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| how to trade cryptocurrency for beginners |
Cryptocurrency trading is a form of speculative investment that aims to make financial profits by exploiting the price variation of a digital cryptocurrency in the market.
This trading guide explains in detail how to trade cryptocurrency, analyzing:
- the best platforms
- what fundamental strategies do you need to apply
- opinions on this branch of online trading
What is cryptocurrency
Cryptocurrencies are virtual, the cryptocurrency that was born as an alternative to traditional currencies. They were born online and only move online. The most important cryptocurrency is bitcoin and the goal of its creators was to offer each holder the same purchasing power anywhere in the world, with the value decided by the market and without the possibility of devaluation due to interest rate cuts by central banks. Cryptocurrency is therefore not issued by any "state mint" and does not depend on Central Banks or other institutions.
Cryptocurrency has a value expressed in traditional currencies and generally in dollars. When you decide to invest in cryptocurrency, you refer to this value, which can be slightly different depending on the exchange platform (exchange) on which you can buy and sell.
How cryptocurrency works
Cryptocurrency is bearer, so it belongs to the person who holds it. Cryptocurrency exchange occurs peer-to-peer, user-to-user, without the control of banks or central authorities. In the Bitcoin example, both the issuance of the cryptocurrency and the handling of transactions are done collectively by the "network" on a virtual ledger called the blockchain.
But why are cryptocurrencies bought? Where are they bought? Why are they traded? And where are they exchanged? There are many questions that arise when talking about cryptocurrencies.
First of all, it must be said that you can buy them on cryptocurrency platforms or so-called "cryptocurrency exchanges".
As for transfers, you can transfer them to make payments between users. To transfer a cryptocurrency to another user, on the other hand, the matter is more complicated, as you need to enter a public and a private key correctly.
Anyway, for the purposes of our article, we will only explain what is related to investing and trading, so we will focus on how to buy cryptocurrencies and how to trade up and down.
What is cryptocurrency trading?
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| how to trade cryptocurrency for beginners |
Cryptocurrency trading probably represents the biggest financial revolution of the last 50 years. We are talking about a market that has grown exponentially, going from 0 to hundreds of billions of dollars in capitalization in a very few years.
The accounts of investors who have used the right tools have seen unimaginable profits. Of course, not everyone has made money; there are also traders who have lost money or been scammed. Precisely because this is a relatively new market it is necessary to operate with particular caution, avoiding falling into traps.
Many aspiring traders, for example, have tried to trade with cryptocurrency exchanges and lost everything because they were scammed by the exchange itself. Other times it has happened that the exchange has been attacked by hackers:and the result is always the same, the poor trader has lost all his money and all his cryptocurrencies.
Why Invest in Cryptocurrency?
The boom in cryptocurrency is explained by several factors, among which we highlight the main ones:
The fact that some cryptocurrencies have reached very important values
The possibility that the evolution of bitcoin can be repeated by another cryptocurrency (although not with the same success)
The issuance of a new cryptocurrency, which starts from very low prices and for which there is hope that they can go up a lot in value
The arrival of bitcoin among investment funds raises its importance and drives away the possibility of banning it
The acceptance of bitcoin as a payment method by major companies and the acceptance of other high-capitalization cryptocurrencies by more and more websites as well
Aside from these motivations, which have pushed many investors and new investors to buy a cryptocurrency and especially bitcoin, there are also other reasons that push to buy crypto. In fact, two motivations that do not have to do with the purpose of profit should be considered.
The first is to secure part of one's savings from the choices of central banks and the exchange of currencies with the dollar. The bitcoin can not devalue due to governmental choices or the trend of financial markets but depends solely on the balance of purchases and sales of the bitcoin itself. So, if a country goes bankrupt, a citizen who has bitcoins will not have to fear that the currency of his failed country will devalue dramatically.
The second is to support the projects behind a cryptocurrency. In fact, more and more cryptocurrencies are presenting or being part of well-defined projects. For example, Ethereum is first and foremost a decentralized platform specializing in the creation and peer-to-peer publication of smart contracts. The cryptocurrency Ether (ETH) is linked precisely to this platform. The examples are many and for each cryptocurrency, it is interesting to understand what the underlying project or intent is.
