2.02 How to start cryptocurrency trading
This lesson explains a step-by-step process on how to start cryptocurrency trading.
In our first lesson, we looked at some of the reasons why cryptocurrencies can be included in your investment portfolio. If you have made up your mind to invest in digital assets, the next step is to figure out ‘how’. Currently, the crypto market hosts more than 15,000 coins. For a beginner, this can be a little overwhelming. At this point, several questions encircle your mind. Is it the right time to buy Bitcoin? Which altcoins should I invest in? Which wallet do I choose to store my digital assets? Which is the most secure exchange to buy or sell digital assets?
While cryptocurrency trading is not rocket science, it is necessary to perform due diligence and assess your financial situation before investing. With this lesson, we undertake the factors to consider in order to start trading or investing in digital currencies.
This lesson explains a step-by-step process on how to start cryptocurrency trading.
Contents
- Research crypto market and perform due diligence
- Choose the platform and trading method
- Analyze the asset
- Set up and secure crypto wallet
- Start trading cryptocurrencies
Research crypto market and perform due diligence
Similar to how you make an investment in stock or equity, conducting research and due diligence is an important step to minimize risks. While you will find countless suggestions on social media and news pertaining to where to invest, the only person that you should trust is yourself. DYOR (Do Your Own Research) - one of the most commonly used abbreviations in the crypto space indicates you should always rely on your research. Moreover, it is no surprise that with the high volatility in the market, it is a good idea to thoroughly assess your financial situation. Always remember the golden rule of investing, “Invest only what you can afford to lose”.
It is also a good idea to analyze the market sentiments i.e. whether the crypto market is bullish or bearish. In the next lessons, we study different indicators to help understand these concepts in detail.
Choose the platform and trading method
Traditional financial institutions like banks and brokerages do not offer cryptocurrency trading. Digital currencies are available to buy and sell on exchange platforms.
Since you are investing your hard-earned money into a new asset, you would want assurance that it is stored in a secure place. Over 400 cryptocurrency exchanges are available today, however, many of them are unregulated and don’t employ enough security measures to safeguard assets. Checking the exchange’s license, transparency, and security increases the safety of your funds. You can also consider researching certain factors like fee structure, supported currencies, the time required to complete a transaction while choosing a cryptocurrency exchange.
Analyze the asset
While taking a dive into a swimming pool, do you test if the water is cool or lukewarm? Similarly, before you invest your hard-earned money it is a good idea to analyze and understand the asset you contemplate investing in.
Some simple steps that you can consider include:
- Assess the team behind the project or cryptocurrency
- Understand the economics (tokenomics) of the coin or token. Study parameters such as token distribution and vesting schedule to understand the short-term and long-term goals of the team.
- Check out the project on various social media channels
- Verify if there is a clear purpose behind the creation of the token
To go one step further, you can also study charts, patterns, and graphs of digital assets. Fundamental and technical analysis are two ways to assess the performance of a cryptocurrency. We are going to study these concepts in detail in the upcoming lessons.
Set up and secure your crypto wallet
As we looked in one of our beginner’s lessons, there are different types of crypto wallets such as hot wallets or software wallets and cold wallets or hardware wallets. Both have their own pros and cons. It is safer to keep a small number of your assets in hot wallets for trading purposes and store a majority of crypto holdings in a hardware wallet.
Cryptocurrency exchanges like zondacrypto also serve as wallets and facilitate you to store your digital coins. To ensure that your wallet is secured, set up 2-factor authentication and never disclose your private keys or seed phrase.
Start trading cryptocurrencies
Although historical data indicates that cryptocurrencies can give you huge returns in a short span, crypto trading is a long-term play. Considering the volatility of digital assets, it might not be a good idea to recognize them as a get-rich-quick scheme.
On the other hand, the entire digital assets space holds a huge potential. So keep tracking the trends of the markets and be updated with the latest news from the community. Observe the price changes and buy or sell your cryptocurrencies at the right time to make profits. Overall, always Do Your Own Research (DYOR).
By the way, if you are wondering what DYOR and similar abbreviations mean, head to our next lesson which explains the main crypto trading terms.
DISCLAIMER
This material does not constitute investment advice, nor is it an offer or solicitation to purchase any cryptocurrency assets.
This material is for general informational and educational purposes only and, to that extent, makes no warranty as to, nor should it be construed as such, regarding the reliability, accuracy, completeness or correctness of the materials or opinions contained herein.
Certain statements in this educational material may relate to future expectations that are based on our current views and assumptions and involve uncertainties that could cause actual results, performance or events to differ from those statements.
BB Trade Estonia OU and its representatives and those working directly or indirectly with BB Trade Estonia OU do not accept any liability arising from this article.
Please note that investing in cryptocurrency assets carries risks in addition to the opportunities described above.
Zonda is now zondacrypto!
As the exchange continues to evolve and grow, we're thrilled to announce that we're rebranding and changing our name to better reflect our vision and values. We're still the same team you know and trust, but with a fresh new name that captures our spirit of innovation and customer-centric approach.
Some things may look a bit different but don’t worry - all operations remain the same and your login details work as usual.
Stay tuned for more updates and exciting changes as we embark on this new chapter together. Thank you for your continued support and loyalty!