How to Become a Cryptocurrency Trader
The global cryptocurrency market is valued at $1.3 trillion, excluding derivatives and some national stablecoins. It is a huge industry with huge growth potential over the next few decades. The Instant Immediate Cipro 2.0 analytics platform at https://immediate-cipro-pro.com/ gives users the ability to navigate this dynamic market.
Why are cryptocurrencies so popular?
Blockchain technology is not something groundbreaking. The first ideas were developed in the 80s by early pioneers in computer technology, but the first significant breakthrough did not occur until the early 90s. It was difficult to think of a use for publicly accessible ledgers with immutable data, but the idea of turning them into a currency appeared even then.
The revolution occurred in 2008 after the international financial crisis exposed the weaknesses of the modern financial system, based on debt and the constant increase of consumption at the expense of monetary stability. These vulnerabilities were hidden by governments until the market could no longer contain speculative bubbles and allowed them to burst.
At that point, an anonymous developer named Satoshi Nakamoto first published his idea for a completely decentralized digital ledger that could not be altered. This would protect the new digital currency from government manipulation and allow for a free economy.
What happened next is common knowledge. By 2021, Bitcoin was approaching $70,000, and the world seemed to go crazy. Investors created a new bubble, which also burst, but without any serious consequences for most traders. Now the market has stabilized and created new opportunities for beginners.
How to become a trader from scratch?
Even without a significant starting capital, you can start trading cryptocurrency using leverage provided by centralized exchanges that offer margin trading. This approach is risky, but it allows you to start trading with a small initial investment.
- To start your journey as a cryptocurrency investor, you need to register on a centralized exchange. Examples of such exchanges are Kraken, KuCoin, Binance, and others.
- Another trading option is the spot market or trading on P2P platforms. Here you use only your own funds, and the profitability is comparatively lower.
- Some investors take a completely different path and try to automate their trading strategy as much as possible using bots.
All options can be profitable. It depends not only on the market situation, but also on your intuition, as well as a properly selected technical analysis strategy. Do not expect stunning success at the first stages of work. Beginner traders need to have endurance and adhere to the learned rules of working in the cryptocurrency market.
Basics of Cryptocurrency Trading
What does a beginner trader need to start investing in cryptocurrencies and other digital assets?
- A working device with an Internet connection. This can be a personal computer or a modern smartphone. The power of the device does not play a significant role.
- An active account on one of the centralized or decentralized cryptocurrency exchanges, depending on the chosen trading method.
- Skills in technical analysis and ability to use price charts.
- Start-up capital for opening the first transactions and buying tokens. The size of the capital is significant, but you can start trading even with a small amount of money.
Let's look at each item on this list separately and talk about some of the nuances of creating accounts and trading.
Choosing the right device
Smartphones on the Android and iOS platforms support all the tools that we will discuss further. A personal computer based on Microsoft Windows, Mac OS or Linux is also suitable for working with the cryptocurrency market.
Why does the power of your equipment hardly matter? Most cryptocurrency exchanges provide access to all functionality through a browser, and the calculations are carried out in the cloud, so having a powerful device is not necessary.
On the other hand, many investors choose to work with bots. Automation products are completely hosted in the cloud and do not require hardware installation.
How to become a trader and where to start?
Creating an account on a centralized or decentralized exchange usually takes only a few minutes. Funds are credited to the balance almost instantly. The main thing is to choose the right platform for trading.
If you are interested in peer-to-peer trading (trading directly between market participants), it is best to work with local exchanges that operate in your country. Almost all regions have already established reliable exchanges that operate as independent contractors.
Centralized exchanges are suitable for traders interested in margin trading or spot markets, where currencies are exchanged without contact between participants.
Registration on a centralized exchange will require you to complete several steps:
- Install the exchange's mobile application or visit the official website.
- Begin the account creation process.
- Provide your phone number and email for verification and communication.
- Be sure to enable two-factor authentication.
- Top up your balance in a way convenient for you and start trading.
You shouldn't start implementing the last point without knowledge of technical analysis. Before you start trading, you need to understand how the financial market works, why prices change, and how to extract valuable information from the price chart.
How to analyze cryptocurrency charts?
Learning the basics of technical analysis is a trader's first step towards success. Technical analysis is a set of special methods and tools for creating price change forecasts based on two sources of information: price dynamics and trading volumes. Despite the presence of only two basic types of data, it is a complex discipline in which it is extremely difficult to become a true master.
Here are some tips and mini-guides to get you started:
- A typical price chart always has two axes. The horizontal one represents time, and the vertical one represents price. The price curve can be represented by a line, columns, or so-called candlesticks.
- To make a price chart truly useful, be sure to use technical indicators and complex strategies.
- Constantly sharpen your analysis skills, read about new strategies and try to integrate the most interesting solutions into your overall investment plan to get the maximum profit from trading.
Cryptocurrency Trading Strategy
Choosing the right trading system is another important step towards starting a career as a trader. During interaction with the market, preferences and priorities will change several times, but you need to start with mastering basic strategies that can become the foundation for further deepening your knowledge.
There is no need to use so-called "strategies" like Martingale trading. Instead of systems where you have to rely on luck, use long-established methods of technical analysis:
- Finding trends with 3MA. Moving Average is a standard technical indicator that shows the average price of an asset over several periods. Three lines with different ranges help identify strong and weak trends.
- Picking a reversal moment using RSI. The Relative Strength Index is widely used to determine whether assets are overbought or oversold. It looks like a dynamic curve that fluctuates between values from 0 to 100. If it is closer to 100, the market is overbought, and if it is closer to 0, it is oversold.
What else do you need to become a trader?
Unfortunately, you cannot start trading without starting capital. If you have a large amount of money, you should definitely follow the principle of diversification. Within the cryptocurrency market, you will have the opportunity to use a wide range of financial products to create a balanced portfolio:
- Opening market positions in the cryptocurrency derivatives market (trading futures and renewable futures on centralized exchanges).
- Purchase of tokens on P2P platforms with transfer to a “cold” wallet (without access to the Internet) or acquisition of assets on the spot market.
- Automated trading systems using bots to automate trading.
- Staking cryptocurrencies to receive passive income from the operation of blockchain networks with the PoS (proof-of-stake) algorithm.
- Copy trading is an investment style based on copying the actions of experienced investors on special platforms .
The last three options are ways to create passive income, but the first two are real trading with the purchase and sale of digital assets. The investor's task is to balance all the methods to protect themselves from risks.
If you don't have enough starting capital for diversification, you should focus your attention and efforts on working with one investment method. Starting to trade with leverage right away is a sure way to fail. Beginners should master the spot market and slowly build up their portfolio.
How to become a successful trader?
There is no secret to success in cryptocurrency trading. Like any other area of life, it requires hard work, integrity, and a lot of effort. Don’t trust bloggers who promise you huge profits after completing their courses. Don’t try to make millions by investing in dubious projects.
A successful trader is a person with a clear plan, developed over many years of experience in trading on financial markets. This is a person who has the necessary skills and knowledge to create a reliable strategy that brings a stable income.
You can become such a trader only if you constantly work on yourself. There is also an alternative that allows beginners to quickly master the market and learn from professionals without serious investments:
Invest in copy trading and follow the trading principles used by the best traders on the largest centralized platforms. This is both a way to create passive income and a great source of valuable knowledge.
Use the simplest trading algorithms and start trading cheap tokens using bots. This way you can test a variety of technical analysis strategies in real conditions and without significant costs.
If you move measuredly and with a clear goal-set, you can become a successful trader. The main thing is not to rush.