Four tips for a novice cryptocurrency trader

September 4, 2020   Bitcoin

In 2020, buying cryptocurrencies became as easy as making any other purchases on the Internet. Now everyone can trade cryptocurrencies and earn on the difference in rates. However, beginner cryptocurrency traders are always expecting a number of pitfalls. To help understand the first steps, we have compiled a list of 4 key tips for those who want to succeed in crypto trading.

Watch your heart rate


Quick earnings can turn a head even to a "wolf" from Wall Street. However, professional traders first learn the basics of a certain asset’s trading for a long time, learn to control their emotions, and have the possibility to get psychological support.

The cryptocurrency market is radically different from the traditional financial market. First of all, anyone can start trading cryptocurrencies without proper preparation and endurance, since only a few hundred dollars is enough for this.

Traders without experience and preparation are more prone to panic and have less ability to apply technical analysis or immerse themselves in market features.

This, of course, is actively used by “sharks” of the cryptocurrency market. An unpleasant term has even appeared in the blockchain environment - to “cut hamsters”. “Sharks” can launch in the media news with a negative or, conversely, positive color, thereby controlling the actions of millions of inexperienced players and earning huge amounts of money from it.

Like any market, depending on supply and demand, the cryptocurrency market goes through cycles of ups and downs. At the same time, inexperienced traders manage to buy cryptocurrencies at the peak and sell at the recession, just succumbing to emotions. Therefore, a fresh mind, strict self-discipline is the main set of a successful trader. Keep track of the pulse and if it becomes more frequent, you may make irrational decisions that will lead to huge losses.

Watch the market


In any market there is a constant movement up or down. Keeping track of trends and predicting the movements of other traders - these are the skills that traders get through trial and error, watching the market over the years.

Since market movements are controlled by human transactions, the reasons for changing trends are not always rational. The reasons for the change of market moods are of secondary importance for experienced traders. The key to success is to feel the market situation in time, which means the ability to predict the reaction of the majority.

It is not easy for a beginner to understand how to act in a sea of various ​​factors influencing market sentiment. Obvious positive news for the industry may not affect the price in any way, and quickly spread rumors will instantly expand a certain cryptocurrency the trend. Only industry experience will help.

You should carefully consider the choice of a cryptocurrency portfolio. There are many altcoins on the market that can grow rapidly at the start. There are no less altcoins, which simply turn out to be useless to anyone. Here the basic investment rule applies, according to which, the greater the profit, the greater the risk.

No matter how much you believe in a specific altcoin’s future growth, you should not forget that almost all altcoins somehow follow the trends of the first and main cryptocurrency - bitcoin. Even if there are all signs of a specific altcoin's growth, with the fall of bitcoin, it will most likely pick up the trend.

Due to the fact that Bitcoin has the strongest capitalization and index of dominance in the cryptocurrency market, many traders prefer to store most of their digital financial assets in this cryptocurrency. Bitcoin may no longer show intensive growth in the short term, but many investors consider it as a relatively “safe haven”.

Cryptocurrency exchange matters


In January 2010, the first crypto exchange, Bitcoinmarket, appeared and there was nothing to choose from for traders. After 10 years, there are at least one hundred cryptocurrency exchanges, the daily volume of which exceeds $ 25 million, according to Coinmarketcap.

Choosing the right option among so many exchanges is not easy, but in a certain situation, choosing a cryptocurrency exchange may be a key decision, and not only from a security point of view.

Of course, the main thing is the reputation of the exchange on the market. You can always check on the internet whether there have been reports in the media about the artificial pumping up of trading volumes, how professional and large a team is involved in managing and securing the platform, in which jurisdiction the exchange is registered.

Exchange users leave their reviews in Reddit branches or on the BitcoinTalk forum and in our Crypto Community. Here you can find how often users experience crashes, withdrawal problems, and other problems.

Another important factor is the cryptocurrency exchange’s trading volume, this information helps to choose a platform where your cryptocurrencies will be as liquid as possible. The more actively trading is conducted on the exchange, the more opportunities a particular trader has for financial maneuvers.

