If you are lucky enough and can do the right analysis, you can find a lot of things to have fun and make money. Playing in an online casino can be one of them: if you know how the gambling mechanics work, you can get very profitable results. Another option is to trade cryptocurrencies. This method, which has become increasingly popular over the past few years, can be surprisingly satisfying if you know what you’re doing. If you don’t know, this article will help you grasp the basics.
What is Crypto Trading?
Let’s start with the basics because you need to understand what you’re really doing first. Consider for a moment that we are talking about gold, not cryptos. Let’s say you have 10 kilos of gold, and you can trade it on an exchange platform. Some of the things you can do to make money are:
- If you think its price will increase in the near future, you can buy more gold.
- If you think the price of silver will increase soon, you can sell some of your gold and buy silver.
- If you expect its price to drop, you can sell some of your gold and convert it to another asset (e.g., USD currency).
It’s not hard to understand, right? Owning crypto gives you the same options. People who own cryptocurrencies can sell their cryptos, buy new ones or exchange them with others using sites called “exchange”. In this regard, there is no difference between the trading options available to gold holders and crypto holders. General investment tactics and advice will always apply to cryptos as well. In other words, if you do the options we listed above at the right time, you will make profits, just like any other asset.
The only difference is that cryptos are much more volatile compared to other commodities. In other words, there are very instant decreases and increases in prices. For example, you wouldn’t expect the price of gold to change by more than 10%. Cryptocurrencies, on the other hand, can gain or lose 90% in just one hour. This means that trading them can make you rich fast but also cause you to go bankrupt fast too: never forget that.
Find an Exchange
In order to trade, you need to use an exchange as we mentioned above. Otherwise, you cannot sell, trade or buy any cryptos. The choice of exchange is of great importance in order to carry out all these transactions smoothly and quickly. We won’t recommend a specific address, but when choosing an exchange, make sure it allows you to trade even during peak times.
Cryptos, as we mentioned, are volatile, and their prices can fluctuate within minutes or even seconds. These transactions must take place as soon as you place a Buy or Sell order. Most crypto trading strategies (arbitrage tactics, for example) yield results based on how fast you can execute these trades. If you use an exchange that does not allow you to trade when prices are rising or falling rapidly because it is “too busy”, you will not be able to use most tactics that will allow you to make profits. Therefore, choose exchanges that have a strong server infrastructure and offer local servers if possible (i.e., those that also have servers in the country you live in).
In addition, beware of the exchange’s commissions. For every transaction (buy, sell, swap) you make on an exchange, you have to pay a certain commission, which is usually paid with that exchange’s own crypto coin. This means there will be another crypto to follow, and traders trading with low stakes can lose a lot over time due to commissions. Before choosing an exchange, make sure you look at the commission amounts.
Stay Away from Risky Methods
If you are not a professional investor and use your own savings, stay away from all risky tactics. Simple strategies will almost always work best for you. For example, you can buy a crypto that you expect to increase in price at the ICO stage and sell it after making a 2x profit. This will be a simple but effective and low-risk investment. “Buy cheap, sell expensive” may seem like simple advice, but it really works.
The vast majority of bankruptcies in the crypto market belong to traders who chose to use tactics such as “leveraged trading” that offers incredible earning potential. Such tactics can earn you as much as 100x your investment if you are lucky enough. The problem is that they offer this in exchange for taking a very high risk because if you lose, you lose 100 times as much.
The basic and most important rule is not to be greedy. The majority of crypto traders, unfortunately, forget this. They continue to constantly increase the risks they undertake in order to earn more. When they succeed a few times, they begin to think that it is impossible for them to lose. This is a misconception that gamblers often make and is even known as the “gambler’s fallacy”.
