Important Simple Guide to Beginning Cryptocurrency Trading for Beginners

 

Important Simple Guide to Beginning Cryptocurrency Trading for Beginners

Before getting started you might be wondering why trade cryptocurrencies in the first place…?

There are four main reasons why you should consider investing in cryptocurrency trading right now.

1. As of 2017, the total valuation of all cryptocurrencies is over $100 billion. As new cryptos are launched and existing ones continue to rise in value, consider the cryptocurrency market cap over the next 20 years.

Given that this market is barely a decade old, this is one you'll want to get into right away.

2. More businesses are adopting cryptocurrencies as an alternative payment method to fiat (normal) currencies. Why? They are considered secure, attract low transaction fees and the transaction is completed within seconds.

Companies are also creating their own cryptocurrencies and offering them through ICOs. If you are able to buy and the cryptocurrency price rises then you have made a smart investment.

 

3. There are hundreds of cryptocurrencies to choose from. Most of those launched are experiencing rapid price hikes within months of being released to the public.

In addition to cryptocurrencies, companies are using blockchain technology to create new technological products. This suggests that this technology is likely to be adopted in the next few years.

4. Finally, cryptocurrencies can be ultra-volatile. For example, on June 24, 2017, the value of Ethereum crashed from $319 to 10 cents.

The crash was short-lived and the price rebounded within a few hours….

Savvy traders made great profits that day...

Speaking of becoming a general trader, let's go to the beginner’s guide to cryptocurrency trading.

Getting started as a cryptocurrency trader

Trading cryptocurrencies is more or less like trading forex. So getting started involves taking similar steps.

1. open a wallet

Regular currencies are stored in a bank. Cryptocurrencies are a bit different because they are software. They are stored in what is known as a "wallet".

It is an address on the blockchain. Wallets can take many forms including apps, online wallets, hardware wallets, and paper wallets.

The wallet has a public and private key. The public key uniquely identifies you with the same wallet as your PayPal email address. On the other hand, the private key is similar to a password.

It is only necessary to open a wallet if you intend to trade in real cryptocurrencies.

IQ Option offers a better and simpler option through the Open Trading Network Platform (OTN). It is a decentralized exchange focused on cryptocurrencies.

It allows you to store all your cryptocurrencies in a single wallet as well as transact across different blockchains.

New IQ Option account holders are getting free OTN tokens for a limited time.

2. open a trading account

The first thing you need is to open a trading account. I would recommend opening one with a regulated broker such as IQ Option or exchange that offers cryptocurrency trading.

I would also recommend having a demo account of your preferred broker. IQ Option offers one with a virtual cash deposit of $10000. Demo accounts come in handy when beginner traders want to try out different trading strategies before investing their cash.

There are hundreds of cryptocurrencies available today. However, finding a broker who offers at least 5 of the most popular ones is essential.

Why?

It is similar to currencies. When a cryptocurrency is popular, traders are likely investing in it. Therefore you are almost guaranteed to have predictable price movements which are essential if you want to be successful as a trader.

On the other hand, having so many cryptocurrencies to choose from, you are nothing short of a special asset. If the performance of one cryptocurrency is not great, you can trade-in in another.

3. loading your account

Depending on your broker or exchange, you can load your trading account in many ways. These will include credit cards, bank transfers, and e-wallets.

4. How to start trading cryptocurrency

Depending on your broker or exchange, you can start trading cryptocurrencies in three different ways.

A. Buying and selling (buying and holding) cryptocurrencies

It is the most popular and recommended option for beginners and experienced traders. It is similar to forex trading. You can buy a cryptocurrency and hold the position while its value rises.

Once you cover the spread/commission and make a profit, you can sell.

Alternatively, you can sell your cryptocurrency when its price is higher. So wait for the price to drop slightly before buying again.

WhIs this strategy recommended?

The volatility of cryptocurrencies allows you to benefit from small price movements. Remember the June 24 Ethereum crash and rally in a matter of hours?

This is a good long-term investment strategy, especially if you have been following the price movements of one or more cryptocurrencies. Many of the popular cryptocurrencies available today have seen an upward trend as they begin to be publicly traded.

There is no multiplier when making cryptocurrency purchases. This makes it harder to lose more than you periods invested when buying cryptocurrency.

There are three drawbacks to this trading strategy.

Spreads are usually higher. This makes it difficult to hold the position for relatively short periods of time unless the market turns fast.

The second drawback is that the only way to maximize profit per trade is by over-purchasing the underlying asset. It is unlikely that your broker will leverage the trade.

Finally, trade entry may require a large amount of capital investment. Some cryptos like bitcoin can be worth more than $5000 per coin.

B. Cryptocurrency CFDs

If you have traded CFDs before, cryptocurrency CFDs work similarly. Instead of buying a cryptocurrency, your job is to speculate on its price movements.

