First of all, I have to warn you. Cryptocurrency trading is not for wimps. You need to have strong nerves and a solid heart. Only the real ones will be hugely rewarded. That being said, here are few basic tips to trade cryptos.
There are a few things to know about trading cryptocurrencies that can help you plan for crypto trading:
Trading on an exchange means you need to comprehend the types of order. You’re going to have to recognize the difference between a limit order and market order because you use a broker service like Cash App or Coinbase.com. And, you’ll also need to understand how stops work with certain exchanges. Also, make sure you brush up on the idea of slippage if you are trading on a DeFi exchange like uniswap. Crypto markets can lack “liquidity,” so be very careful to position large market orders, please! It is very necessary to protect your accounts. If your account gets compromised or you lose access to your wallet, you lose everything in cryptography. In certain cases, there is no way to recover, so protection is super essential. It is a must for a secure password, 2FA, and other good practices.
I suggest 2fa on a Coinbase account with whitelisting enabled in Coinbase Pro for exchange security. You MUST write your seed/pin/ to a computer held offline for wallet security, safer to have a backup and to have both encrypted but make sure not to lose that password either. Finally, stable program for passwords like Last Pass support.
The demand for crypto-currencies is insanely unpredictable.
If you exchange a Bitcoin, another coin, or even a stock like the GBTC Bitcoin Trust, you can make a fortune in a moment and lose it in the next. For all your investable funds, think minimising risks, hedging, knowing some TA, and not “going long.” TIP: If you exchange only the top coins by market cap (that is, Bitcoin and Ethereum coins) or GBTC, then there is a slim risk of losing anything overnight (not impossible, but slim). Other cryptocurrencies are riskier than others (but can offer quick gains on a good day). Coins with lower market caps and amounts, in general, tend to deliver a higher risk/reward.
For beginners, trading on margins doesn’t make sense.
Newcomers are likely to want to stick with strong liquidity on big coins and stop margin trading. No better way to blow up your account than exploiting altcoins, but those who delve deep into the culture of cryptography will easily come along with the temptation. Common sense says don’t do this outside the doorway, so your warning is here!
The derivatives have rule-sets of their own. You can’t just contract HODL and options because you have mistimed the market, because it can cost money in fees to keep a permanent long or short contract. It can be enticing to optimise returns, but the risk you take and the expertise you need make derivatives ill-suited for beginners.
Cryptocurrency trading is an operation that is taxable.
If you do not grasp very carefully the fiscal consequences of trading cryptocurrency tread. When trading coins, there are some nasty traps you might fall into. For one, “like-kind assets” are not generally considered. If that is confusing, then consider sticking to trading USD for coins in Coinbase before you understand the notion.
The exchange of cryptocurrencies is not part of the daily exchange of stocks. We recommend using the Coinbase exchange/broker below, but once you sign up for a Coinbase account, you can also use the related Coinbase Pro. None of these are the same as Wall Street and its exchanges, either.
In other words, you are ready to start trading if you understand order forms, protection, and what you are trading.
The 5 best crypto trading exchanges :
I give you the top 5 here but they are plenty and you can check the whole liste here.