Looking for a few tips on how to get started trading in cryptocurrency?
The first step is choosing your wallet. We’re not talking about a traditional leather, or pseudo leather wallet! Crypto wallets are like a bank account, secured with a secret key. This is where you store the encrypted passwords that represent your crypto coins. You will also want to hold as many of your cryptocurrencies in your wallet as possible because leaving them sitting in exchanges exposes you to risk should that exchange be hacked. Therefore, it’s important to ensure your wallet is safe, secure, and hacker proof. Furthermore, you will need a wallet for each type of coin you want to invest in. So Bitcoin needs a Bitcoin Wallet, LiteCoin needs a LiteCoin wallet and so on.
Choose your exchange. A crypto exchange operates on the same mechanics as any other currency exchange. They’re places where you can buy and sell cryptos or exchange them for fiat currencies. However, there’s an important distinction. Crypto exchanges are not part of the mainstream stock exchange world. The number of exchanges is also growing exponentially along with the crypto market. One of the most important things to compare when choosing a cryptocurrency exchange are the platform fees – some will charge you a percentage of each deal you make whilst others change you per transaction. Pick the one that is going to give you the best deal given the volume of trading you want to do. There are also platforms with automated trading algorithms like the Charlize Theron Bitcoin revolution trader that take the guesswork out of trading for you.
Make sure your portfolio is as diversified as possible. This is standard investment advice. The more diversified it is ie the more cryptocurrencies you invest in, the less risk you’re exposing yourself to. Cryptos come and go so by investing across a range of them, the successful ones will balance out any that may fall by the wayside. Ideally you’re looking for coins that will increase in value or at the very least, retain their value.
Do your research and be prepared to do a LOT of it because there are a LOT of cryptos out there now. Tracking and research is the name of the game here. Keep an eye on the latest cryptos and their rankings and other key indicators. Join discussion groups, ask questions, and avail yourself of the help and advice to be found within a generally helpful and engaged online community.
Know that you don’t have to buy entire coins. Bitcoin for example is currently trading close to US$4000 so unless you have that type of spare cash at your disposal, think in fractions rather than wholes. You can also add more fractions at any time to grow your portfolio.
Understand the local tax implications of cryptocurrency trading. In many countries, you are required to declare your earnings from trading in them. Don’t make the mistake of thinking it can’t be tracked by officialdom. It can be, and it is. Governments will always find ways to find out what their citizens are earning, especially when it comes to taxing them.
Remember that cryptos are a very volatile commodity. They can increase in value at an astonishing rate, and crash equally as spectacularly. They’re not controlled by any central regulatory authorities who can ensure bumps and lumps are smoothed out. They’re also not regulated so if someone cheats you, or an exchange is hacked, or you lose a coin, you have no comeback. That’s why you only ever invest what you can afford to lose in a worse case scenario. Don’t ever invest your last dollar or more than you can afford.