Encryption

How to trade cryptocurrencies

Are you afraid of missing out? We have a quick plan for you to trade cryptocurrency quickly.

1. You decide whether to own a cryptocurrency or simply have a hunch that its value will go up or down.

• You need an exchange to own the currency – Try Hodly – Simple and user-friendly app
• You need a broker to guess the price. Check out the list above or use our broker page for a full list.

2. Account funds

3. Buy the cryptocurrency you want or start trading based on its price.

Congratulations, you are now a cryptocurrency trader! You can execute buying or selling of cryptocurrencies in the broker demo account. Unfortunately, it cannot be practiced in exchange.

Encrypting transactions usually involves guessing the price without owning the actual coin. For this reason, brokers offering forex and CFDs are usually an easier introduction for beginners than buying real currency through an exchange.

How to Compare Brokers

The cryptocurrency platform you choose to trade on is one of your most important decisions. Exchanges act as digital wallets for cryptocurrencies, so don’t jump in without first considering the factors below.

Some brokers specialize in crypto trading, others do not. Others offer specific products. For example, IQ Options offers traditional crypto trading via Forex or CFDs, but also offers cryptocurrency multipliers. These offer increased leverage, so there is risk and reward. Innovative products like this can make a difference when you start trading your account cryptocurrency day.

Apps & Software

Day traders need to constantly adjust because reacting to a big news event a few seconds late can make the difference in their profit or loss. That’s why many brokers now offer user-friendly cryptocurrency mobile apps so you can always be up to date whether you’re catching the train or making your sixth coffee of the day.

The cryptocurrency trading platform you sign up for is where you spend a significant amount of time every day, so find one that suits your trading style and needs. Exchanges like Coinbase offer in-depth platforms like Global Digital Asset Exchange (GDAX). We always recommend setting up a demo account to make sure the exchange has the necessary technical tools and resources.

Security

Always check reviews to see if a cryptocurrency exchange is secure. Once your account is hacked and your digital currency is sent, it is gone forever. So while secure and complex credentials are half the battle, the other half will be fought by trading software.

Fees

Each exchange offers different fee rates and fee structures. If daily traders make a lot of volume, even a marginal difference in interest rates can reduce profits significantly. There are three main fees to compare.

• Exchange fee – A fee for using cryptocurrency software. Currencies and coins you trade can affect exchange rates.
• Trading fee – Amount charged for cross-currency transactions on an exchange. A marker fee is the cost of making a sell offer. Tuition is the cost of getting an offer from someone.
• Deposit and Withdrawal Fees – These are the amounts charged when depositing and withdrawing from an exchange. You will often find it cheaper to deposit your funds. Also, some exchanges do not accept credit cards. With debit/credit, there is typically a 3.99% charge, and bank accounts typically have a 1.5% charge.

Final Words About Brokers

This is not a decision to take lightly. Do the math, read reviews, try out exchanges and software first. Coinbase is widely regarded as one of the most reliable exchanges, but trading cryptocurrency on Bittrex is also a reasonable choice. CEX.IO, Coinmama, Kraken, and Bitstamp are other popular options.

Cryptocurrency trading for beginners

Before choosing a broker and experimenting with different platforms, there are a few simple things you should understand first. Understanding and accepting these three things will give you the best chance of success when entering the crypto trading arena.

• Find out what Bitcoin, Ethereum and Litecoin are on the rise. But there are Zcash, Das, Ripple, Monero and a few more. Do your homework, see what’s going on, and stay focused.
• Embrace volatility – Cryptocurrencies are famous. For example, the price of Bitcoin rose from $3,000 to $2,000 in less than three months in 2017, then jumped to nearly $5,000. This means that the risk is high, but the potential for profit is also great. It makes sense to always check the volatility of the exchange you decide to trade on.
• Understand blockchain – You don’t need to understand the technical complexities, but a basic understanding will help you respond to news and announcements that will help you predict future price movements. Basically, the list of security records (blocks) is constantly growing. Encryption protects your interactions and then stores them publicly. They act as a public ledger eliminating intermediaries like banks.

Wallets

If you want to own real cryptocurrency without guessing the price, you need to save it.

There are many wallet providers, but there are also risks of using lesser known wallet providers or exchanges. We recommend Hodly service backed by a regulated broker.

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Strategy

Once you’ve decided on a broker, familiarized yourself with the platform, and funded your account, it’s time to start trading. Following an efficient money management system, you need to utilize effective strategies to make money. Here is an example of a simple cryptocurrency strategy.

Swing Trading

This simple strategy requires vigilance. The idea is to watch the corrections carefully in the trend, then catch the ‘swing’ in the correction and come back to the trend again. If you have overlapping candles or price bars, simply correct them. Trend prices move fast, corrections don’t.

