In this article, we will tell you how to start trading cryptocurrency from scratch, what strategies to use, what platforms to trade on, how to choose cryptocurrencies for trading, and how to ensure the safety of your funds.
What is cryptocurrency trading?
How to earn on cryptocurrency?
What is the best cryptocurrency to trade?
Risks of cryptocurrencies
Cryptocurrency trading is one of the ways to make money on the digital currency market, which consists of buying and selling cryptocurrencies on special platforms - exchanges. Cryptocurrency traders seek to profit from the difference in the price of coins at different points in time. To do this, they use various cryptocurrency trading strategies based on market, news and trend analysis.
Cryptocurrency trading has its own benefits and risks that you need to consider before you start trading.
Before you start trading cryptocurrency, you need to understand what a cryptocurrency is and how it works
Cryptocurrency is a digital currency that uses cryptography to encrypt its transactions and create new units. Each cryptocurrency has its own unique code, called hash, which serves as its identifier. In addition, each cryptocurrency has its own network of nodes - computers that keep the currency running and record all transactions in a common database called the blockchain.
The next step is to choose a suitable exchange for trading cryptocurrency, which will meet the requirements for liquidity, commissions, functionality and security. Next, you need to create a wallet for storing cryptocurrency, which should be reliable and convenient. After that, you can start trading cryptocurrency on the exchange, following the chosen strategy and controlling the risk.
There are many cryptocurrency trading strategies that can be divided into two main groups: long-term and short-term.
Long-term strategies involve buying and holding a cryptocurrency for several months or years in the hope of its growth in price.
Short-term strategies are focused on making a profit through frequent transactions during the day or several days. Short-term strategies require more attention and activity from the trader, but can bring more income if the market is predicted correctly.
Regardless of the cryptocurrency trading strategy chosen, it is important to consider the risks associated with this type of investment. The cryptocurrency market is highly volatile and unpredictable, subject to strong price fluctuations, news influences, and speculation.
Successful cryptocurrency trading requires constant education and market analysis. It is necessary to follow the news and trends in the field of cryptocurrency, study various indicators and charts, apply technical and fundamental analysis. It is also helpful to connect with other traders and cryptocurrency experts to get advice and support.
Cryptocurrency trading is an interesting and promising type of income that can bring big profits with the right approach. It requires a lot of time, knowledge and discipline from the trader. Therefore, before you start trading cryptocurrency from scratch, you need to understand the basics of cryptocurrency, choose the right exchange and wallet, determine your strategy and risk management. Only then will you be able to successfully earn on cryptocurrency.
To start earning on cryptocurrency from scratch, you need to follow a few steps:
1. Learn the basics of cryptocurrency: what is blockchain, how cryptocurrency wallets and exchanges work, what types of cryptocurrencies exist and how they differ from each other.
2. Choose a suitable cryptocurrency trading platform where you can open an account, fund it and make transactions. It is important to consider factors such as fees, liquidity, security, and of the platform’s reputation.
3. Determine your cryptocurrency trading strategy: what style of trading do you prefer (long-term or short-term), what risk are you willing to accept, what analysis tools will you use (technical or fundamental), how will you manage your capital and risks.
4. Learn the technical analysis of cryptocurrencies: how to read price charts, how to determine trends and support and resistance levels, how to use indicators and oscillators (indicators, the charts of which are displayed on a scale separate from the price chart), how to build trend lines and channels, how to determine points entering and exiting trades.
5. Study the fundamental analysis of cryptocurrencies: how to assess the prospects for the development of cryptocurrencies and projects on the blockchain, how to take into account the impact of news and events on the cryptocurrency market, how to analyze trading volumes and the dynamics of supply and demand for cryptocurrencies.
6. Learn the psychology of cryptocurrency trading: how to control your emotions and not give in to panic or greed, how to develop discipline and self-control, how to avoid typical traders' mistakes, such as overtrading or insufficient portfolio diversification.
“If you can learn to create a state of mind that is not affected by the market's behavior, the struggle will cease to exist,”
— Mark Douglas, famous American trader, investor and author of several books on trading, popularizer of the “trading psychology” idea.
