asset when it is expensive and then sell it when it’s cheaper.
How to Trade Crypto
You can trade crypto through a digital exchange like Coinbase, Binance, or Bittrex. There are lots of other exchanges, but we don’t recommend signing up for any of them because the security risk is too high.However, we do recommend you read our on how to analyse cryptocurrencies before you make your first trade!
There are two main ways to trade crypto:
1) Day Trading. This is when you buy or sell an asset on the same day. You open a position and then close it again before the day ends. Day trading is like being a poker player. You are not long-term investing, you are actively trading and hoping to make a profit from short-term price fluctuations.
2) Position Trading. This is when you buy an asset and then hold onto it for a long period of time.
Learning how to trade crypto effectively takes a considerable time investment, regardless of whether you are day trading or position trading. Keep that in mind! There are lots of things to learn in order to become a successful crypto trader, chief among them is learning how to control your own emotions.
You must also learn some basic technical and fundamental analysis skills, such as:
1. Identifying price trends
2. Identifying consolidation periods
3. Identifying market structures
4. Identifying cycle phases
5. Identifying strong community, developer base, and technical innovation.
Just as with technical analysis, learning how to trade crypto effectively using fundamentals will require you to make a serious time commitment. You will spend many hours on Discord servers and Telegram chats getting to know the ins-and-outs of the project's team, developers, and community. This part is just as important as what might be going on in the charts.
Which Crypto Should You Invest In?
When you are learning how to trade crypto,one of the most important things to keep in mind is how well the project is doing. Ultimately, the value of a crypto coin is based on how useful it is.
For example, if a coin has a team that is making progress and is moving towards a useful goal, it will probably increase in value over time. If you are basing your investment decisions purely on which crypto coins are the cheapest right now, you might get lucky for a few weeks.
However, it’s a risky strategy and you could just as easily lose all your money if the market shifts and your cheap coins suddenly become worthless.You must put in the work in order to succeed at crypto trading, there is no shortcut home. You must do your due diligence!
How to Pick the Best Coins to Trade
Aside from the technical analysis you should employ when deciding which coins to trade, you should also keep an eye on the following fundamental factors:
1. How long the project has been around. The longer a project has been active, the more likely it is that it will succeed.
2. How much money the project has raised. The more money a project has raised, the more likely it is that it is a legitimate project with a real team behind it.
3. The team behind the project. Is the team making progress? Are they active on social media? Are they responding to the community? Are they making progress towards a useful goal?
4. Look at the on-chain data. One of the best ways to measure the health of a crypto project is to analyze its on-chain metrics. Doing so will give you all kinds of insight into its relative bullishness or bearishness and help you make better investment decisions.
Long-term winners in the crypto industry will score high on the 4-point checklist above. So, choose projects which display those characteristics when you decide your ready to trade crypto.
Biggest Mistakes People Make When Learning to Trade Crypto
Learning how to trade crypto is not easy. There are lots of common mistakes that new traders make, so if you want to avoid them, keep reading..
Here are some of the most common crypto trading mistakes people make:
1. Not diversifying investments. Crypto is a risky market, so if you put all of your eggs in one basket, you could lose everything.
2. Not doing enough research. Before you invest in a crypto project, you need to make sure that it is legitimate, has a real team behind it, and has a real path towards achieving its goals.
3. Keeping bad trades open. If you buy a crypto coin that immediately drops in value, you should sell it as quickly as possible.
4. Not paying attention to the market. Crypto markets are unpredictable and can be extremely volatile at times. If you’re not paying attention to the market and how your investments are doing, you could lose everything.
The Bottom Line
As you can see, learning how to trade crypto is a long-term process. The key to success is to find coins that have real value and have a team that is making progress towards a useful goal, as well as to fully commit to the learning process, because you WILL make mistakes!
If you find coins that you think are being undervalued by the market, you could make a big profit. However, if you jump into trading crypto without doing your research, or without a plan for which coins to buy, you could lose everything. Patience and a long-term attitude towards learning is the key. Lastly, if trading crypto is not for you, then you can always just get crypto for free!