Cryptocurrencies were very much in the news in the last part of 2017; most of the attention was focussed on the dazzling performance that year of the prototype crypto, bitcoin, which earned itself the label of ‘ten-bagger’ as it increased from $1,000 to $10,000 between January and December. If you have been impressed by this performance, then you might have considered trading in cryptocurrencies yourself. Here are a few basic tips to help you start up, but remember a dictum by which nearly all successful cryptocurrency traders swear; you must do your homework and believe in the currency or currencies in which you trade. There can be rewards a-plenty from trading in cryptocurrencies, but it is not something to be attempted in a half-hearted manner.
First, remember a couple of factors. Cryptocurrencies trade all the time, 24/7, and this differentiates them from so-called fiat currencies. Also, and this must always be born in mind, cryptocurrencies are extremely volatile. Remember what happened on November 29th, 2017 to bitcoin; even in the course of the ‘ten-bag’ year, bitcoin lost 20% of its value in the course of a few minutes. It recovered what it had lost later on the same day, but it is not hard to imagine the sort of mistakes that could have been made during that brief plunge. Volatility is a factor that you must always take into account. Cryptocurrency trading is not for the faint-hearted.
Moving onto practicalities, you will first need to find a cryptocurrency broker. You will find many to choose from; do your research first and make no snap decisions. Find out if there is a regulatory body in your part of the world, like CySEC for Europe, and select one of its members. Look into the matter of fees before you make a decision, and learn the difference between brokers who charge for a swap at the day’s end and those who don’t. Also, master the all-important subject of spread, so you are not confused when the broker charges for it for opening a position. You should beware of leverage, at least until you are absolutely sure of your mastery of the trade. The volatile nature of cryptocurrencies means that profits can be made without this powerful but potentially dangerous tool.
The next step is to decide which cryptocurrency you want to trade. Look into not only the popularity or otherwise of the currency but also its infrastructure, the technology behind it and the development team who are working on it. Some of the newer cryptos are designed to exploit niche marketing – Blocktix is a ticket marketing platform designed to combat scalping. If you are interested in this, study the subject in depth. Finally, you need to make the all-important decision of where the price is at before you buy (and later sell). There are many tools available to help you to make this decision, and you must again do your own research.
Spread betting, CFD trading and Forex are leveraged. This means they can result in losses exceeding your original deposit. Ensure you understand the risks, seek independent financial advice if necessary.
The value of shares and the income from them may go down as well as up. Nothing on this website constitutes a solicitation or recommendation to enter into any security or investment.