A cryptocurrency is a form of digital the currency that lets you make online payments to other people or businesses without having to go through a third-party like a bank. Records of these transactions are stored in a sequence of data blocks called a blockchain, which is stored and duplicated on thousands of computers around the world; this is how the system remains relatively accountable and transparent.
There are currently about 1,500 types of cryptocurrency, including Bitcoin, Ethereum, Ripple, and Litecoin. You can buy the coins in a variety of ways, including paying cash for them on an exchange like Coinbase; providing goods or services in exchange for the currency; or purchasing them from a Bitcoin ATM. After you’ve bought cryptocurrency, you store them in an “online wallet” or on an external hard drive, cold storage.
Initial Coin Offerings (or ICOs), which involve an investor purchasing cryptocurrency coins that aren’t part of a registered offering, but that provide the promise of a future stake in a startup venture. In these cases, the startups create their own “coins” to sell to investors.
WHAT IS CRYPTO TRADING?
Crypto trading means investing in cryptocurrencies by using a combination of fundamental and technical analysis.
HOW TO GET STARTED WITH CRYPTO TRADING?
Getting started with crypto trading is not that much different from any other kind of trading - you first need to spend a lot of time working on your strategy, tweaking previous performance to get a little better each time.
However medium term investing in crypto doesn't have to be quite as hard. Investing and day trading are two rather different styles. Day trading is very difficult because it's extremely sensitive to any inconsistencies you may do as a trader, regardless of the strategy you end up using.
The way I trade crypto is 'active investing'. Meaning that I will hold the buy positions for months on end but on occasion, I will also sell them and hold the 'short' position for a week or two to boost income. Any trader must have a very good knowledge of candlestick patterns - price action is always key in any type of trading. I've had great success investing in crypto through supply/demand concept (which I also teach on Udemy where I have over 200 students enrolled this year alone). I use Weekly chart candlestick patterns to enter my long positions with a combination of swing extremes and price hitting a supply area on
the Daily chart to book profits. However please bear in mind that although this may sound simple, it takes years to hone any trading strategy and a lot of hard work, journaling, record keeping and tweaking
- both the strategy and yourself as a person psychologically!
WHAT CRYPTO COINS IS BEST FOR TRADING?
If you're after the highest volatility, most of the 'popular' cryptos are just fine. They will all move 6-8% on average per day when the market is going through one of the four phases of market cycles (which happens in any market, regardless of asset class). But if you're looking for a long term investment with the highest possibility of risk/reward, I would say that Ripple (XRP) is likely your best bet. Although different from regular cryptos (you don't mine it), XRP is currently technically a 'penny stock' - meaning its price is less than a dollar.
But what's quite interesting, current financial system has already started adopting the technology behind Ripple (although not XRP) in the background on the down low for its settlements - including a well-known bank Santander. Therefore looking at it from a growth potential point of view, if banks do end up adopting XRP this could skyrocket the price of XRP towards $50 or even higher. Meaning if you invest even a modest $100 in XRP, once the rise happens you'll be looking at making over $12,000. Not bad!
Bitcoin is no longer a super-profitable opportunity because the price has risen over $10,000. So if you are aiming to make any serious profits from it, you'll need a large upfront investment to make it worthwhile. This recent rise in cryptos is because Facebook announced the creation of their cryptocurrency called LIBRA which is backed by some pretty large players such as Visa and Paypal. This move has brought the cryptos back into focus, resulting in a rapid increase in price.
WHAT COINS HAS LOW RISK?
Low risk is any coin that is still fairly low in prices - such as XRP and Stellar Lumens (XLM). However, with Stellar Lumens, low risk likely comes with low growth potential. It suffers from the same problems as Ripple. The company that created XLM (Stellar Networks) has its own set of features and services in the blockchain space. But just because other institutions may adopt the Stellar Network technologies, it doesn't mean that they will start using XLM or XRP for their actual transactions. So in this case, should either of these companies ever decide to go down IPO route, it would probably be a better investment to purchase their stock outright, rather than investing in their coins. However, from a risk/reward perspective, there is a possibility of very low risk and a huge reward just buying some XRP and XLM. Literally, nothing much to lose and all the upside to gain.
WHAT EXCHANGE IS BEST FOR CRYPTO TRADING?
The most well-known exchanges are:
Coinbase, Okex, Bitrex and of course Binance, which is the biggest of
Personally, I use Coinbase and eToro due to the ease of use. Plus Coinbase has a debit card linked to the wallets.
WHAT MINIMUM INVESTMENT TO GET STARTED WITH?
You can start with quite small amounts. $100-$300. However, this will obviously depend on your personal finances. If you're someone who is quite secure financially, you may want to start with $1k instead. But regardless of your level of disposable income, you will still need to spend time learning about price action and strategies, as well as learning more about fundamental reasons why the crypto price may increase or decrease.
HOW MUCH CAN I MAKE WITH CRYPTO TRADING?
Anytime someone asks me how much they can make; I always ask them: how much are you prepared to lose?!
Trading and investing is not for everyone. It takes a very disciplined mind and a highly analytical nature for success and consistent profitability. Most people don't have these traits. Trading is a psychological game first and foremost. If you are someone who comes from a professional background that required you to spend hours and hours and years honing your skills methodically, then sky's the limit in trading. But if you've never done anything like this, then you're looking at years of drawdowns and lots of money lost as you battle your own psychology and fight/flight response.
Trading is not gambling contrary to popular belief - it's a very structured environment that is ruled by supply demand areas, which are visible on the chart if you know where to look. But it's such a complex skill akin to playing a musical instrument to a virtuoso level: it looks like magic to those who don't know what it takes to get there!
To make consistent money trading you need:
1. You need to take a solid strategy (people usually don't stick with trading long
enough to develop one!)
2. Unusual emotional resilience
3. A scientific mind to tie up vast pieces of information into a viable
Talking about actual returns is completely pointless because they will vary wildly depending on how you manage yourself, more than anything.
Having said that, for the right type of personality, trading is incredibly intellectually stimulating, no day is the same. When done properly, trading doesn't take much of your time and can offer quick windfalls. The issue is that a lot of people will get excited about the initial windfall and promptly trade themselves out of their profits soon after! Therefore a level of indifference and detachment from profits AND
losses is key if you're looking to make consistent profits as a crypto trader.
Another problem is that cryptos stay flat for long periods of time - another reason why we don't really daytrade them at Blahtech, but instead we do a combination of multiday swing trading and active investing. Sitting in a shorter-term trade that goes nowhere and watching it go nothing for days on end is very exhausting psychologically. So before you start wondering how much money you can make, ask yourself if you're strong enough to spend the next decade or so, testing your self-discipline to its absolute limits!
If none of these scares you off and you really want to become a crypto trader, then have a look at our website for a trader training courses where we teach professional strategies of supply demand and market profile - two strategies that have a known statistical edge.
Supply/demand concept and market profile are the two most commonly used tools of professionals but are almost completely unknown to the masses.
source: Deeyana Angelo(marketstalkers).
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