We are sure that, even if you have no experience in this sector, you will have already heard of Bitcoin, Ethereum and the like.
This is already a great place to start, as you are about to find out how to invest online in the most revolutionary assets of all time: cryptocurrencies.
Before starting this guide to crypto trading, we remind you that choosing to trade cryptocurrencies implies the need for an online platform. Precisely for this reason we will discuss in this cryptocurrency trading guide the best trading platforms available to you today.
In this way, you already have all the necessary tools to start investing in the most promising digital currencies, or those that have attracted your interest due to the performances recorded on the market.
In this crypto trading guide you will find everything you need to start investing in Bitcoin and all the main cryptoassets. That said, we can begin our guide to crypto trading.
Guide to Crypto Trading: What are Cryptocurrencies?
Cryptocurrencies are virtual coins that are encrypted. They were created as an alternative to traditional currencies. The first cryptocurrency created was 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 devaluations due to decreases in prices. interest rates from central banks. Therefore, cryptocurrencies are not issued by any "state mint" and do not depend on central banks or other institutions.
Cryptocurrencies have a value expressed in traditional currencies and generally in dollars. When you decide to invest in cryptocurrencies, we refer to this value, which can be slightly different depending on the exchange platform on which you can buy and sell.
Cryptocurrency Trading Guide: How Cryptocurrencies Work?
The exchange of cryptocurrencies can take place peer-to-peer , therefore as an equal, user by user, thus avoiding operating with banks or central authorities. In the example of Bitcoin, the most famous cryptocurrency, both the issuance of the coin and the management of transactions are carried out collectively by the "network".
Cryptocurrencies are bearer, so they belong to whoever holds them. Some cryptocurrencies are specialized in the defense of this privacy.
Encryption also makes it impossible to seize coins, unless you have the security keys.
Each cryptocurrency has some differences, more or less substantial compared to Bitcoins, which in any case remain a point of reference, as well as a starting point, for the development and future of cryptocurrencies. In the next paragraph of our crypto trading guide, we will discuss the types of popular cryptocurrencies and the best trading platforms.
Types of cryptocurrencies
In this crypto trading guide, we’ll give a brief description of some of the most popular cryptocurrencies in the market.
Without any doubt, Bitcoin is the best known cryptocurrency, so much so that for many it is the only one known and is practically still a synonym for the term "cryptocurrency" itself. In the future it could lose its position of supremacy, but for the moment the times still see it clearly in first place among the choices of users and also of investors, as well as of traders. But these last two categories do not affect the importance of the same, since the many users who make payments in BTC every day represent the essential part of its success.
Ethereum is talking more and more about itself and the reasons are different, even if in reality it is a somewhat more complex system than that of Bitcoin. In fact, ETH is a platform, a network for the exchange of contracts based on its platform and at the same time it represents the monetary value or the cryptocurrency of the same platform.
Ripple’s XRP has been in existence since 2012, although it has never had the reputation of Bitcoin. XRP is the digital currency used for payments and transactions on the Ripple platform, online since 2012.
Despite the limited supply, the unit cost per XRP token is still quite affordable and the market cap is just over $45 billion. In terms of market capitalization, XRP represents the 7th most popular cryptocurrency. The maximum total number of coins is set at $100 billion.
Investing in cryptocurrencies
For some years there has been a real boom in cryptocurrencies, with all its risks and related opportunities. Two factors that contributed to its boom were, in chronological order:
- The fact that it does not devalue when new money is issued (for bitcoin we are not talking about issuance but about mining)
- The rush to buy once the price has risen, by investors of all types, including new ones, attracted by the price rise
- The arrival of bitcoin among investment funds
- The acceptance of bitcoin as a payment method by major companies
With traditional currencies, issued by a central authority, the more currency is issued, the less exchange value the same has compared to other currencies. With Bitcoin, however, this is not the case. Be careful, though, because that doesn't mean that Bitcoins can only see their value increase! The exchange rate changes between Bitcoin and dollars is constantly changing, as well as between the dollar and other cryptocurrencies.
