The world of cryptocurrency is complex and can be daunting if you’re new to trading and just looking to get your feet wet. As you learn how to navigate the different exchanges available, decipher the terms and decide which cryptocurrencies you want to invest in, it may be very overwhelming.
We get it, it’s hard to keep up with it all. However, if you’re willing to take the time to craft a strategy and do your research: investing in cryptocurrencies can yield high results.
We’re here to talk through crypto trading, break down how it works, and go through the basics of trading so you can decide if investing is right for you.
Let’s dive in.
Cryptocurrency is also known as “crypto.” It’s a digital asset that doesn’t go through the government or any physical bank. Instead, individuals buy, sell, and trade them securely through different platforms, called crypto exchanges.
There’s a wide range of different cryptocurrencies on the internet. Most individual units are often referred to as tokens or coins. These can typically be used to buy and sell things. If you hold on to the right currencies long enough, they also increase in value. Most cryptocurrencies that you can invest in have a finite amount of tokens. With that in mind, the more traders invest in a certain currency, the less available they are.
Cryptocurrencies are often mistaken for in-game virtual currencies, like the Robux used in Roblox or SAND on The Sandbox. These virtual cryptocurrencies are unique to the specific gaming world and don’t have any value outside the virtual world they exist in.
Cryptocurrencies are supported by blockchain. Think of blockchain as a virtual register for currencies and online business. Blockchain keeps track of who owns what and maintains a record of transactions to ensure no copies of tokens or errors.
This prevents traders from making duplicates of their holdings or spending their crypto twice. With blockchain set in place, cryptocurrencies can operate how they do, without the need of a central authority, minimal transaction fees, or any processing.
In a sense, it develops a stable currency for countries and locations that don’t have financial infrastructures they can rely on. Blockchain streamlines the trading process, processing transactions and requests way faster than traditional markets. The best part? It doesn’t matter if it’s a weekend or a holiday.
Cryptocurrency isn’t like the regular stock exchange. It’s a highly volatile market with tons of risk involved. Some days, you may need to close your eyes and resist the urge to panic because no two days are the same.
It’s unpredictable and has wild shifts in value. The cryptocurrency trading market is also a 24-hour market, meaning the value of crypto is always changing, unlike the traditional stock market.
Before you dive straight into trading, there are a few things you’ll need to know and terms you’ll want to familiarise yourself with the following:
If you’re serious about wanting to trade and invest in cryptocurrency, you’ll need a crypto wallet. These wallets contain public and private cryptographic keys. These keys track wallet ownership and allow you to send and receive different cryptocurrencies.
Cryptocurrency exchanges are essentially a digital marketplace. They allow individuals to buy and sell different types of cryptocurrency. These are online platforms that essentially act as the “middle man” between all buyers and sellers.
As of 2022, there are plenty of publicly traded cryptocurrencies. Some currencies have a higher market valuation than others. Some are strange and essentially worthless. The best way to understand which ones you want to invest in and gain a better understanding of: is through market research. A few of the most commonly traded include Bitcoin, Ethereum, Solana, Cardano, and Stablecoins.
Anonymous crypto transactions are becoming a thing of the past. KYC stands for know-your-customer. It’s now required for any crypto platform that offers services in the U.K, Australia, and the U.S. The industry is growing and is no longer what it was a few years ago because governments are cracking down on privacy and security measures.
It’s put in place to help fight off money laundering and keep exchanges and the individuals that trade with them in check. Governments have their eyes on cryptocurrency, so there are sure to be ongoing changes to privacy and regulations as it continues to grow in popularity.
There’s no right or wrong answer when it comes to choosing which platform you want to buy and trade crypto on. Before you go with the first option you find on Google or that your friend recommended, you’ll want to do your own research and weigh the pros and the cons to ensure it’s a good fit for you and your trading journey.
Here are a few things to consider:
Not all platforms have the same available currencies. If you want to trade or invest in a certain currency: you’ll want to ensure the exchange you choose has them available for trade.
