There is no doubt that the lucrative cryptocurrency trading market is hugely profitable. However, understanding the dynamics of the cryptocurrency trading market is not as easy as it is made out to be. Kimberly Rosales, a specialist who has been researching cryptocurrencies since their birth, explains how it is possible to discover the crypto market effectively and reliably.
Undoubtedly, you can make a lot of money in this business, but you can also lose a lot. The fundamental thing for people who have never traded cryptocurrencies is to understand the dynamics and the basic concepts of the business. Trading or dealing with cryptocurrencies is not just about buying Bitcoins or selling them, as there are numerous factors to consider and equally abundant ways to make money in this market.
Before getting into the topic of how to trade cryptocurrencies, it is necessary to pay attention first to the basic economics of cryptocurrencies, because it will be vital to explain the trading of cryptocurrencies. Although some of these economic concepts will be unique to digital currencies, you may have heard of some of them, as they are abstracted from the everyday investment markets.
However, the main reason you should understand these concepts is that some of them affect the price movements of cryptocurrencies and are, therefore very, essential in trading. These concepts include supply and demand, market sentiment, and utility.
Supply and demand are two variables that greatly affect the price of cryptocurrencies. The world’s most popular cryptocurrency, Bitcoin (BTC), has a supply limit of 21 million, meaning that the total number of BTC that will be in circulation [ever] will not exceed 21 million.
If you decide to become a cryptocurrency trader, you are likely to change your position in the market on a regular basis. Therefore, it is essential that you keep up to date on market sentiments around your chosen position.
Rosales suggests that it is “vital to conduct thorough research and read many recent articles about cryptocurrencies on the web. If you invest in a cryptocurrency that has negative market sentiment [e.g., a steadily declining value], you are likely to lose money rather than gain.”
Once you understand some of these basic concepts of the cryptocurrency market, you can start building your own cryptocurrency portfolio. First, you need to find and access the market in order to buy and trade cryptocurrencies. There are many trading platforms you can choose from on the Internet, but you need to decide (based on the factors described above) which cryptocurrency you want to try first.
And finally, there is the utility. In the context of trading, this concept refers to the usefulness of a cryptocurrency. The more useful it is, the more valuable it is perceived to be and, therefore, the more likely it is to be bought. For example, Ethereum is not just a digital currency, as it encompasses an entire platform that allows decentralized systems and applications to be built on top of it. Therefore, many people see Ethereum as more useful than most cryptocurrencies that are merely trading mediums.
Since you are completely new to cryptocurrency trading, you would need to buy your first digital coins using fiat currency. You will have to register (and, of course, pay some fees) on different platforms to start buying and trading your digital coins.
“The best thing about some of the existing platforms is that they offer wallets to store cryptocurrencies securely and tell you your balance as you continue to trade,” Rosales assures. “The wallet stores your private key and public address, allowing you to store, send or receive cryptocurrencies. They also provide statistical graphs and data to buyers, which show the performance of the cryptocurrencies on offer.”
There are also other external analysis tools and oscillators that help traders identify buy or sell signals. With that information and a little more research, informed forecasts can be made on which are the best cryptocurrencies to buy now and in the future, taking into account the progress of their value.
The basic principle of cryptocurrency trading is “buy low, sell high,” which involves buying when your preferred cryptocurrency is not as expensive and selling when the price goes up. Obviously, you have to invest in coins that have the potential to grow.