SHIB showed unrealistic growth in 2021
What is the best cryptocurrency to trade? This question is of interest to many novice traders who want to make money in the cryptocurrency market. There is no single answer to this question, since the choice of cryptocurrency depends on many factors, such as:
There is no universal cryptocurrency that would suit everyone. Therefore, it is important to do your own analysis and research before making a decision to buy or sell.
Cryptocurrency security is one of the most important aspects of cryptocurrency trading.
Various methods are used to ensure security in the cryptocurrency market:
Contract audits. Contracts are programs that automatically perform certain actions based on conditions set in the code. Contracts can be used to create and manage cryptocurrencies, tokens, decentralized applications and other services. Contract audit is the process of checking contract code for errors, vulnerabilities, logical problems, and compliance with standards and specifications. Contract audit helps to increase the credibility of the cryptocurrency and protect it from attacks and fraud.
Exchange audits. Exchanges are platforms that allow users to exchange cryptocurrencies among themselves or for other types of currencies. Exchanges play a key role in the trading of cryptocurrencies, so they must be reliable, transparent and secure. An exchange audit is the process of checking its technical infrastructure, financial statements, rules and regulations, security measures and data protection. An exchange audit helps prevent the loss or theft of user funds, market manipulation, and other risks.
Exchange licenses. To ensure security in the cryptocurrency market, it is very important that cryptocurrency exchanges are licensed. Exchange licensing allows you to comply with the rules and requirements of regulators, such as setting standards for the security and protection of customer data, preventing fraud and financial crime, and controlling transactions on the exchange. ATAIX Eurasia is an authorized market participant and operates on the basis of licenses from the Astana International Financial Center (AIFC).
Reputation. Reputation is the opinion or assessment that the community or public has about a cryptocurrency, its creators, developers, nodes or exchanges that support it. Reputation is formed based on the history of successes and failures, feedback from users and experts, media coverage and other factors. Reputation affects the credibility of the cryptocurrency and its value in the market.
And as for the average user, how can he improve his security?
Here are some tips to improve security:
There are different types of wallets such as hot (online) and cold (offline). Hot wallets are convenient for frequent transactions, but more vulnerable to hackers. Cold wallets provide a high level of security, but require more care and attention. Choose a wallet according to your needs and preferences, but always use only trusted sources to download or purchase a wallet.
Keep your private keys and passwords in a safe place. A private key is a unique code that gives you access to your wallet and allows you to sign transactions. The password is an additional layer of protection that protects your wallet from unauthorized access. Never share your private keys and passwords with anyone, store them on a computer or in the cloud, or write them down on paper or screenshots. Use dedicated key storage devices such as hardware wallets or paper wallets. Change your passwords regularly and use complex character combinations.
Cryptocurrency is a dynamic and innovative phenomenon that is constantly evolving and changing. To be successful in this area, you need to be aware of all the events that can affect the price, supply and demand of cryptocurrencies. Follow authoritative sources of information such as blogs, podcasts, social media, or news sites. Be wary of fake news or rumors that can be spread to manipulate the market. If you want to keep abreast of the latest news of the cryptocurrency industry, subscribe to our Telegram group — we cover the most important and interesting events in the world of cryptocurrencies every day.
Classic "pump and dump"
When trading cryptocurrencies, it is necessary to take into account various risks that can lead to loss of funds or lost profits. In this text, we will look at some of the most relevant risks of cryptocurrencies and how to minimize them.
One of the most serious risks of cryptocurrencies is the hacking of exchanges where digital coins are exchanged and stored. In the history of cryptocurrencies, there have been several major cases of hacker attacks on exchanges, as a result of which users lost millions of dollars. For example, in 2014 the Japanese exchange Mt. Gox was hacked and about 850 thousand bitcoins were stolen, which was almost 7% of the entire existing supply. In 2016, hackers stole 120,000 bitcoins from the Bitfinex exchange, and in 2018, $500 million in NEM from the Coincheck exchange.