How to trade cryptocurrency
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| how to trade cryptocurrency for beginners |
To speculate on cryptocurrency there are mainly two alternatives:
buying tokens, storing them in a wallet, and reselling them the moment their price has increased acceptably
invest directly on their trend, upward or downward.
In the first case, it is necessary to turn to a platform that allows the exchange of cryptocurrency with FIAT currency (such as the euro or the dollar).
Usually, we turn to exchanges, which are precisely exchange platforms within which users have the opportunity to exchange cryptocurrency among themselves, converting them depending on the market price, or exchanging them with fiat currency.
Some of the most famous names today are Coinbase, Kraken, Binance , and Coinmama. Beyond the security issues we have already mentioned, there are a few cons that we need to take into consideration regarding cryptocurrency trading on these platforms.
The operation is similar to what happens with traditional currencies on Forex, with the difference that here there is no central bank to determine the underlying trend of the currency. The volatility of cryptocurrency, in fact, can be high even within reduced timeframes, giving rise to huge profit opportunities in the short term.
These opportunities, however, are extremely reduced the moment you decide to turn to an exchange for trading. These platforms, in fact, are designed for a traditional operation: you buy a cryptocurrency, you keep the position open waiting for its value to increase significantly,and you sell it.
If we add to this the presence of commissions on the execution, we understand how the whole context becomes unsuitable for day trading and the opening/closing of many positions in a short time.
Better than to turn elsewhere, to maximize both the potential of your investment and the security of your funds.
Where to trade cryptocurrency
First point: it is fundamental to always use an authorized and regulated platform, in order to have the absolute certainty of not being cheated, since a regulated platform is subject to continuous supervision by the competent authorities (CONSOB for Italy).
Second point: the platform must be easy to use and allow you to invest directly on the trend of cryptocurrency. This means that in addition to being able to buy, you must also be able to sell short.
Short selling is a speculative operation that allows you to make profits in case the price of a cryptocurrency goes down. We already know that the price of cryptocurrency is very volatile, so a two-way trade is a not insignificant advantage.
To invest on the trend you use financial derivatives, CFDs, which faithfully replicate the trend of the underlying asset (in this case the cryptocurrency you want to trade on).
Third point: the absence of commissions. Some exchanges are reliable but, as mentioned, they apply high commissions and therefore make trading absolutely not convenient.
We have selected some of the best trading platforms that allow you to operate safely, easily and without paying commissions.
eToro
eToro is a great option for beginners and experts who want to trade cryptocurrency. The trading platform is really simple and intuitive.
One of the main advantages of eToro is the ability to copy trade thanks to the social trading revolution.
Basically, eToro is both a trading platform and a social network. This means that you can get in touch with other traders by exchanging ideas and opinions.
The most important aspect, however, is the possibility to copy what other traders are doing through Copy Trading.
The trader's profile contains valuable information: for example, in addition to the level of profits achieved in the past there is also the level of risk of his operations.
With this information it is easy to choose traders to follow. Just one click to start copying: eToro software will then replicate all trades.
eToro is completely free and does not charge commissions of any kind. You can use eToro to trade many cryptocurrencies such as:
- Bitcoin
- Bitcoin Cash
- Ethereum
- Ripple
- Litecoin
- Dash
- Ethereum Classic
- Cardano (ADA)
- IOTA
- Stellar
- NEO
- EOS
- ZCash
- Binance Coin
- Shiba Inu
- Curve
- Basic Attention Token
- Solana
- Dogecoin
- Algorand
- Uniswap
- Decentraland
- The Sandbox
- Loopring
and many more, available for CFD trading and direct purchase
The fact that it is possible to copy professional traders allows everyone to get profits right away. Moreover, this possibility is great for those who want to learn all the secrets of cryptocurrency trading: there is nothing better than learning by copying the really good ones!
XTB
XTB is completely free, without commissions and fixed costs. It is one of the easiest and most intuitive platforms to use: even those who have never used cryptocurrency can trade with XTB without any problems.
All members have the opportunity to be followed by a real cryptocurrency expert. This expert is available over the phone and provides very useful advice and guidance - in many cases it can make a difference!
XTB also offers very good trading signals. These signals are interesting indications of financial markets (they can concern cryptocurrencies but also other markets) and are elaborated by prestigious research centers.
