7 Tips for Getting Started with Cryptocurrency Trading
The bulls are once again starting to see the light of day in the crypto market. When the mainstream media outlets begin to turn their attention back to cryptocurrency, traders will flood into the space. The explosive growth will result in millions of incumbents looking for a quick buck, threatening another bubble for this volatile asset class.
While it’s exciting to get caught up in the hype, it’s important for us to stay grounded so we don’t get trapped with misaligned expectations. Trading cryptocurrency can be a complex process and you don’t want to learn lessons the hard way. It will result in the loss of funds, deteriorating sanity, and an overall animosity towards the crypto assets. Start out with the correct foot forward by reading this article and taking these lessons to heart.
1. Pick a Reputable Exchange
Before owning any cryptocurrency, it’s important to research the reputable brands in the market which provide exchange services. This will have a direct impact on where you purchase your cryptocurrencies, how you trade, and the community in which you will become involved.
As a beginner, it’s important to focus on buying your cryptocurrency from a trusted and reliable source. Instead of focusing on “getting the best deal”, go with the exchange with the best reputation. Even if it costs a bit more, it’s worth the piece of mind and security. Due to the nature of cryptocurrencies, scammers are abundant. It’s a global market where transactions are final. Once you have sent a cryptocurrency payment, there are no charge backs, no banks you can call, and absolutely no way to become reimbursed. Getting a sweet deal in crypto can mean getting scammed.
The most trusted exchange for purchasing cryptocurrency is Coinbase. We highly recommend beginning your journey with Coinbase because you can rest assured your funds are secure, their support team is ready to answer any questions, and the experience is enjoyable. No other exchange compares to the reputation of Coinbase.
In order to get started with Coinbase, read our guide on how to purchase your first cryptocurrency and set up a portfolio.
2. Pick a Simple Strategy
The beginning of your journey into the cryptocurrency market will be hectic. You will quickly become bombarded with ideas for trading strategies. Before you dive into the complex trading strategies you hear about on Twitter or Facebook from self proclaimed gurus, find a strategy that’s simple to implement and maintain as you learn.
Remember there is no magic bullet. There has never been and there will never be a strategy which guarantees returns. However, there are strategies which can reduce risk. The most popular of these strategies is portfolio indexing and rebalancing. This is a strategy that has been trusted by financial institutions for decades, so we can be confident the strategy has been well tested and examined.
The cryptocurrency market never sleeps. There are no closing hours or holidays. Services are running every second of every day. The constant requirement to be online drives people mad. Monitoring the market at every moment is exhausting. You don’t want to be online 24/7, trust me. It will turn into a nightmare, burning you out.
Before you spiral into this future, find a service which helps you automate your strategy. There are a number of free applications in the market which provide portfolio automation tools, so sign up for one of the trusted services.
4. Build a Portfolio
Putting all your eggs into one basket is a recipe for disaster. Constructing a portfolio can reduce risk and provide stability in this volatile market. Instead of buying a single asset and praying for a moon, distribute risk to a number of assets and manage that portfolio by making small adjustments to your positions.
5. Keep assets in cold storage
While you may have selected a reputable exchange in order to store your cryptocurrency, you never know when the sky might fall. The cryptocurrency space has a history of surprises when it comes to hacks. Funds can be lost in a hack at any moment, so it’s always encouraged to keep your assets off the exchange as much as possible. This is certainly a leap, so take your time to research options. One option for a convenient mobile hardware wallet is the Ledger Nano X. It’s simple, it works, and you can rest easy because your funds are secure.
Being the guardian of your own bank is great, but it means you must find services which can accommodate keeping funds off the exchange. Unfortunately, the options are few and far between. Thankfully, those people who rebalance their portfolio can continue rebalancing even when most assets are stored offline. This is possible because rebalancing only requires trading the delta for each rebalance period. The delta is the amount of the asset which must be traded in order to once again reach your desired allocations. You can read more about how to keep your assets off the exchange and still rebalance in this article here.
6. Be patient
Although the market is volatile, that doesn’t mean the value of your portfolio will skyrocket over night. Once you’ve implemented your strategy, let the strategy work. Explore the intricacies of your strategy, engage with the strategy for some time. It doesn’t happen over night. Enjoy the process of learning. Build up your expertise with weeks of careful research until you’ve mastered your strategy.
7. Ask for help
It’s easy to get lost in the bustle. When you feel lost or confused, don’t be afraid to ask for help from reputable groups. Countless people all around the world would be excited to help you. Everyone is rooting for your success and can’t wait to build you up. Cryptocurrencies can change the world for the better, but we must all work together to bring about this future. Join a passionate community which helps you learn something new each day.
Now that you have the resources, get started! Go out, create a portfolio and build the foundation for your adventure into cryptocurrencies. Don’t forget to check out the Shrimpy website, follow us on Twitter and Facebook for updates, and ask any questions to our amazing, active communities on Telegram & Discord.