To protect against exchange hacks, it is recommended not to store large amounts of cryptocurrencies on the online wallets of exchanges, but to use personal wallets with a high level of security, such as hard or paper wallets. It is worth choosing proven and reliable trading platforms that have a good reputation and licenses.
Another such risk is bridge hacks. Bridges are special services or applications that allow you to exchange cryptocurrencies between different blockchains or networks. For example, a bridge could allow the transfer of ether (ETH) from the Ethereum blockchain to the Binance Smart Chain (BSC) blockchain or vice versa. Bridges are a potential point of attack for attackers to try to intercept transactions or spoof recipient addresses. To protect against such attacks, you must use only proven and reliable bridges and always verify addresses and amounts before confirming transactions.
Another risk is the theft of a seed phrase (mnemonic phrase). A seed phrase is a set of 12 or 24 words that is used to restore access to a cryptocurrency wallet in case of device loss or damage. The seed phrase is the most important security element of the cryptocurrency wallet, as it gives full control over the funds. If the seed phrase falls into wrong hands, the attacker can steal all the funds from the wallet. To protect against such a risk, it is necessary to store the seed phrase in a safe place, preferably in an offline format (for example, on paper or a flash drive), and do not disclose it to anyone.
Another risk is the loss of access to the wallet due to a forgotten password or a lost device. Cryptocurrency wallets usually require a password to unlock access to funds. If the user forgets the password or loses the device on which the wallet is installed, he may not be able to use his funds. To prevent such a risk, it is necessary to always remember or write down the wallet password and store it in a safe place. It is necessary to have a backup copy of the seed phrase, which will allow you to restore access to the wallet on another device.
In addition to these risks, there are other factors that can affect the security and value of cryptocurrency assets. For example, market volatility, regulatory changes, technical issues, cyberattacks and fraud. In this paragraph, we will look at some of these factors in more detail and provide tips on how to reduce your risks when investing in cryptocurrencies.
Market volatility means that the prices of cryptocurrencies can fluctuate strongly during a short period of time. This is caused by various reasons, such as demand and supply, news, rumors, emotions of traders, etc. Volatility can both increase and decrease the potential profit or loss of an investor. To protect yourself from volatility, it is important to follow market trends, analyze price charts and use risk management tools, such as stop-loss (an order set by an investor to automatically sell an asset when its price reaches a set level. It is used to minimize losses in if the price of the asset begins to move in an unexpected direction) and take-profit (an order set by the investor to automatically sell the asset when its price reaches a set profit level. It is used to fix the profit in the event that the price of the asset begins to move in the expected direction).
Regulatory changes may have an impact on the cryptocurrency market. Different countries have different approaches to regulating cryptocurrencies and related activities. Some countries take a friendly stance and support the development of the crypto industry, while others prohibit or restrict the use of cryptocurrencies. Regulatory changes can increase or decrease the credibility of cryptocurrencies, affect the availability and legality of certain services and platforms. To avoid unpleasant surprises, it is important to follow the news and legislation in the countries where you plan to invest or trade cryptocurrencies.
Technical problems can also cause the loss or decrease in the value of cryptocurrency assets. If a user forgets or loses his password or wallet key, he may lose his assets forever. To minimize technical risks, it is important to choose reliable and proven services and platforms, and store your assets in secure wallets.
Cyber attacks and fraud are another major threat to cryptocurrency investors. Hackers and scammers use various methods to steal the money of users who want to capitalize on the growth of digital currencies. Among the most common cryptocurrency fraud schemes are the following:
Fake websites and apps. Scammers create websites and mobile apps that mimic official platforms for trading or keeping cryptocurrencies. They attract users with low commissions, favorable rates or free giveaways. Once a user enters their details or sends their funds to a fake website or app, they lose access to them forever.
Phishing attacks. Scammers send emails, messages on social networks or messengers in which they invite users to follow a link to a fake website or download a malicious application. The purpose of such attacks is to obtain the user's personal or financial information, such as a password, secret key, or crypto wallet recovery phrase.
— Market buildup schemes (“pumping and dumping”). Scammers organize groups on the Internet in which they agitate users to buy a certain cryptocurrency or token, promising its rapid growth. When the price rises due to increased demand, the scammers sell their assets at inflated prices and then disappear. After that, the price drops sharply, leaving investors with losses.
