How to Start Trading Cryptocurrencies (New Version)

Cryptocurrency trading can be extremely profitable if you know what you are doing, but it can also lead to disaster. Even though most traders decide to either go with fiat or bitcoin, other cryptocurrencies can represent viable income sources, as long you as you tread carefully and understand what you are doing. This guide is for those who want to start getting involved in cryptocurrency trading.

That being said, after you learn how to trade cryptocurrencies, study the ones you are going to trade before actually investing. Some may be on the forefront of innovation and represent a safe way to make money, while others might just flat out fail – as bitcoin has shown us, sometimes it may be better to hold on to your coins.

Where to trade

The first thing you will need is a safe and secure platform to trade your cryptocurrencies. While fiat currencies have well-renowned financial institutions in which you can trade, most cryptocurrencies aren’t that lucky. It is, however, possible to trade bitcoin, the number one cryptocurrency, using renowned institutions.

A few trading platforms now include bitcoin, as some even offer Contracts For Differences (CFDs). These allow you to trade bitcoin without actually using it, as they represent a contract between you and the exchange. In it, the two parties ‘agree’ the difference between the entry and exit price will determine your profit or loss. CFDs are a flexible option, but they do have disadvantages worth looking into.

To trade other cryptocurrencies, you will need to use cryptocurrency exchanges. According to CoinMarketCap, there are well over 100 active exchanges, so we need to filter them. The best way to do so is to go with those with the largest trading volume, as they will enable the best possible opportunities. According to data, these are the 20 biggest exchanges you can use:

1)Poloniex
2)xBTCe
3)Bitfinex
4)Quoine
5)BitMEX
6)Kraken
7)BTC-E
8)Bithumb
9)Coincheck
10)GDAX
11)bitFlyer
12)Zaif
13)Coinone
14)Bitstamp
15)Korbit
16)OKCoin.cn
17)Gemini
18)Yunbi
19)Bittrex
20)CHBTC

In the last 24 hours, Poloniex had a whopping $160 million trading volume, and CHBTC was at $7 million. Note that, trading volume alone, doesn’t mean the exchange is trustworthy. Before choosing one, check for online reviews. A great tool to use is Web of Trust, as it compiles user reviews and can be downloaded as a plugin to your browser.

There are also other exchanges in which you don’t need to create an account, such as Shapeshift.
The following principles stay true across exchanges, even though user interfaces and other aspects can vary. As an example, I’ll be using Poloniex to explain how one can start trading cryptocurrencies.