6 Things To Know Before You Start Crypto Trading
There are so many cryptocurrency online trading secrets you need to know before starting your cryptocurrency journey.
Cryptocurrency trading has proven to be one of the best ways to make huge profits online. Crypto success in recent times has seen several investors flock into the space, with many not having an idea about how the crypto market works.
While cryptocurrency has the potential of turning an average income earner into an overnight millionaire, investors are advised to tread carefully because these assets are increasingly volatile. For instance, in late 2017, BTC traded as high as nearly $20,000, but in early 2020, the cryptocurrency was trading below $4,000.
There is also the possibility of losing your funds to hackers if not properly stored.
In view of this, we have compiled six things to know before commencing your crypto trading journey.
Selecting A Reputable Cryptocurrency Exchange
Crypto trading is conducted on cryptocurrency online broker platforms. These platforms facilitate the buying and selling of cryptocurrencies. With cryptos having a strong potential to bring massive returns, several trading platforms have emerged in the market, claiming to have the best features to stay ahead of their competitors.
However, experienced investors would tell you that not all the available exchanges are legit despite these claims. Past events have revealed that fraudulent and unserious individuals can also establish a cryptocurrency broker platform.
Most times, the possibility of succeeding in crypto trading lies in the type of exchange you choose. To select the best trading platform, it is advisable to use specific criteria like regulation, security, customer service, etc., to pick a legitimate trading platform.
Learn The Best Way To Store Your Funds
A good amount of investors who have had their funds stolen were reported to have stored their assets on an exchange. Despite conducting crypto trading on exchanges, on no account should clients use these platforms as their private wallets.
Once you are no longer in any trade, you should move your funds from the exchange to a private wallet. Users should adopt the best technique in keeping funds safe, including setting up two-factor authentication (2FA) to protect the wallet from potential hacks.
Only Invest What You Can Lose
As stated earlier, not only does cryptos have the potential of making you rich, you can also lose a large amount of your capital in a flash when the coin value plummets or when your money suddenly goes missing as a result of a hack.
Crypto trading is tempting, but do not get carried away. You might be tempted to put in more cash, mostly when you record a few wins, but doing this may spell doom for the trader.
Do Your Own Research (DYOR)
In the past, users were carried away with successful Initial Coin Offerings (ICOs) that they failed to research new firms’ background entering the space. This act of negligence resulted in hundreds of millions of losses.
Although the crypto market is relatively new compared to conventional financial markets, tons of individuals claim to be knowledgeable about the asset that will likely bring massive profit within a short period.
Every piece of information from random individuals should be taken with a pinch of salt, as these recommendations may be blinded by undying love for a project.
Do not be focused on making gains that you would forget to DYOR about a project or a trade call.
Do Not Get Greedy
Know when to exit a trade once your goal has been met. Although it is possible to record more than 100% gains within an hour, it is best to set reasonable goals that can be easily achieved, or you risk everything when a major market correction for the asset occurs. Traders should learn how to sell when small wins, like 10% to 15%, are recorded.
Spread Your Trading Wings
It is important not to put all your eggs in one basket by trading just one cryptocurrency. At least, a trader should spread his risks to two or more cryptocurrencies in order to mitigate the risk of losing substantial amounts of funds when the value of one drops rapidly, which could set your wallet in flames.
In this article, we covered six things you need to know before starting your crypto trading journey. While crypto trading has enough opportunities, the act comes with a significant amount of risks, and you should adhere to the tips raised to make huge returns while mitigating your losses.