Your profit or loss depends on how well you predict the price of the cryptocurrency. canines the price moves further (either positive or negative) from the purchase price, the greater your profit or loss.

Why Trade Cryptocurrency CFDs...?

Firstly, you do not need to open a wallet to store your cryptocurrency tokens. This is because you will not need to buy or sell actual cryptocurrencies.

Brokers usually place smaller spreads on cryptocurrency CFDs than buying and selling the actual crypto. Lower spreads make it easier to enter and exit trades within a shorter period.

Brokers also usually offer leverage (multipliers) to traders. This is a type of loan that allows you to significantly multiply your profits.

Multiples however do come with some risk. You can lose more than your invested amount on a single trade.

C. Binary options trading with cryptocurrencies

Although many regulated brokers and exchanges are moving away from digital/binary options, it is still a viable strategy for cryptocurrency beginners. This strategy takes a different approach than the above two.

With the previous two strategies, your profit or loss is calculated as the difference between the price at the trade entry and the price at the trade exit. With binary options, your profit or loss is fixed.

That is, you are going to earn a certain amount depending on how well you anticipate the price of the underlying instrument to move.

So, if you were to get $100, if the price of Ethereum goes up in the next 60 seconds, you will get the same regardless of whether the price rises by $1 or $300. If the price goes down, you will lose your invested amount.

Why should you consider this cryptocurrency trading strategy?

You do not need to open a cryptocurrency wallet to get started. Binary options trading does not require that you own the underlying instrument which in this case could be $5000 worth of bitcoins.

This is a good option if you don't want to stay in a long position. Some actions may take up to 15 seconds.

Cryptocurrency binary options have many disadvantages.

The first disadvantage is that many regulators are introducing tougher rules to regulate binary options trading. Many brokers are exiting this market in favor of CFDs.

Although this does not mean that you cannot find a reputable broker offering cryptocurrency binary options…

Another disadvantage is that the profit you stand to make is fixed. This is regardless of how much the value of the cryptocurrency rises.

In the end, this cryptocurrency trading strategy largely depends on the speed of execution. Hence it is not a good long-term investment option.

5. withdrawing your earnings

The process, timing, and fees involved when withdrawing your cryptocurrency trading earnings largely depend on your broker. However, you should be able to withdraw earnings in the form of cash (for CFD and binary options traders) and cryptocurrency to your wallet.

Now that you have gone through the necessary steps in this cryptocurrency trading guide,

Which cryptocurrencies are currently on offer on IQ Option...?

View the full list here

Bitcoin

It is the most popular cryptocurrency. It was launched in 2009 and accounts for about 46% of the total cryptocurrency market capitalization. It is also one of the most expensive with Bitcoin Going at $5000.

bitcoin cash

It is one of the new cryptocurrencies launched in August 2017. Its popularity is largely attributed to the fact that at the time of its launch bitcoin owners received an equivalent amount of bitcoin cash coins.

 

 

Drop of water

Since its launch in 2014, Dash has grown into one of the most popular cryptocurrencies. Along the way, it changed its name twice (Darkcoin and then XCoin). Its popularity stems from its instantaneous transactions, decentralized governance, and private transactions which are major improvements over bitcoin.

Ethereum

It is the second most popular cryptocurrency on the market. Two features have helped propel Ethereum into the top 5 cryptocurrencies available today.

The first is smart contracts which provide additional security especially when transactions are made between untrusted agents. The second is the faster transaction speed compared to bitcoin.

Ethereum classic

Similar to Bitcoin Cash, Ethereum Classic was built on the success of Ethereum.

Litecoin

One of the first "altcoins" to be developed as a bitcoin alternative, Litecoin offers fast transaction confirmations and almost zero transaction fees.

 

Wave

Ripple claims to be safer, cheaper and makes transactions faster than Bitcoin and Ethereum. Concerning market capitalization, it is the third-largest.

just

It is a lightweight cryptocurrency specially optimized for the Internet of Things.

Apart from these eight, other cryptocurrencies, you can trade on IQ Option are ZCash, Monero, Santiment, and OmiseGo.

Conclusion

Cryptocurrencies are no doubt a part of the world’s financial future. New cryptocurrencies are being launched every year. However, some such as Bitcoin and Ethereum are huge in terms of market capitalization and popularity.

As more companies and businesses continue to adopt these alternative payment methods, an increase in their value is inevitable. And that's where you come in.

As a cryptocurrency trader, you have the opportunity to make huge profits on their price movements. Getting started is simple and involves the same steps as online for CFD trading.

In addition to the potential profitability of cryptocurrency trading, it is worth noting that brokers and exchanges are increasingly viewing this market as an alternative to binary options. So now is the right time to start your cryptocurrency trading career and connect with other traders before you start.