Modern cryptocurrency exchanges are no longer just exchanges, but entire ecosystems. A good crypto exchange creates built-in tools for professional traders. Add-on tools are also created that help to trade most efficiently by the most popular crypto exchanges.

Checking the cryptocurrency pairs that are available at one or another exchange for trading, as well as the possibility of withdrawal to local fiat currencies, will help you choose the right cryptocurrency exchange. In order not to lose money on the exchange rate difference, in transactions in fiat currencies, exchanges that accept bank cards for payment are most suitable.

It will not be superfluous to compare fees for depositing and withdrawing funds in advance. Often, in order to start trading on the cryptocurrency exchange, newcomers deposit money through a fiat gateway and pay, say 3% commission, successfully trade on the exchange, and then they have to pay another 3% for withdrawing funds. And the commission can be much higher.

Exchanges such as Garantex differ favorably from competitors, since the commission for depositing and withdrawal can be zero. The founder of the Garantex cryptocurrency exchange, Sergey Mendeleev, recommends paying attention to how you are going to withdraw funds from the exchange in advance:

“Trading can be convenient on many exchanges, but depositing and withdrawing funds through fiat gateways can be expensive. The Garantex crypto exchange offers the best fiat gateway to date with the lowest fees and the best rate.”

The competition among cryptocurrency exchanges has become so great that they are actively fighting for customers, enticing them with additional bonuses, on which traders can earn extra dollars or bitcoins. This is a kind of loyalty program with native exchange tokens and free altcoin giveaways.

Large exchanges also encourage users who stay on the platform for a long time, offering additional bonuses and privileges. That is why the right choice of the platform will help to increase earnings.

Not your key - not your bitcoins


A common mistake of novice traders is storing all assets in one wallet of a certain cryptocurrency exchange. In the crypto financial environment, the principle of diversification is applicable - do not store all the eggs in one basket, especially not in the most protected one.

With the growing popularity of cryptocurrencies, the number of hackers and scammers wishing to take control of your bitcoins has increased significantly. You can be let down by the cryptocurrency exchange itself, as well as one of your own incorrect or unverified steps.

In 2020, cryptocurrency exchanges are one of the main goals of professional hackers. Therefore, no matter how safe the exchange is considered, no matter how many beautiful words about security there are on the company’s website, the crypto exchange is a code written by people, which means there may be potential vulnerabilities that professional hacker teams are looking for.

A major hack of the Mt.Gox crypto exchange showed that traders can instantly be left without their assets. Do not rely completely on popular crypto exchanges now: industry giants such as Bitfinex, Bithumb and Binance also had hacking events.

Another goal of scammers is you and your negligence. This is where phishing sites that look similar in appearance to the crypto-exchange website are used, or, for example, special programs that can replace the address of a bitcoin wallet during a transaction to another.

Therefore, it is always necessary to check every step you do while you are trading in the cryptocurrency exchange, do not open unfamiliar web links, check the sending addresses, and also do not store passwords and keys in an insecure place.

In addition, it is worth remembering the basic principle: “Not your key - not your Bitcoin”. The cryptocurrencies that are in the account of the crypto exchange are like dollars in a bank account. Formally, they are yours, but in reality, you can be left with nothing.

Experienced traders store earned cryptocurrencies in hardware wallets, where fraudsters cannot reach them. Of course, a hardware wallet can be broken or lost, but for this you can use clones of wallets, store digital financial assets in different wallets and use physical means of protection like safes.

Conclusion


A calm attitude, market understanding, a platform suitable for you and security measures to diversify risks will help preserve and increase your crypto assets.

Trading cryptocurrencies is now really easy and 2020 is already full of surprises that make trading exciting, but still risky.

No expert can predict for sure what will happen to the cryptocurrency market tomorrow, and even more so in 10 years. Such guarantees can only be given by fraudsters who are not going to fulfill their obligations.

Author: Kate Solano for Сrypto-Rating.com
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