The minimum refers to the amount you need to deposit and invest in. Some exchanges have a hefty minimum investment for getting started, so you’ll want to ensure you find one that fits your budget and needs.
Liquidity refers to their ability to take your money and turn it into tokens and vice versa. You don’t want to have to pay hefty fees to make a few simple trades. If a cryptocurrency is increasing in price, you’ll want to make moves fast and invest at the lowest possible price. The best way to know an exchange’s liquidity is its trading volume and if it’s well-established. If they have a high trade volume and can handle it: they most likely know what they’re doing.
Customer service is essential, especially if you’re new to trading. You’ll want to ensure the exchange has a support team there to answer any of your questions.
A step-by-step guide to trading currency with an exchange
Investing in crypto can be broken down into a few simple steps. However, it doesn’t necessarily mean it’s easy for new traders.
Here’s the breakdown of the process:
Choose a crypto exchange and create an account. When you make an account, you’ll need to prove all of your personal identification information, in the same way, you’d open a normal stock brokerage. Don’t be surprised if they ask for your Social Security number, address, date of birth, and other personal identification information.
Once you’re approved and your account has been opened, it’s time to fund your account. Usually, you can fund your account directly from your bank account with a wire transfer. This will be the most cost-effective option. Depending on the exchange you choose, it may also be free.
Bitcoin and Ethereum are the most popular and active choices among traders. They’re more predictable and can be easier to trade than other options. However, there are other options out there. This is where things get tricky and complicated because there are many options. At times, you may feel it’s better to play it safe, stick with what you know and develop a consistent trading strategy.
As a rule of thumb: don’t put all your eggs in one basket. Do your research, look into riskier options, and have some fun. When new investors are just starting out, they like to allocate a smaller portion of their investment towards mid-market cap cryptos. From there, you can build a strategy that works for you.
With a market as unpredictable as cryptocurrency, it pays to have a strategy. You’ll want to stick with your guns. If you’re new to trading, you may want to enrol in a trading course or do some more research to help you formulate a strategy.
If you’re in it for the long haul, you’ll need a place to store all of your currency, where cryptocurrency wallets come in. As mentioned above, these are software wallets you can use on iOS, Google Chrome, or Android devices. Most require 3-factor authentication to ensure your assets stay safe on the internet. Some cryptocurrency wallets allow you to buy, sell, and earn interest on any digital assets you keep in your wallet.
If you don’t prefer keeping your cryptos in the mobile device there are also several hardware wallets available.
Before you jump right in, there are a few things you should keep in mind:
● Do your research: Don’t just jump in without a strategy or at least a basic understanding of the different cryptocurrencies you plan to trade. It gets complicated, and there’s more to crypto than the infamous Bitcoin and Ethereum. With a plan on your side, you’ll make decisions that benefit your overall investment goals and provide better results.
● Diversify your investments: You shouldn’t just go all-in with crypto, even if you get lucky on your first investment or two. You should have your money in mutual funds, stocks, and real estate. This way, you can have peace of mind if things don’t go according to plan.
● Have a trusted crypto wallet: Think of your wallet as your bank account. You want to be able to trust the wallet and ensure that all of your cryptos are in a safe place online. You’ll want to take the same protection and precautions you do with your investments, bank information, wallet, or cash with your cryptocurrency wallet.
● Develop a backup plan: The internet isn’t the most trustworthy place in the world. You’ll want a backup plan to help you if you can’t log in to your crypto exchange account, your wallet, or your desktop or mobile device. Prevention is key to staying safe and protecting your assets.
● Understand the risk: We aren’t going to beat around the bush: Trading is a high-risk business. You can lose a lot of money if you don’t manage your risk appropriately. Always set a limit for how much you’re willing to invest, know what you can afford to lose, and make the right decisions for yourself moving forward.
At Ovoro, we want to help streamline your trading experience and help you build a high-performing portfolio you can be proud of. We offer several automated investment pools that trade selected cryptos 24/7. If you’re ready to join the future of investing, get started with Ovoro today.
Ovoro is the future of crypto trading, our focus is to teach people to become financially literate in a fun and simplified way.
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