On the 250-minute cryptocurrency chart, we see 25 seconds where the price is within the 100-point range. If the price only moves 20 points each day, I’d be seriously interested. There’s a lot of overlap. This tells us that the price will most likely continue to trend.

You should then sell when the first candle has moved below the previous candle’s contract range, and you can stop at the latest small swing high. Simple, straightforward and effective.

Tips

Even with the right broker, software, capital and strategy, there are some general tips that can help you increase your profit margins and minimize your losses. Here are some useful cryptocurrency tips to keep in mind.

Utilize News

Short-lived cryptocurrencies are very sensitive to related news. When news comes out, such as government regulations or cryptocurrency exchange hacks, prices tend to plummet.

Conversely, when a large corporation announces that it will integrate the use of the currency into its business, the price can rise quickly. If you are aware of any news and can react quickly, you will have an edge over the rest of the market.

Technical Analysis

Analyze historical price charts to identify speaking patterns. History has a habit of repeating itself, so if you can hone your patterns, you can predict future price movements, giving you the edge you need to take profits throughout the day. You can read more about identifying and using patterns here.

Study Metrics

This is one of the most important cryptocurrency tips. You can assign a current value to a particular currency by looking at the number of wallets versus the number of active wallets and the current trading volume. You can then make an informed decision based on today’s market price. The more accurate your predictions, the greater your chances of making a profit.

Trade on Margin

When a specific price movement is expected, margin trading allows you to borrow money to increase your potential profit if your prediction comes true. Exchanges have different margin requirements and offer a variety of rates, so it’s a good idea to do your homework first. Bitfinex and Huobi are two of the most popular margin platforms.

Trading or speculating using margin increases the size of potential profits as well as potential losses.

Rules and Taxes

Since digital markets are relatively new, countries and governments are working to introduce cryptocurrency taxes and rules to regulate the new currency. It may not cost you much if you don’t know these things before you start trading.

Rules

Many governments aren’t sure what to classify cryptocurrencies as a currency or an asset. In 2014, the US introduced cryptocurrency trading rules, meaning that digital currencies fall under the asset umbrella. Traders are then classified as investors and must comply with complex reporting requirements. Go to IRS Notice 2014-21 for more information.

Taxes

In addition to the possibility of complex reporting procedures, new regulations may affect tax obligations. The ‘property’ ruling in the US means earnings are now considered capital gains tax (15%) instead of regular income tax (up to 25%). Each country’s cryptocurrency tax requirements are different and will change as many countries adapt to evolving markets. Before you start trading, do your homework and find out what types and amounts of taxes you will be paying.

Bot

If you have a strategy that already works, cryptocurrency trading robots are worth considering. You program a strategy, and the bot works, automatically executing trades when predetermined criteria are met. There are two advantages to this.

First, it’s a serious time saver. You don’t have to stare at charts all day to find opportunities. Transaction execution speed should also be improved as no manual entry is required.

Second, automated software allows you to trade in multiple currencies and assets at once. This means that you can reap huge potential benefits without lifting heavy objects.

risks

Bots aren’t all plain sailing. You still need to monitor your bot to some extent to avoid losing profits due to computer crashes and unexpected market events.

They can also be expensive. There are many options like BTC Robot that offer a 60-day free trial, but they are usually billed for a monthly subscription to benefit from. Also, if you have to pay someone to program your bot, it can get expensive. You also have to pay to update your bot as the market changes.

So while bots can help you increase your cryptocurrency profits throughout the day, there are no free rides in life and you should be aware of the risks. Perhaps your best asset is when you already have an automated and effective strategy in place.

Education

The most useful cryptocurrency trading tutorials are the ones you can give yourself with a demo account. First, you get the opportunity to try out potential brokerages and platforms before making a purchase.

Second, it is the perfect place to correct mistakes and develop skills. You will normally be trading in fiat currencies so mistakes won’t cost you much money. Once you have tested your strategy and worked out any wrinkles, start trading with real money.

You can find many cryptocurrency daily trading courses online, as well as various books and e-books. The more information you absorb, the better prepared you are and the more likely you are to maintain an edge in the market.

key points

Think of this as a guide to daily trading cryptocurrencies and you can avoid most of the hurdles many traders face. When choosing a broker and platform, consider ease of use, security, and fee structure. In 2017, there are several strategies you can use to trade cryptocurrencies. Whatever strategy you choose, let technical analysis and news play a major role. Finally, be aware of regional differences in rules and taxes. You don’t want to lose your profits due to unexpected regulations.