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May 12, 2023
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.
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.
If you want to buy cryptocurrency, 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.
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.
Cryptocurrencies are highly volatile and can decrease in value rapidly during times of market instability. Therefore, it is important to understand the overall economic conditions before staking cryptocurrencies. Keeping track of the crypto or XRP exchange rate can provide valuable insights into market trends and help you make informed decisions.
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.
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.
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.
