The Most Comprehensive Guide to Buying Cryptocurrency
Cryptocurrencies have gained considerable attention from people, especially the investors in the last few years. Many people have made money investing wisely in crypto, while others have lost thousands of dollars attempting to make fast money.
A lot of people want to invest in crypto and search the right information on how to do it right. This article offers a comprehensive guide for newbies who want to make money investing in crypto.
Type of crypto
Before 2015, there were rare alternatives to BTC, now there are many other coins (known as altcoins) that you can choose to invest. So, take some time to go through the best coins and study the projects behind them. This knowledge will help you to invest wisely.
Buying or trading
There are two ways to buy Cryptocurrencies – buying at some special places (crypto ATMs at your place or buying it on platforms like Localbitcoins) and trading at exchanges. Both have their pros and cons, and you need to consider them before investing. Traders can speculate on the current price of a cryptocurrency without the need of taking ownership. On the other hand, buyers have to pay the full price of the number of units they want to buy.
Consider all the risks
Cryptocurrencies are volatile and can rise and dip with the market conditions within a short time. For instance, in January 2018, an altcoin Aeron rose by 337.29 % in less than 24 hours. Also, your country can outlaw the cryptocurrency exchange and trading anytime, and you can lose all your invested money. Therefore, you must invest only the amount of money that you can afford to lose. Try to diversify your investments in different assets or at least different coins.
Invest for long term
Investing money in cryptocurrencies for short term is risky as the prices may fluctuate any time, and the price can dip within a few seconds after the purchase. So, invest for the long term creating a well-diversified portfolio and pay attention to the values of cryptocurrency.
Cryptocurrency exchange
Exchanges are the places where people buy or sell cryptocurrencies. Traders need to choose a reliable exchange, for example, Digitalterminal.net, to buy or sell cryptocurrency. Choosing an exchange mind such factors as quality, reliability, fees, liquidity, security, user-friendliness, purchase, and trading volume.
Stay tuned
Short term trading takes advantage of breaking news and current events to make quick money. It is good to keep an eye on the news and rumors, as they have a high influence on the crypto markets. Doing so will enable you to create your strategies for buying, holding, and selling crypto for a short term.
Market sentiment
Cryptocurrency traders frequently switch between multiple positions. Any position you want as an investor should have positive market sentiment.
Liquidity & Order Book
The order book is the number of buying and selling orders placed for a cryptocurrency at a specific price. Also known as market depth, the order book is used as an indicator of liquidity that is the ability of a cryptocurrency to be bought and sold without affecting its price.
It looks like:
For example, if you want to sell a bitcoin for $8000, it would be considered a market order and joins the order book. It would sit in the order book until a buyer purchase it for $8000. Traders prefer liquid cryptocurrencies, as it would not affect the price if they attempt to exit a position.
Stop Loss
A stop loss is a useful tool to decrease risk in trading. You can place a sell-stop loss to your buy-in price to minimize the risk and limit your loss on an investment. Similarly, a buy-stop loss enables you to collect profits if your cryptocurrency hits a price above your set buy-in price.
To sum it up
There are no limits to learning how to trade cryptocurrencies. However, this little guide will help you to have a basic idea of buying and selling crypto. You need to research the crypto market, create strategies, learn the fundamentals and technical analysis to make money in this volatile crypto world.
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