Online trading on cryptocurrencies
The sharp changes in cryptocurrency prices have made them attractive for the more daring traders.
Trading cryptocurrencies can mean two things: buying and selling cryptocurrencies, or trading up or down on their value.
For example, bitcoin can be bought and sold, but it can also be traded up and down on its value. In practice, you can invest in the fact that bitcoin will go up in price or even go down in price!
If you are interested in making profits on price changes (without actually buying bitcoin) you can do it through CFDs, which allow you to trade up and down, but also to do it with smaller capital thanks to leverage. With 1: 2 leverage, for example, you can trade on $100 of bitcoin for just $50.
If you have never traded cryptocurrencies before, we recommend that you start very slowly and carefully. Even better, you could start with a demo account and practice with virtual funds, then move on (if necessary) to operate with a budget of limited funds.
In summary: start gradually. Do not get discouraged by a quick loss or the enthusiasm of a high and fast profit, but concentrate on understanding what are the dynamics that influence the quotations of the cryptocurrency on which you decide to trade.
Because this is a crypto beginners guide, we also advise our readers to get some info trading basics for beginners and etf trading guide against not trading on more than 2 cryptocurrencies at a time. If you do, you may start to have problems in following their variations carefully and above all not being able to understand the market mechanisms that move them.
Crypto Beginners Guide: Which platform to trade cryptocurrencies?
What are the best cryptocurrency trading platforms? We have reviewed some of the best ever in this guide to crypto trading.
eToro is a great opportunity for all those who are approaching cryptocurrency trading for the first time and want to avoid making mistakes. In addition to providing traders with a very simple and intuitive interface, eToro offers a more unique than rare opportunity in the world of online trading: copying the best traders.
Thanks to the patented Copytrader system you can easily find traders who have achieved good results in the past with minimal risk. These traders can be selected for copying: the software system will take care of replicating all their operations in real time.
This system guarantees two immediate advantages to beginners: they can start immediately (the same as the best traders in the world) and they can learn to trade online by observing what the best traders do.
XTB is considered to be one of the best trading platforms in Europe. In addition to trading cryptocurrencies, it also allows you to operate on stocks, commodities and many other traditional financial securities.
How come an impressive number of newbies are using XTB to trade cryptocurrencies? First, because it is really very simple and intuitive. Even a beginner is able to use XTB without any problems.
All subscribers also get free phone support from a true cryptocurrency expert. The precise indications of this expert are precious and those who follow them are guaranteed not to make mistakes.
Those who want to learn more have the opportunity to download an excellent ebook for free or learn about the ETFs using our etf trading for beginners.
This ebook has been downloaded hundreds of thousands of times because it is free (the other guides also cost a lot), it is easy to study even for a beginner and above all it explains things in practice, as you make money with trading. So he doesn't waste time with theory unnecessarily.
The advantages of XTB do not end there : all members can use the platform in demo mode, without restrictions and without limits. With the XTB demo you can experience risk-free cryptocurrency trading, so you can then go for sure when using real money.
Iq Option is a cryptocurrency trading platform widely used by beginners for two reasons:
- It is really simple and intuitive to use
- It allows you to start trading cryptocurrencies with as little as $10
In short, Iq Option has broken down any type of entry barrier to trading : it is really simple (everyone can use it) and it only takes 10 euros to start, while in the case of other platforms it takes between $100 and $250.
Iq Option also makes a wide educational section available to all members with hundreds of video courses that explain trading (cryptocurrencies and other financial securities) starting from the basics up to the most complex and profitable strategies.
Beginners also particularly appreciate the Iq Option demo, obviously unlimited and without constraints.
How to day trade crypto for beginners: Best Strategies
The inherent risks of trading cryptocurrencies are directly related to the nature of these assets. Most of all, the daily volatility could prove to be a limit, especially in the case of investors who are still novice.
However, it is possible to adopt the best strategies to make the most of any direction cryptocurrencies follow.
Among the best you can consider are:
- Intraday trading;
- Buy and hold;
- Automated trading.
