Cryptotrading attracts many newbies as one of the most obvious methods of making money in both the growing and the falling cryptocurrency market. Often there is the opinion that it is impossible to learn how to trade on the stock exchange without serious losses and mistakes. But this is an erroneous belief. If you approach the matter wisely, then even in the first stages you can achieve success. What does the profitable trading of cryptocurrency for a beginner consists of and how to start? We will talk about it in this article!
How can a beginner start trading cryptocurrency?
Profitable crypto trading begins with an understanding of the traded assets. It is difficult to earn an asset if you do not know its basic properties. Cryptocurrencies differ from traditional assets by high volatility, and this feature is a key in crypto-trading.
A novice should choose medium volatility cryptocurrencies. Low volatility, that is, weak jumps and failures, is unprofitable. But too high is also rarely profitable for beginner traders, since it is associated with a high unpredictability of the course. Average volatility allows you to earn good money and at the same time it is characterized by minimal risks, even for beginners.
In addition to volatility, each cryptocurrency has its own peculiarities, such as the reaction to cryptocurrency market news, following a different cryptocurrency rate, and so on. These features often become the basis or at least one of the elements of a trading strategy.
They also indicate the profitability or disadvantage of the asset for the trader. For example, following a course of another cryptocurrency is a profitable feature, since it allows you to easily predict changes in the course. On the other hand, frequent periods of a flat are a disadvantageous feature for a beginner, since at that time it is difficult to trade and easily mistaken.
Beginners are recommended to start with the popular cryptocurrency. Their movement is easier to study, analyze and predict than the features of the movement of little-known assets, due to the fact that
Knowledge of cryptocurrency and their features will lead the trader to further understanding of the entire market. This, in turn, will allow to choose strategies for each asset correctly, regardless of its current state.
Profitable trading cryptocurrency for a beginner: the choice of strategy
Strictly speaking, you can do it and vice versa, first choose a strategy, and then look for suitable cryptocurrencies. But this is not the winning sequence. There are hundreds of cryptocurrencies, relatively few strategies, and just a few basic ones. A trader will spend much less effort analyzing several strategies than analyzing hundreds or even dozens of cryptocurrencies.
In parallel, it is necessary to take into account the features of cryptocurrency, which were discussed in the first part of the article. They may not influence the choice of the basic strategy and be used both on short time intervals and on long ones, both on a falling market and on a growing one.
But it may be that they only benefit at short time intervals, or only during the fall of the market. Then the strategy should be chosen in such a way as to make the most of these features in the specified situations.
Profitable cryptocurrency trading for a beginner: other elements of preparation
There are now many resources for trading cryptocurrency, and they are significantly different. For example, registration on the exchange may be complicated or simplified. Exchanges from the first category are more reliable.
If anonymity is important to a trader, it is worth choosing exchanges that declare it as one of the main advantages. If it is not important, then it makes sense to choose large stock exchanges that involve the identification procedure, but are notable for reliability.
The commission for operations is also important. An exchange with too low commission may not be completely reliable. But if the strategy involves the conclusion of a large number of transactions on a daily basis, then it is worthwhile to calculate commission expenses and compare them with the possible risks associated with the unreliability of the exchange.
There are not so many trading software for cryptocurrency trading, although some traditional terminals allow trading and cryptocurrency. Free terminals are often unreliable, failing from time to time, which can lead to losses. Paid are often unjustified for beginners. There is no point in paying $ 100 for a program, if the trader is trading $ 50.
Novice traders are usually advised to get by with exchange functionality. As a rule, the stock exchanges are equipped with all the necessary tools for the beginner, and the programs have too many of them, most newbies do not yet know and will not use them.
For example, if the strategy is based on a trend reversal, you need to use tools that help predict the return point. If volatility is important, you should constantly see its index. But do not choose too many tools. It is better to choose no more than three for each strategy and study them thoroughly.
It makes no sense to study dozens of textbooks in detail, because trading on stock and currency exchanges is different from crypto trading. However, leaf through two or three books for general information, read articles, forums, watch trainings.
It is not necessary to try to remember everything read and heard. Basically, the theory of trading at odds with practice, because each asset has its own characteristics, and a lot of theory will not work in practice.
Communication with another trader, analyst or expert who worked with the cryptocurrency being traded is most justified. Find such a person is sometimes obtained in the communities of traders or on the sites of consultants.
The main mistakes of novice traders in cryptocurrency trading
There are other errors. However, the main mistake of newbies is an unserious approach to trading. Some people think that there is nothing difficult in it, that there is no need to study theory, determine strategies, carry out fundamental analysis of cryptocurrencies, and you can trade intuitively.
Others understand that a serious approach is important, but it seems overly complex, and they again hope for intuition. Still others consider trading as a hobby, and therefore initially do not pay special attention to it.
The result in all three cases is the loss of money due to a lack of understanding of the characteristics of the assets, their movements, the strategies used and much more. The way out is first of all to realize the importance of a serious approach.