Crypto trading is evolving at lightning speed. Here’s how to make sure that you’re on top of this evolutionary race to the future.
Cryptocurrency trading isn’t just about trading cryptocurrency. While this may seem counterintuitive to the novice investor, any expert will tell you that to invest soundly, you first have to understand the applications of your market. Moreover, you also have to understand the future applications of your market. For cryptocurrency traders that are just starting out, that can seem not only difficult, but downright confusing. But crypto offers something that traditional markets don’t– a chance for retail investors to genuinely make a difference in the future that our society is headed towards.
Specifically using crypto trading platforms like Bitvavo.com to help navigate and learn the ropes of this ever-changing field of investment is great for novice investors, but what happens when you’re ready to move up to the big leagues? Here are the seven most important steps to becoming an expert cryptocurrency trader. So, you can go from entry level to adept in no time.
- Understand Cryptocurrencies and Their Applications
The most fundamental part of any investment you will make, is understanding the asset or product you plan to invest in. When it comes to cryptocurrencies, there is both a broad understanding of how each token works, the technology it represents and the validation system it uses. You will also need to be familiar with the more intimate nuances of cryptocurrencies and their associated markets: what influences their values, what technologies or services do they represent? What investment potential or use case scenarios are relevant to them now, and in the future? Asking yourself these questions prior to even getting a crypto wallet will get you started on the right track to becoming a crypto expert.
- Do Your Research
In order to really understand cryptocurrencies in general, and cryptocurrencies in specific, you’ll need to do a bit of research. Don’t just focus on the investment side of things, but continue to develop an intimate knowledge of each token you invest in, how your chosen exchange is run, and how to best secure your assets. On top of all of that, you’ll also need to familiarize yourself with how cryptos are traded– while they are similar to traditional stocks, assets, and bonds, there are parts of trading cryptocurrencies that are vastly different from interacting with the NYSE.
- Find the Best Platform
Now that you’re all read up on how the system works, you can start to engage with it properly. The most important part of becoming a trading savant in the world of cryptocurrency is choosing the right exchange for you. Ensuring that you choose an exchange that is not only reputable, but also tailors their systems to your needs. There are a number of different crypto exchanges that offer a wide variety of perks and benefits. Make sure that you chose the one that not only allows you to trade the cryptos you’re most interested in, but also one that operates well with your experience level– both as a trader and a computer user.
- Pay Attention to Whitepapers
Back to research again, it’s important to be cognizant of the value of the information you are getting. While it’s definitely important to follow influencers, developers, and read up on crypto financial news– you’ll also want to familiarize yourself with whitepapers. How they work, what they mean, and other important attributes describing the cryptocurrency you plan on investing in. Whitepapers are produced by the founders of a given cryptocurrency explaining why they’ve made it, how it works, and possible functions and applications.
- Hold On to Your Investments
Cryptocurrencies are extremely volatile when used as a speculative asset. That means that price can change on a dime, with huge rallies and devastating corrections. Make sure that you don’t fall prey to the dreaded FOMO (Fear of Missing Out) and hold onto your investments, even if they are showing some poor performance. Many cryptocurrencies, despite dips in value, still provide a pretty spectacular ROI, especially if you’re holding on to them for the long haul. Never investment in a token you’re not excited about, and don’t give up hope easily.
- Know When (and How) to Let Go
That being said, it’s also important to know when to trade your cryptocurrrencies, and what to trade them for. Sometimes, trading doesn’t mean converting to cash, but using your existing crypto assets to invest in other types of cryptocurrencies or technologies. There are also instances where it may be wise to “stake” your cryptos, or lock them up for a period of time for another purpose– like becoming a validator, or investing in DeFi. If you’re unsure what either of those terms mean, see step one.
- Keep Your Stash Secure
The final and arguably most important step to becoming an expert crypto trader is knowing how to protect your assets. With cryptocurrencies this actually means a number of different things– from knowing which wallets are best to have, and which are best to hold certain amounts, understanding both public and private keys, securing backups, to even considering which altcoins are best for padding out your portfolio. Protecting your investments from hacks and scams are just one part of building an ultra-secure portfolio of crypto investments.