Stay vigilant and don't trust offers that are too good to be true. Before investing in cryptocurrency, check the sources of information, reviews from other users and the reputation of the platform. Do not give your data or funds to strangers or services. Use reliable antivirus programs and protect your crypto wallet with a strong password and two-factor authentication.
Cryptocurrency trading is not an easy and quick way to make money, but a serious and responsible activity that requires constant learning, analysis and self-control. Only then can you count on a stable and profitable result.
Continuing the conclusions about trading, we can highlight its pros and cons. Among the pros are:
The cons include:
Thus, cryptocurrency trading is a complex and risky activity that requires high qualifications, discipline and self-control from the trader. With the right approach, trading can be an interesting and profitable activity.
This information does not constitute individual investment advice and may not reflect your investment objectives, expectations and acceptable risks. ATAIX Eurasia is not responsible for possible losses in case of making transactions or investing in the financial instruments mentioned in this information, and does not recommend using it as the only source when making an investment decision
Did you find it interesting?
What is cryptocurrency trading?
Is it safe to trade cryptocurrencies?
What should a beginner trader do?
What tools does a cryptocurrency trader use?
What is cryptocurrency trading?
Cryptocurrency trading is the process of buying and selling cryptocurrency assets such as Bitcoin, Ethereum, Litecoin and others on cryptocurrency exchanges in order to profit from changes in their prices on the market. Cryptocurrency trading can be done on both centralized and decentralized exchanges, and can be both short-term and long-term. Successful trading of cryptocurrencies requires knowledge of the market, analytical skills, the ability to make decisions based on data and manage risk. It is also important to follow news and events that may affect the prices of cryptocurrency assets.
Is it safe to trade cryptocurrencies?
It is possible to trade cryptocurrencies, but this is associated with certain risks and threats that must be taken into account. Cryptocurrencies are highly volatile assets, which means that their prices can fluctuate significantly in short periods. This can lead to large losses for traders who do not know how to manage risk. In addition, cryptocurrencies are subject to the threat of cyber attacks and scams, which can lead to the loss of funds. Traders should be especially careful when choosing a platform for trading and storing crypto-currency assets, as well as when exchanging information and funds with other users. Despite this, trading cryptocurrencies also has its advantages, such as high liquidity, accessibility and the ability to earn on rising and falling prices. To successfully trade cryptocurrencies, you need to have knowledge of the market, analytical skills, ability to make decisions based on data and manage risk.
What should a beginner trader do?
It is important to understand that cryptocurrency trading is a complex and risky activity that requires high skill, discipline and self-control. A beginner trader should learn different trading methods such as technical and fundamental analysis, arbitrage, scalping, swing trading and position trading. It is also necessary to learn the basic tools and terms used in cryptocurrency trading. To start trading cryptocurrencies, you need to choose a reliable and secure platform for trading and storing cryptocurrency assets. A trader should be aware of the different types of wallets and choose the one that best suits their investment goals and security level. A beginner trader must also be able to manage risk and not risk more than they can afford to lose. It is important to follow the news and events that may affect the prices of cryptocurrency assets and make decisions based on data analysis. Finally, a beginner trader must be ready for failure and be able to learn from it.
What tools does a cryptocurrency trader use?
Traders use a variety of tools to analyze the market and make trade decisions. Some of them include:
1. Charts are the main technical analysis tool that allows traders to analyze past price movements and predict future price changes.
2. Indicators are mathematical formulas that are used to analyze price data and identify market trends.
3. News and economic data is information about events that may affect the prices of cryptocurrency assets, such as changes in legislation, economic indicators, etc.
4. Analytical reports are documents that contain market analysis and forecasts for the future.
5. Social networks and forums are places where traders can communicate and share information about the market and transactions.
6. Trading platforms are software that allows traders to make transactions in the cryptocurrency market.
7. Crypto wallets are software that allows you to store cryptocurrency assets and make transactions. Each trader chooses those instruments that are most suitable for his investment purposes.