Trading cryptocurrencies is no easy endeavor. In 2017 anyone could open a Coinbase account and buy any of the cryptocurrencies on Coinbase, and they probably would have made money. 2018 has brought the crypto space back to reality. All of a sudden cryptocurrencies are just as difficult as trading stocks, futures, or any other financial asset class.
You need to get educated about the cryptocurrency space before throwing your money into BTC or other altcoins. In 2019, cryptocurrencies have been in a monster uptrend, with Bitcoin and some other altcoins up 300% or more this year. In order to start trading cryptocurrencies successfully, you must do these 3 things in order to give yourself the best odds of succeeding.
Find A Secure Place To Store Your Cryptocurrency
In such a new space, security has to be your number one priority before you start trading cryptocurrencies. I’m sure you have heard hundreds of stories by now of hackers stealing cryptocurrencies from unsecure wallets. You need to know the best wallets to store your cryptocurrencies and the best practices to keep your cryptocurrency secure.
In terms of security, hardware wallets are usually the best choice. Their private keys are often stored in a protected area of a microcontroller, and cannot be transferred out of the device in plaintext, which is great for security. They’re immune to computer viruses that steal from software wallets, and they’re open-source. One of the best hardware wallets is the Trezor.
Find the Best Exchanges
The cryptocurrency exchange space is still quite a new and undeveloped space. There are numerous cryptocurrency exchanges out there now, and 99% are risky to trade on. In order to start trading cryptocurrencies successfully, you need to be trading on the most liquid and secure exchanges.
My favorite exchanges are Coinbase Pro, Kraken, Binance, and Bittrex. Coinbase Pro has great liquidity, solid executions, and a decent trading platform. The main downside is its limited selection of coins. Ever since Kraken has resolved its platform and execution issues, it has become my favorite place to short Bitcoin and other altcoins. They’re one of the few exchanges that allows you to short cryptocurrency. I haven’t been shorting, mainly focusing on long plays.
Binance and Bittrex are the best exchanges for trading altcoins. I prefer Binance personally, as it has great executions, low fees, an exceptional trading platform, and a mobile app. Bittrex has a bigger selection of altcoins and more fiat pairs but lacks in platform functionality and fees are higher.
Define Your Trading Strategy
Before you start trading cryptocurrencies, or anything else in the financial markets, you need to create a trading strategy with an edge. “Buy at any price and hope it goes up” is not a strategy. You need to know what time frame you trade best on. Are you going to day trade? Or are you going to focus on longer-term holds and swing trades? Or will you just buy and hold for months and years?
You need to find a style of trading that is best suited to your personality, your time commitment, and your capital limitations (if any). For example, if you are someone who has difficulty making quick decisions under pressure in a short period of time, you probably want to stay away from day trading. Longer term investing might be more suited to this type of personality. You may need to experiment with different styles of trading before figuring out what is the best style for you. It is not an overnight process. Success in crypto trading is no different than any other profession. It does not happen overnight, and you cannot be afraid to lose and fail along the way.
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