It’s 2021, and once again, Bitcoin’s hitting an all-time high. Everyone wants to know what a Polkadot is, and there’s another hardware wallet released.
But what does this jargon all mean? Well, firstly, we’re assuming you’re looking for guides to cryptocurrency for beginners. Those who buy and sell stocks will recognize the fundamentals of trading cryptocurrency as being very similar.
But if you’re intrigued and want to start trading cryptocurrency, ready to catch the next wave of the bull run, then read on. Here are 5 tips for beginners when trading cryptocurrency.
1. Only Invest What You’re Happy Losing
You might have heard this if you’ve ever placed a bet before. Cryptocurrency trading doesn’t have the same regulatory fallback as investing in the stock market, so always trade at your own risk.
Make sure you do your research, then do it again, and then a third time. That way, you’ll be 100% confident you haven’t made any silly mistakes. Know the different types of cryptocurrency before trading so you don’t buy the wrong one.
2. Learn Your Safe Tricks
Dollar-Cost Averaging is one of the safest strategies you can play when investing in any asset. That way, if you’ve made a bad investment, you can recoup your “average value” by buying when the market declines as well as on the way up. It also takes a lot of patience to see the results in some cases, so don’t expect it to be the overnight success everyone believes in the media.
Another safe trick is to set a stop loss. This means that if you’ve bought some cryptocurrency, you can protect yourself from a sharp drop by selling at a marginal loss of your choosing. Depending on how risk-averse you are, place a stop loss on all your holdings or cash out a certain percentage.
Apart from setting boundaries with trading, be sure to protect it from hackers. Monero is one of the cryptocurrencies with great potential so make sure to place it in an XMR Wallet that provides security and privacy.
3. Watch Out For Fees
Look at how you’re trading and work out whether you’re wasting money on fees or not. Depending on the platform, costs go from near 0 to over 5% of your trade. And, if you’re sending Ethereum at the wrong time, you can end up paying over $200 in gas fees for a $10 transfer!
So make sure you always look at the fees when trading. Don’t buy and then sell at 2% profit, only to end up with a loss because you’re charged 5% in exchange fees.
4. Know Your Taxes
Before the last bull-run of 2017, cryptocurrency was a very different space from the one we know today. Even those who mined Bitcoin in years gone by could never have anticipated what was to come.
Thus, governments clocked on. Now they are going back through the databases to work out who owes them a tax on their assets.
Find out your local tax laws around cryptocurrency and how tax is calculated. Even better, use a tracker from the start that works this out for you. That way, you’ll know you’re always paying the right amount of tax.
Plus, reputable exchanges such as this site will make sure you’re compliant with local legislation in their country. That way, you know you’re staying safe while allowing yourself access to the right resources.
5. Learn From The Mistakes of Others
There are horror stories all over the web of people who have sent coins to the wrong address. Many have thrown a piece of paper with their backup code (also known as a seed phrase) in the bin worth millions. Even some cyber experts have fallen for a convincing scam.
Do not think this will not happen to you. Everyone affiliated with cryptocurrency can give you one story of how a mistake was made, no matter how small or large. Take this advice wisely, and tread carefully.
Trading Cryptocurrency is Risky and Rewarding
Once you know your way around the cryptocurrency space and you’ve done your research, then it’s easy to grasp the ideas. But remember, when looking for the best cryptocurrency to invest in, there’s no room for complacency in trading cryptocurrency. Always be careful.
For more top trading advice, keep reading our blog and see what you discover!