Cryptocurrency is simply a type of currency only in a computerized format. It is a digital asset formulated to operate as an exchange medium wherein transactions are stored on a decentralized ledger called ‘blockchain.’
It is a modern way of conducting business and has many merits. It eradicates the requirement for a governing body. Transactions are done on a P2P (peer-to-peer) network without the need for intermediaries.
Cryptocurrency can be used as a means of payment for local and international trades. Private information of the trading parties is kept confidential, yet marketing details can be accessed as the blockchain is transparent.
There are many crypto coins in the market right now. However, Bitcoin stands head and shoulder above the rest, and for a good reason. It is the most popular and valuable cryptocurrency.
Since it penetrated the trade market in the latter years of the last decade, bitcoin has recorded an astronomical surge in value globally. As of 2021, 1 Bitcoin is equivalent to $56,000. It is expected that the price will keep rising as time goes by.
One of the most beneficial things about bitcoin is that it can be exchanged for other alternative coins. Inexperienced traders need to be acquainted with the best bitcoin exchange for beginners.
However, bitcoin remains a niche market which means that its price is volatile. There have been numerous and sudden fluctuations in the cost over time. Unfortunately, it is an occurrence that has a high probability of continuity.
Due to its decentralized nature, bitcoin is highly subject to speculation. As opposed to fiat currency which government mandates can easily influence, the price of bitcoin is primarily determined by the forces of demand and supply.
For all its bright spots, bitcoin remains a tough nut to crack for inexperienced traders due to its high level of volatility. Many beginners do not know the tricks about Bitcoin but keep gravitating towards it.
The following suggestions have been outlined to assist you with navigating the trading market.
Look for informative and trustworthy sources
There are many opinions on cryptocurrency out there. Investors, analysts and traders all have a say like crypto coins. However, not all these parties are well-placed to influence people’s thoughts on cryptocurrency.
It is therefore essential to look for only reputable and informative sources on cryptocurrency if you want to learn to trade.
Start with little investment
It is vital to begin trading with an amount you won’t bat an eyelid at losing. Cryptocurrency is very volatile. It is advisable to sell in small amounts that will enable you to understand the intricacies of the market without necessarily losing a lot of funds.
Look Out For Scammers
Not every person that trades in cryptocurrency is a real trader. Some are just plain thieves.
The absence of a central authority of power makes cryptocurrency a fertile ground for different forms of scams.
There are many instances of fake wallets and fake exchanges being used in transactions. Scammers also use Ponzi schemes to entice people, promising them increased return on investment. This is usually untrue and unsuspecting people get stolen from.
The fact that a private key protects each party from being traced makes it impossible to apprehend such thieves.
Establish targets for both profit and loss
It is vital to know when to begin and end trading in cryptocurrency. Your emotions should never sway you as it is very inconsistent. When making profits while trading, you should know when to stop and not become greedy, as that can quickly backfire. Conversely, an apparent stop loss level will help you reduce your losses also.
Be prepared for fluctuations
Cryptocurrency is a modern way of trading. There is a lot of instability with the prices as the usual trade factors do not determine it.
You have to be open-minded when trading, as anything can happen. You should be prepared for a slight or sequential, drastic or low surge in prices.
Possess a motive for entering each trade
It would be best if you had a rationale behind every transaction you make. This enables you to be clear-minded and focused.
There are generally four types of traders, which are:
Scalpers – They are the most enthusiastic traders, making numerous trades on a daily basis.
You should know which type of trading trait you possess and build on that. It is understandable to want to make hay while the sun shines; however, cryptocurrency trading requires you to be very calculative. You can’t always profit on every trade, and that is okay.
The cryptocurrency market is highly volatile as crypto coins are still trying to gain mainstream acceptability. Due to its decentralized nature, many governments do not recognize it as a legal tender. To that end, every trader must be careful when making any transactions.
Every crypto trader started as a beginner before gradually improving. Understanding the trade market will take many resources; you must grow at your pace without rushing the process.
In collaboration with Cryptimi®. Image: Unsplash.