Such good signals are usually sold on a subscription basis, with very high prices. In the case of XTB, the signals are completely free.
XTB is a platform that allows you to trade on all major cryptocurrencies such as:
- Bitcoin
- Bitcoin Cash
- Ethereum
- Litecoin
- Ripple
- Dash
- Avalanche
- Binance Coin
- Cardano
- Chainlink
- Dogecoin
- Kusama
- Polkadot
- Polygon
- Ripple
- and many others
You can also use XTB in demo mode, with no constraints or limits of any kind.
Iq Option
Iq Option is one of the authorized and regulated platforms that provides the largest number of cryptocurrencies.
Among other positive features of the Iq Option, we must mention the fact that it is completely free and does not charge commissions.
Many beginners use Iq Option because it is possible to start with an initial capital of just 10 euros. However, it is also possible to operate with a free demo, with no strings attached and no limits.
Here is the full list of cryptocurrencies available on Iq Option:
- Bitcoin
- Ethereum
- Ethereum Classic
- Bitcoin Cash
- Bitcoin Gold
- Ripple
- EOS
- Litecoin
- Tron
- Cardano
- IOTA
- DASH
- NEM
- NEO
- ZCash
- OmiseGo
- QTUM
- Stellar
Cryptocurrency Trading Strategies
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| how to trade cryptocurrency for beginners |
Cryptocurrency trading is an activity that can generate high returns and is among the financial investments that have generated the highest profits over the past few years.
At the same time, however, if you make mistakes it is also possible to lose money with cryptocurrency trading.
What are the best strategies to trade cryptocurrencies without mistakes?
Short Selling
Beginners usually think that to trade cryptocurrency you just need to buy and wait for the value to increase.
Unfortunately, however, the value of cryptocurrency doesn't always increase (there is no financial asset whose value is always going to increase) ,and therefore those who bought lose money. Experts, on the other hand, know that it is possible to sell short: this is a speculative operation, proper to the functioning of CFDs, which generates profit in case the value of a financial security falls.
With this simple strategy, you can always earn, both when the value of cryptocurrencies goes up and when it goes down. to make a profit with trading, it doesn't matter how the cryptocurrency prices go: the important thing is to make a correct prediction!
To give an example, if the price of Bitcoin goes up, then it's time to buy Bitcoin, if it goes down it's time to make money by selling short.
Can a beginner make good predictions? Sure. many beginners observe what Bitcoin does and then trade on other cryptocurrencies: usually, cryptocurrencies always follow Bitcoin, if they go up they go up too and if they go down, they go down.
With a little experience, even a beginner can make very good predictions. Those who want to save themselves the trouble of learning use the eToro platform and just copy the best traders.
Trading system
Another serious mistake made by those who start cryptocurrency trading is to ignore the trading system. What is it? The best trading platforms provide the possibility to set take a profit and stop loss.
The take profit indicates the maximum profit you want to reach on a trade: when this profit is reached, the trade is automatically closed.
The stop loss indicates the maximum loss you are willing to suffer on a single trade.
It is always good practice to set stop loss and take profit because they allow to limit losses (it is the trader who decides how much he is willing to lose!) and to keep trading activity under control. Unfortunately, many beginners forget to set these simple parameters.
Money management
Money management should be at the core of every cryptocurrency trading strategy.
Explained in simple words, it is always advisable to divide the available capital into small amounts, so as to risk only a small amount on every single trade.
In this way, even if a trade closes in the negative, the losses are really insignificant compared to the total capital and are easily compensated by the profits obtained from the other trades.
Cryptocurrency trading course
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| how to trade cryptocurrency for beginners |
Cryptocurrency trading is absolutely not difficult, on the contrary, nowadays it is really within everyone's reach. Those who want to start, however, should devote some time to studying.
What is the best course to study cryptocurrency?
Our choice falls on XTB's xStation Academy. This course, which is available for free to all members, is really simple, doesn't use technical language, and doesn't waste your time with theory.
In fact, it is the best course precisely because it clearly explains the most important thing: how to make money with cryptocurrencies.
