What is crypto trading + beginner tips: A trader’s perspective

Cryptocurrencies have been gaining popularity over the last decade and while some people are still skeptical about this new asset class, many investors and institutions have started to recognize its potential for high returns, diversification, and even as a hedge against traditional financial systems.

In this guide, we’ll discuss what cryptocurrency trading is and how you as a beginner can break into this space. 

What is crypto trading

Simply put, crypto trading is the process of purchasing, selling, or exchanging cryptocurrencies (e.g. Bitcoin, Solana, Ethereum) for the sole purpose of making a profit from price fluctuations. 

Cryptocurrency trading is similar to other forms of securities trading, where investors buy or sell a specific amount of a cryptocurrency with the expectation that its price will rise or fall within a certain time frame, allowing them to sell at a higher price or buy at a lower price.

How to get started trading cryptocurrencies 

Understand the risks

I’m just gonna give it to you straight: trading cryptos is not for the faint of heart. The crypto market is one of the most volatile in the world and its price swings can be very unforgiving.

Choose a good trading platform

I’m not talking about a platform that doubles your initial investment or runs frequent promotions – an actual reliable platform. Now this may differ from person to person depending on a number of factors including your geographical location, how much free capital you have, etc.

However, there are general considerations you want to keep in mind during your search. They include;

• Is the site a trusted/recognized platform?

• Does the platform offer its services to people in your region (this is actually more important than you think)

• How many assets do they provide access to?

• Do they offer effective customer support and provide helpful resources on their website?

Take time to understand how the market works (as well as popular trading platforms)

One of the biggest mistakes a lot of beginners make when they start trading is looking for Telegram or Discord channels where they can get trading signals. I’m not saying this doesn’t work for some people, but in most cases you’re not even familiar with certain concepts that will help you in placing and liquidating orders.

How then are you supposed to make any money from trading? That’s why it’s important that you spend time researching and understanding the markets. Take a few free courses in trading (could be forex, options, or even stock trading) before risking any money. 

This approach also shields you from being influenced by every ‘crypto guru’ in the market. By conducting your own analysis, you can validate your findings with reputable industry experts who have a proven track record. 

You also want to make sure you familiarize yourself with a platform’s trading interface before risking your own money. A lot of crypto trading platforms allow users trade with demo funds before investing real money. This feature should be a key consideration when selecting a trading platform.

Learn risk management 

I know you’ve seen all those social media posts about people who made millions of dollars from investing under $20. If you’re coming into this space just to 100,000x your money in the shortest time possible, then you might end up getting disappointed.

This is one of the harsh truths I’ve learned in my years of trading. Your most important strategy is “risk mitigation”! There is no strategy that is foolproof. What separates profitable traders from losing traders is risk management. 

Look for high-value opportunities that offer minimal risk exposure and invest a small portion of your capital. As lucrative as the cryptocurrency market may seem, you could still lose millions of dollars!