How to Start with Cryptocurrency Trading In 2023?
Almost 90% of cryptocurrency traders indeed lose their investment. And yes, beginners typically suffer the highest amount of loss as they start their journey. But, instead of concentrating on the losses, let’s focus on the 10% who remain. Any trader who can maintain trading for more than two years can build a fortune from their investment.
Crypto trading in 2023 can be a lucrative business with almost 100% return on investment. But we all need to understand that it’s not a leisurely walk in the park. On the contrary, it takes a while to completely master how cryptocurrency trading works and how to leverage it.
All in all, if you want to know how to start cryptocurrency trading in 2023, then this article is in your best interest. We will take you through some of the most critical aspects that will help you learn the ropes and potentially gain from your investment. So, buckle up, and let’s get to it, shall we?
What is cryptocurrency trading in 2023?
There’s no way you can make money out of cryptocurrency trading if you don’t even understand what crypto trading is; it’s only logical, right? Well, with that in mind, here’s the definition.
Cryptocurrency trading is the buying and selling of cryptocurrency coins, depending on the price changes. What’s more, you can predict the price of a particular crypto coin using future contracts. All these happen on a cryptocurrency exchange platform and with the use of blockchain technology. Get it? If not, continue reading on.
Cryptocurrency is a set of digital codes that hold monetary value in blockchain technology. These types of codes are decentralized and are free from government control. Additionally, they do not go through the rudimentary bank system. Therefore, cryptocurrency trading is more or less equal to forex trading but with crypto coins and decentralization of the system.
Of course, there are several differences between cryptocurrency trading and forex trading, but I hope you get the picture. Now that you are up to speed let’s now take a deeper dive into cryptocurrency trading in 2023.
Step by Step guide on how to start cryptocurrency trading in 2023
We’ve already covered the definition of cryptocurrency trading, and now it’s time to move to the next step.
1. Open a cryptocurrency trading account
As you’ve already guessed, there are several cryptocurrency trading platforms. The majority of these platforms offer great deals and discounts to their clients. Unfortunately, there’s also a small percentage of the trading platforms that are scams. Yes, you heard that, right!
That means you need to be careful when choosing your trading platform, especially if you are new to the crypto world. Well, thankfully, we have reviewed all the top cryptocurrency exchanges in 2023. These cryptocurrency exchange platforms are typically top-notch websites with a good reputation. However, each of them offers different services, and you have to decide which cryptocurrency exchange works for you.
Account registrations are relatively easy and you can easily switch from exchange and try them out.
2. Understand how cryptocurrency trading works
For you to be profitable with crypto trading, you need to know how it typically works. When you purchase cryptocurrency coins on an exchange, you buy the coins themselves. That means you have to create an account on a particular cryptocurrency exchange platform. After purchasing the crypto, you will have to store them in your wallet until you are ready to sell.
Typically, most traders will sell when the price shoots up to earn a substantial profit; “Buy low Sell high” policy. There’s minimal risk involved in such transactions, but the gain isn’t that high unless you have a considerable investment.
Another popular, but very risky, way to trade is Futures Trading. Future trading allows you to trade with capital that’s not yours, including a leverage. This sounds very sketchy, but you can’t lose more than your own investment. With a leverage you can trade with more capital than you actually own. You can either go long or short, depending on your prediction. Going long means that you anticipate that the cryptocurrency price will rise, while going short means that the crypto price will drop.
Your losses or profits will be calculated depending on the investment you’ve placed on your prediction and the leverage. This type of trading is very risky, but can result in high profits or losing your whole investment.
How the cryptocurrency market works
Another aspect of cryptocurrency trading that you need to learn before you nose dive into trading is how the cryptocurrency market works. Typically, the market price of each cryptocurrency moves up and down depending on the demand and supply. With that, you can buy your specific cryptocurrency at its lowest price and then sell it at a high price.