Wondering how to day trade crypto for beginners? The first strategy is suitable for investors who intend to take advantage of the daily price fluctuations reported by these assets.
The second strategy, on the other hand, is recommended for investors who prefer to ride market macro-trends and make the most of the long-term growth of emerging cryptocurrencies.
The third, finally, is suitable for any type of user as it allows you to exploit market opportunities efficiently: by relying on a good trading bot you can get the best results with minimum effort.
The first aspect we want to focus on, the intraday trading strategy (or day trading), concerns those considering how to day trade crypto for beginners.
As we have already mentioned, trading on a daily basis is ideal for investors interested in the short term. In fact, it allows you to carry out numerous operations during a single market session, from which to obtain certainly limited but constant income over time.
Although it is an attitude not foreign to newbies, we recommend that you carefully evaluate the levels of stress and attention to which day-traders are subjected.
A market like this in analysis, presents abrupt and consistent changes in value, with sudden trend reversals. For this reason, cryptocurrency trading requires constant study and analysis of the trend of individual assets on the market.
Buy and hold strategy
Another increasingly popular approach among traders is called " buy and hold ".
This is a long-term strategy, which could increase risks, but also prove to be optimal for more than satisfactory returns.
Numerous investors decide to operate in this direction, trying to take advantage of dominant and lasting upward market trends .
One of the main purposes of the buy and hold strategy is to avoid the so-called "market noise", i.e. those anomalies perceptible in the short term, which cause uncertainty and volatility.
Although paradoxical, this strategy is no stranger to unskilled traders. In fact, in case you are interested in such approaches, all you have to do is:
- Choose and analyze the growth margins of a crypto (investor interest, validity of the project of which the digital currency is the representative, usefulness of the asset in real life);
- Accompany your operations with both technical analysis and fundamental analysis;
- Open a position when the crypto is more favorable.
After that, whether it be months or even years, you can take advantage of the financial growth of a cryptocurrency to get income from your operation.
Before concluding, it is good to clarify that many investors prefer medium/long-term approaches to trading cryptocurrencies like the strategy we have mentioned in crypto beginners guide, as they are less stressful and more profitable.
Of course, you should opt for tactics that suit your risk profile and abilities. If you are interested in stocks, check out the most popular stocks trading guide, which has been created after well research.
Another solution in vogue both among experienced traders and newbies is related to automatic cryptocurrency trading.
As the term suggests, it is a way in which you will be able to invest in the best cryptocurrencies, without operating on the market yourself.
The most common option for automatic trading, in the eyes of experienced investors, concerns the use of the well-known MetaTrader platform .
In order to carry out automatic operations on the chosen assets, you will need to download and install EA (Expert Advisors), or trading bots specifically designed to analyze and compare the numerous earning opportunities present on the financial markets.
We advise you not to underestimate the risks of automatic trading on cryptocurrencies. In fact, it is good that you correctly set the parameters that the Expert Advisor will have to follow to invest, always taking into account your strategies.
You will have to take care of deciding the frequency with which to operate on the market, and above all, of assuming a precise risk profile.
After setting up the bot's operational criteria correctly, you will notice several advantages. Between these:
- Reduction of investment times, especially on a daily basis;
- Profit maximization;
- Absence of human error during operations.
In fact, automatic cryptocurrency trading is ideal for reducing stress and trying to increase the gains obtainable on a daily basis.
Taking advantage of the speed and analytical skills of the best EX, you can open multiple positions on a daily basis, trying to make small but steady profits.
Crypto Trading Guide: Conclusions
Trading cryptocurrencies is not a passing trend, but it is proving to be a profitable solution even for medium/long-term investments. However, to conclude our crypto trading guide, we want to reiterate some of the fundamental steps to limit any errors:
- Trading with a safe and reliable online broker;
- Study the main characteristics relating to individual cryptocurrencies;
- Implement a trading plan that is appropriate to your financial resources and skills.
By investing with the support of the CFD trading platforms mentioned in the course of this cryptocurrency trading guide, you will have the opportunity to carry out financial transactions in total safety, and through flexible and economically affordable investment methods.