Many books and paid courses that claim to explain cryptocurrency trading waste time with lots of theory and little practice. After all, who wants to trade cryptocurrencies, what can it matter to know thoroughly all the possible algorithms for blockchain management? Nothing.
That's why XTB's practical course explanations are exactly what you need.
Automated cryptocurrency trading
The development of investment platforms has led to the emergence of expert advisors (EAs), and real trading bots that are used to automate cryptocurrency buying and selling operations.
On paper they seem like a miracle solution: you just install the EA on the platform and wait for the gains. Is this really the case?
The answer is obviously negative: many expert advisors don't work, especially the free ones, while the paid ones can have a definitely excessive cost when compared to the gains they allow you to get.
Moreover, you may have read some posts or received some email proposing you some automatic cryptocurrency investment services starting from a low initial investment (usually around 250 €).
Well, know that this scheme is the one adopted by the main scams related to the crypto world (Bitcoin Era, Bitcoin Gold, Bitcoin Superstar, ...), which bet everything on the naivety of novice traders and the promise of easy money.
So what is the best alternative to automated cryptocurrency trading? Copy Trading by eToro, which is based on human decisions of experienced and competent traders, able to adapt to market changes in a timely manner, even in unexpected situations.
Main cryptocurrency on which to trade
Hundreds of cryptocurrencies exist today: some, like Bitcoin, are highly capitalized, while others are little more than case studies that are best to stay away from.
What is the best cryptocurrency to invest in? Most traders usually go for Bitcoin but emerging cryptocurrencies can also be a great asset, as long as they have a medium or high capitalization.
The great thing about emerging cryptocurrencies, in fact, is that you can easily make predictions since their price is closely correlated to that of Bitcoin: when the price of Bitcoin goes up, the price of another cryptocurrency also goes up ,and, vice versa, when it goes down, the price of another cryptocurrency also goes down.
We have selected the best cryptocurrency to trade on, all of them serious projects with an adequate level of capitalization:
- Bitcoin
- Bitcoin Cash
- Ethereum
- Ripple
- Ethereum Classic
- Litecoin
- DASH
- NEO
- NEM
- Monero
- Cardano (ADA)
- Stellar Lumens
- IOTA
- EOS
- Tron
- Polkadot
- Zcash
- Binance Coin
- QTUM
- Dogecoin
- Polygon
- Shiba Inu
- Decentraland
- Chiliz
- Quant
- Enjin
- Compound
- Filecoin
- Cosmos
- Spark
- Solana
- Curve
- SushiSwap
- Axie Infinity
Cryptocurrency trading opinions
First, there is a widespread opinion that cryptocurrency trading is some kind of scam. We know that many traders who have operated with exchanges have suffered scams or theft, not to mention those who have relied on fake automated cryptocurrency trading systems, such as Bitcoin Profit or Bitcoin Code.
In reality, cryptocurrency trading is not a scam; we know that it is a particularly profitable investment. What you need to do is to use only authorized and regulated cryptocurrency platforms.
Also, does cryptocurrency trading mean making easy money? No: it is true that the profits you can make with cryptocurrency trading are really high but, at the same time, it takes commitment and time to achieve positive results.
Those who promise easy money are also fraudsters!
Finally, is trading cryptocurrency difficult? In the beginning, trading cryptocurrencies was really complicated and there were pretty big technical difficulties. Even today, people using exchanges have to be very technically savvy in order not to make mistakes.
Of course, the platforms we have selected and recommended for trading are extremely easy to use, even for a beginner!
Conclusions
Cryptocurrency trading is a high-yielding activity that can generate high profits, even for beginners. It is necessary to use safe and reliable trading platforms and to know some basic principles.
Today you can rely on the services of some brokers designed just to help you with this. Try it yourself, at no cost, by registering for a demo account at:
eToro
XTB
IQ Option
What is cryptocurrency trading?
It is a short-term speculative investment activity in cryptocurrencies.
How do you make money with cryptocurrency trading?
You make money by buying cryptocurrencies when the price goes up or selling cryptocurrencies short when the price goes down.
Can beginners trade cryptocurrency?
Yes, but it is very important to use easy-to-use platforms. Getting positive results takes effort and time (but it is worth it).
What are the best cryptocurrency trading platforms?
The best choice is between eToro, XTB ,and IQ Option.
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