Most of the cryptocurrencies are in pairs. For instance, BTC/USDT. That means the price of Bitcoin against the Tether. Tether is a cryptocurrency that’s “tethered” to the US dollars, and is a so-called stablecoin. Therefore, BTC/USDT is essentially the same as the price of BTC/USD. Such pairs are common in the cryptocurrency market, and you can use that to leverage maximum profits. However, you will have to study the market for a while.
For instance, you need to know where the price was a few months or even years ago so you can effectively speculate on the next price. Thankfully, most exchanges offer trading tools to help you with your trading experience. Some of these trading tools require advanced skills to interpret effectively, but you can get a little help.
Finally, it’s time to trade
Depending on the platform of your choice, you will get an interactive interface that will take a bit of getting used to it. Most websites will present you with a lot of numbers and graphs. But don’t be scared or worried. With time, you can interpret every level of the platform. Before trading, you will have to deposit crypto coins or buy them from the site. I find it easier to add funds in USDT, but you can pick a currency of your choice. Once that’s done, then you are up and ready to profit from the market.
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General knowledge about cryptocurrency trading in 2023
What do you need to know about crypto trading?
The market is volatile
The cryptocurrency market is very volatile. That could be a good and bad thing, depending on your position during the trade. Most times, the fluctuation in prices could potentially give you profits within a day. Several factors contribute to this volatility: panic trading due to cyberattacks on cryptocurrency exchanges, social media statements, and buying and selling forces. Therefore, if you’d like to make profits in the market, you need to be updated with the current events happening in the crypto-world. To stay updated, you should regularly check crypto news sites, crypto Twitter and crypto Telegram.
Your exchange could make a difference
Aside from the fees and simplicity of the exchange, other reasons could typically affect your trading. One of them is security. If you are planning to add massive capital to a given platform, you need to ensure that the security on the website is up to par. Otherwise, you risk losing your investment. And the worst part is, since cryptocurrency is far from the reach of the government, there’s no way you can get your investment back. Therefore, take time to study your cryptocurrency platform before jumping into it. Check if they have an insurance fund for hacks and make sure your account is well secured.
Learn about leverage
Most cryptocurrency exchange platforms use leverage to help increase your profit level on the futures contract. That means you can open large positions with less money and investment in your account. But it would help if you remembered that it’s not all about profits. That’s because leverages also magnify your losses as well. You need to be careful when trading with the leverage, learn more about margin trading here.
Trade with the known coins
There’s a high chance of gaining from upcoming altcoins, but it also comes with substantial risks. Upcoming altcoins could easily be knocked out of the market, and their price will drop abnormally. At the same time, these coins could have an insane rise in price. But when it comes to the prominent coins, such as Bitcoin, Ethereum, Ripple, and Litecoin, their costs will typically hover within certain limits. Once you can speculate the highs and lows, you can effectively make a profit from the market.
Storage of your coins is an essential factor in your trading experience. Most cryptocurrency exchanges offer wallets on their platform where you can store your coins. But it’s probably safer to store your coins away from the cryptocurrency exchanges. That could save you a lot of headaches just in case the exchange is hacked. You can use hardware wallets to reduce your chances of getting hacked.
Before you go!
I’m sure now you know how to trade cryptocurrency in 2023. But, always remember that trading is not a get-rich-quick plan. It takes months or even years of practice to mitigate your losses and increase your profit levels. Anyone who tells you that it’s easy to make millions on trading cryptocurrency in 2023 is lying to you. The truth is, you need to treat it like any other job you might have. That means you need to learn how the craft works before thinking of the profits.
Is it free to start with crypto trading?
Yes, it is free to create an account on different exchanges. You can try trading with a paper account. Whenever you are ready to trade for real, you do need a small capital to start with crypto trading.
Do I need a lot of capital to start trading?
No, it's not necessary to have a lot of money to start with trading.
Can everybody learn trading?
Yes, it's possible for everyone to learn trading, but it needs a lot of practice and it can take a lot of time to master it.