Cryptocurrency traders often have one of two goals: accumulate Bitcoin or make a profit in USD. If you can time the market right, trading crypto can give you much higher returns than traditional investments. However, it’s not uncommon for traders to lose money quickly trading cryptocurrencies.
Make a cryptocurrency brokerage account
Coinbase, Gemini and eToro are among the best crypto brokerages on the market.
- To make an account, you’ll need to provide your crypto brokerage with personal identification information, similar to opening an account with a stock brokerage.
Consider automated crypto trading.
Trading bots enact a strategy that is intended to give you the best results given your investment goals
- Can provide you with a conservative, neutral, or aggressive method, you can make money quickly, hold your coins or diversify your portfolio.
Compare Cryptocurrency Brokers & Exchanges
There are a ton of options when it comes to cryptocurrency brokerages. For new investors, Coinbase is a great option.
How Does Cryptocurrency Work?
Cryptocurrencies are digital assets that are powered by blockchain technology
- To transact with a cryptocurrency, you need to have a set of public and private keys
- Public key is connected to your wallet address and allows people to send you cryptocurrency
- Private key is used to approve transactions being sent from your wallet
Pick a crypto to invest in
Most active cryptocurrency traders allocate most of their capital to Bitcoin and Ethereum.
- Smaller mid-market cap cryptos offer higher upside potential and move more predictably than larger altcoins, making them an attractive investment for risk-tolerant investors.
Pros and Cons of Investing in Cryptocurrencies
Investors are attracted to cryptocurrency due to its high volatility
Choose a strategy
Most traders take multiple factors into consideration when buying and selling cryptocurrency.
- Elliott Wave Theory is a popular strategy that focuses on the psychology behind market sentiment, so it works particularly well for speculative assets like cryptocurrencies
- If you’re an experienced trader, you may already have a strategy you use to trade stocks.
Store your cryptocurrency
If you’re buying your cryptocurrency to hold for the mid to long term, get a cryptocurrency wallet
- Hardware or software wallets are best for this use case
- Ledger is a popular hardware wallet brand
- ZenGo is a mobile wallet that offers comparable security
Cryptocurrency Trading vs Stock Trading
More risky than stock trading
Step 2: Fund your account
Most crypto brokerages offer bank funding through debit cards and wire transfers.
- Wire transfer is typically your cheapest option to fund your account — it’s free on Coinbase and Gemini.
- Connect your bank account to your crypto brokerage.
Cryptocurrency
Decentralization of financial operations through cryptocurrencies has several efficiencies over the traditional financial system
- Cut out almost all the overhead costs associated with banks
- Less expensive transactions that can be sent and received internationally
- Inflation or finite supply that’s written into code – no need to trust the Federal Reserve
- Financial derivatives can be coded directly onto certain cryptocurrency blockchains, replacing the need for financial intermediaries
Selecting Investments in Crypto
Most of the best cryptocurrency projects are in the top 50 market capitalization of cryptocurrency.
- Small market cap cryptos are generally riskier than larger market cap coins. It’s important to invest in cryptocurrencies that have a solid team backing the project.
