Peculiarities of cryptocurrency trading

The capitalization of the cryptocurrency market is in the trillions of dollars and only increases every year.

Cryptocurrency has long ago transformed from entertainment for young enterprising investors into a serious and profitable business, which even people far from the exchange trading industry are interested in.

Cryptocurrency today can be bought by anyone who has a couple of hundred dollars at his or her disposal. How to start to get acquainted with the asset and how to make money from it – we will tell you in the second article of the “Selecting a trading instrument” series.

cryptocurrency trading

Who is suitable for crypto trading

Cryptocurrency attracts traders by its extreme volatility. The rate can fluctuate by tens or even hundreds of percent per day. Sufficient trading experience + a set of proven strategies + stress tolerance = the starting set of an ideal crypto trader. Accordingly, if you are a beginner or do not like to take risks in your trading strategies, then investing in cryptocurrency is hardly a good choice for you.

However, we strongly advise you to at least try, because if you correctly calculate the time to enter the market and take into account all the rules of risk management, cryptocurrency trading can bring you a much higher profit than traditional investments.

Cryptocurrencies can also be included in your investment portfolios along with more traditional assets. Investments in bitcoin, for example, could make you a millionaire in a few years. In mid-October 2015, bitcoin was worth $262. If you had invested only $285 in your first cryptocurrency, today your capital would have grown to $70000.

Trading Cryptocurrency – Where to Start

How to trade cryptocurrency? To join the cryptocurrency fever, all you need is a small amount of money and an intermediary. There are two options for cryptocurrency trading:

If you want to buy a cryptocurrency for further personal use, you can do it on special cryptocurrency exchanges. The market offers many options, so the choice should be made responsibly, otherwise, there is a risk of stumbling upon an unreliable resource. What is the best cryptocurrency exchange? We advise giving preference to the most well-known platforms: Binance, Bitfinex, Coinbase, EXMO, etc. After choosing a crypto exchange, you need to create an account, a so-called digital wallet, where the currency will be stored. Swoop – and you are already a crypto-investor.

To make transactions with cryptocurrency, you need to have a set of public and private keys. These keys are similar to the passwords generated by your cryptocurrency wallet. Your public key is linked to your wallet address and allows people to send you cryptocurrency. Your private key is used to confirm transactions sent from your wallet – only you have access to your private keys.

If you want to make quick money on cryptocurrency trading, you’d better just open a special cryptocurrency account with a broker instead of having a personal wallet on an exchange – it will be faster, easier, and more convenient. For example, at Grand Capital we offer a special Crypto account with 68 cryptocurrency pairs, so every trader can choose the option that suits his/her mood and wallet.


How much to start crypto trading with

When determining the amount of starting capital for crypto trading, you should be guided by the basic principles of calculating the starting deposit. Let us note the main thing – the loss of starting capital should not seriously affect your overall condition, but it should allow you to master all desired trading tools and test strategies. Experienced traders do not have a common opinion and advise to start in the range of $1000-2000 dollars. This amount is enough to form trading discipline and to try out strategies that can help in the future in transactions with larger amounts and risks.

How to choose a cryptocurrency for investment

First, remember that there is no one perfect cryptocurrency, but there are perfect cryptocurrencies for certain use cases. For example, bitcoin is the best cryptocurrency to use as a backup asset because it has the widest distribution and limited supply.

There are many types of cryptocurrencies, differing in their set of characteristics and spectrum of use, but they all have one thing in common: they are based on blockchain technology, which makes them decentralized.

There are special services for analyzing cryptocurrencies, such as CoinMarketCar. With their help, you can study the rating of all cryptocurrencies by capitalization level and other parameters, as well as just, learn a lot of useful information about crypto trading. For investments, it is better to choose popular cryptocurrencies, which are at least in the top 30 rankings. This guarantees you more stability and variability of trading places for this currency.

How to choose a trading strategy for cryptocurrency trading

Cryptocurrency trading, just like any other asset, is not possible without an effective strategy. However, strategies for digital money trades will differ significantly from those used for other instruments. For example, technical and computer analysis, which are indispensable for analyzing transactions with currency pair charts, require a different approach. Pricing in the cryptocurrency market is difficult to follow with standard analytical methods, an individual approach and indicator settings are needed. Cryptoassets are characterized by impulses of a wide range, that is, the price can instantly change by several hundred points.

The most important feature of cryptocurrency pricing is the frequent formation of price impulses. To profit from them, it is important to place trade orders in the direction of the jump in time (we recommend using pending Buy Stop and Sell Stop orders).

The high level of volatility of digital assets creates a good potential for super-profits.

So, we have already told you about the peculiarities of trading currency pairs and cryptocurrencies. In the following articles in this series, you will learn about other popular trading instruments and you will be able to finally decide on the right ones for you.

Kevin Doran

I have been trading forex since 2015. Over the past few years, I have tried and tested all the most popular Forex Brokers. I publish my reviews to help you choose a reliable broker and reduce your risks.

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