How to Make Money by Trading Cryptocurrency

November 25, 2020

How to Make Money by Trading Cryptocurrency - Trading Strategy

From the outside looking in, the world of cryptocurrency can seem intimidating. And it’s perfectly normal when you look at how many cryptocurrencies there are on the market – 6900 according to CoinMarketCap. So, it is a good idea to educate yourself and seek advice on cryptocurrency tax before investing.

Cryptocurrencies are a completely different class of asset and one that is still largely misunderstood, even by those in the market. However, getting started with crypto is fairly straightforward, though it is fairly different from other financial instruments. Let's take a look at how to make money by trading cryptocurrency.

Key Takeaways on How to Make Money Trading in Cryptocurrency:

  1. How to Buy Cryptocurrency: Understand the necessity of a cryptocurrency wallet for secure transactions. Choose between digital wallets, physical wallets, or paper wallets, and be cautious about storing coins on exchange accounts due to potential risks.
  2. Find an Exchange: Research and select a reputable cryptocurrency exchange. Some exchanges allow trading between fiat and crypto, while others are limited to crypto-to-crypto transactions. Consider peer-to-peer platforms for more flexibility in trading.
  3. Learn How to Read a Chart: Acquire skills in reading and interpreting cryptocurrency charts, including understanding candlestick figures and technical indicators like RSI and Stochastic. Use online resources and tutorials to enhance your chart analysis skills.
  4. Learn Your Coins: Gain in-depth knowledge about different types of cryptocurrencies, including stable coins and privacy coins. Stay updated on developments like halvings, hard forks, and payment protocol rollouts. Learn to read white papers to make informed decisions about new investments.

These takeaways provide a guide for beginners in cryptocurrency trading, emphasising the importance of understanding wallet security, choosing the right exchange, learning chart analysis, and having thorough knowledge of various cryptocurrencies.

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How to Buy Cryptocurrency

If you want to buy crypto, the first thing you need is a wallet. A cryptocurrency wallet is simply the equivalent of a public mailbox for your coins. People can send money to your key, which is like your address, but only you can take money out of the box with your private key. The job of the wallet is to protect that key.

There are different sorts of wallets out there. There are digital ones that you can use on any device. Then you have physical ones that store your key offline. You could even use a piece of paper with your private key as a wallet. All you have to know is that you need one, or be willing to find an exchange that will allow you to store coins on your account. The latter is probably the worst option as the exchange will now be the one holding your coins. This means that you will lose your currency if the exchange fails. Exchanges have failed before, so don’t think it can’t happen again.

Find an Exchange

There are many types of exchanges out there, one such example is here, some more reputable than others. Some will allow you to trade fiat for crypto, others will only allow you to exchange cryptocurrencies.

You have others that will allow you to do both, like Paxful for instance. This site allows you to swap LTC to BTC or any other coins quickly and easily. The best part is that it is a peer to peer platform, so you can pick the best LTC to BTC offers from millions of users there.

Learn How to Read a Chart

Next, you have to learn how to read charts, because you’re going to be looking at a lot of those when investing in crypto. You need to understand candlestick figures in particular, and also how to use technical indicators like the RSI and the Stochastic.

Don’t be intimidated by those, however. There are tons of resources online that will teach you how to use these fast. A great place to start is YouTube. Once you’ve mastered these charts, you can finally start calling yourself a cryptocurrency trader and investor. However, if you do not yet feel confident to go it alone, why not take advantage of smart trading tools designed by experts like those at dex.ag. Though of course, you will still need some knowledge of crypto and the type of trading you are going to focus on (you can choose day trading, swing trading, scalping, or any other type of trading or investing). Many tools now include real-time market analysis, automated portfolio management, options for quantitative trading strategies, and AI-powered forecasts. In the long run, this can take some of the stress out of trading.

Learn Your Coins

Finally, you have to make sure that you know your crypto inside and out. You want to know the difference between stable coins and privacy coins. You want to stay abreast of recent developments like halvings, hard forks, and payment protocol rollouts. And you want to learn how to read white papers so you can come in thoroughly informed about any new coin you decide to invest in.

Conclusion

Making money with cryptocurrency is possible when you have the right foundation and strategy. This is why you always need to be willing to learn more about crypto in general and wait until you've learned everything you need to before you start trading.

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