Trading in cryptocurrencies is a relatively new concept. The crypto market is more than a decade old and has shown great potential in the past. Although the crypto market shies away from traditional economic rules, it retains the demand-supply law.
In recent years, several cryptocurrencies have cropped up, and there is a strong desire amongst several crypto developers to create a cryptocurrency equivalent to the undisputed king of cryptos, “Bitcoin.”
Each crypto developer is in a race to create a perfect and well-balanced cryptocurrency.
These crypto developers will try to create an innovative way to bring forth a cryptocurrency that would become the next big thing after Bitcoin.
Many crypto traders are still regretting that they missed out on a perfectly good opportunity when Bitcoin was well within their reach when its price was trending from a few cents to a few dollars. Although Bitcoin was created in 2009, the price trend was mere cents. It was after 2017 that Bitcoin started trending in thousands of dollars and reached its all-time high in 2021, trending at more than $65,000.
Today, since several developers are creating cryptocurrencies that are available in the market, many crypto traders, thinking that the crypto they invest in will be trending in the thousands in a few years like Bitcoin, fall prey to crypto scams.
The developers will create a cryptocurrency and boast to their followers about how it would revolutionize current cryptocurrency trading. After creating much hype, many crypto users will start pouring their money into the currency, and as per demand-supply law, the price of that currency will begin surging. A point will come when the developers will sell all their crypto and leave their users with worthless cryptocurrency. These developers will make a substantial amount of money and leave the crypto world without a trace.
A famous example would be a crypto called “Squid.” The crypto was named after a famous South Korean drama called “Squid Games.” Many crypto users fell prey to it. You must use caution when it comes to investing in cryptocurrencies.
For your benefit, we have listed below a couple of trading tips that you can remember before you begin your journey into the crypto world.
Learning the jargon
The crypto world uses several jargons, and familiarizing yourself with them will help you understand the current market situation. A few do crop up once in a while. So understanding them is equally important.
How to Read a White Paper
Every cryptocurrency has a white paper explaining its purpose and potential impact. It describes the technology used. For example, Ethereum uses proof-of-stake. Bitcoin uses proof-of-work. These technical papers often confuse readers who lack expertise in computer language. However, you can understand them as you continue reading and find the answers.
Joining the crypto community
Joining a good and reputed crypto community can be advantageous. Not only will you learn the latest jargon but also the white paper of a cryptocurrency. By engaging with a crypto-focused community, you can learn different trading strategies and observe how research is performed.
Staying cautious
Although you may join a crypto community, this is also not a safe approach to the crypto world. Certain cryptocurrencies might tempt you to invest. However, exercise caution. Some cryptocurrencies have high risks of rug pulls, pumps, and dumps.
Sometimes a community member may use a strategy that differs from yours. This can lead to conflicts.
Setting your own financial goals
Before you even begin your crypto trading journey, ask yourself why you want to enter the crypto world. You must also be prepared to invest some of your financial assets to achieve these goals.
Every crypto user has a different financial aspiration and lifestyle. They have different goals too. These goals will help you stay focused on the dreams that you would like to manifest into reality.
Once you understand your financial goals and aspirations, it becomes easier to choose a trading style that fits your personality.
After gaining sufficient experience in interpreting external factors that influence the price trend in the cryptocurrency market. Traders use several graphs and charts, and external factors also influence cryptocurrency prices. Once you understand what drives price fluctuations, you’ve already won half the battle in the crypto market.
Crypto Exchange
Several online crypto exchanges are available for you to choose from. There are several reasons why you should not settle for any other crypto broker or brokerage firm when selecting an online crypto broker or brokerage firm. Again, several scammers would love to get hold of your hard-earned money.
- A reputed trusted, and reliable crypto broker or brokerage firm should be chosen. Check if your state or country allows them to run their business.
- Go through their review page to understand how they treat their clients.
- Avoid websites with poor grammar or incorrect English, even if their services are reasonably priced.
- Every online crypto broker or brokerage firm has a dedicated client service center. Be sure to check them out before choosing.
- Cryptocurrency brokers and brokerage firms make money by charging a fee on each trade. Some might also have hidden charges, so it is wise to check with your local CPA or certified public accountant.
- Online crypto brokers and firms offer trading platforms and educational articles for learning about cryptocurrency.
- Some also offer frequent webinars for you to understand the latest developments in the crypto world.
Trying out your skills
Some online crypto brokers and brokerage firms offer a demo account that uses virtual money. So you can try all your skills on it without fear of losing money. These demo accounts have all the charts and graphs you need to create a strategy.
Once you are confident about your skills, you can try the live account, which is exactly similar to the demo account but uses fiat money instead of virtual.
A hot and cold wallet
With scams on the rise in the crypto world, you might consider investing in a crypto wallet, since storing your funds on exchanges is risky—many are going bankrupt due to poor wealth management.
Managing a wallet can be tedious, but it keeps your assets safe; if an exchange goes bankrupt, your cryptocurrencies remain secure in your wallet.
Conclusion
Investing in a cryptocurrency is not a bad idea; you have one more financial market besides the traditional ones in the world. It is just that some greedy corporations take undue advantage of crypto traders and commit scams. There is also a risk of choosing a crypto broker or a brokerage firm originating from a third-world country, which mostly runs scams rather than earning an honest living.
