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How To Start With Crypto: Trading or Investing?

Ready to start investing in crypto? Our guide for beginners will help

They said it would never happen again, they said it was just a fad, in religious texts it would be referred to as the second coming, we are of course talking about the most wonderful of times; a cryptocurrency bull market.

The naysayers said it was dead, a failed dream that could never succeed, the idea of regular people being in charge of their financial future was merely hippie fantasy. The reign of the current financial systems and the FIAT currency that props it up could and would never be overthrown. Well it’s happening and adoption has been so strong banks that were once stubbornly opposed have had to open up digital asset divisions, countries are considering Central Bank Digital Currencies (otherwise known as CBDC), progressive countries are drawing up regulation to embrace the new asset class while those that dig their heels in and resist the change will be left in the dust. 

It’s a beautiful new day, Crypto millionaires are being made in abundance, the chat of Lamborghinis can be heard across social forums, euphoria is in the air and everyone wants a piece of the action so just how do you get involved and most importantly how do you avoid losing all your money while you go after these previously unattainable goals?

It looks so simple, buy low sell high become wealthier than you could ever imagine why isn’t everyone doing it? The fact is it’s not as easy as it looks, the statistics show that 90% of people who dare to venture into the markets fail to make money, 80% of those will lose some if not all of their money invested while the remaining 10% will break even. The final 10% that actually make money are those who commit vast amounts of time learning and honing their craft, their success comes after many losses yet it’s their perseverance that eventually allows them to come out on top. 

Now that we’ve got that warning out of the way there is absolutely no reason why everyone can’t be a part of this revolution and make some good profits too, in the same vein this article should in no way be misconstrued as financial advice it’s merely our musings on the crypto landscape and the opportunities that are available.

Risk Management

Your number one priority in any investment should be risk management. In its simplest form it means don’t risk more than you can afford to lose but more importantly protect your money like it was your child.

Start small, maybe $100 and see how you do with that because if you can’t manage to hold on to that then what chance do you have with larger amounts.

Plan your trades, and in the beginning do paper trades to test your theories on the markets, if these consistently play out in the manner you thought then you can start to risk some capital. Learn when to be greedy and when to be more conervative and always take profits, no gain is realised if it’s not cashed out to whatever you’re trying to accumulate.

Crypto is one of the most volatile markets there is, you can win and lose a fortune in a matter of minutes, if you don’t take precautions then you may as well go to your local casino and put all your money on red or black the odds will be the same.

Investing vs Trading

Before you start you have to decide what type of involvement you are looking for in the markets and how much time you are able to commit to research and analysis.

For many just getting into the markets it might be prudent for them to spend some time researching various projects and allocating funds on a longer term basis with a clear take profit limit.

If you have faith in a project and believe it to be undervalued a simple yet effective strategy would be to buy $10 worth once or twice a week on a regular basis to build a position. If you employed this tactic, buying $10 once a week, with Bitcoin over the past year you would have invested a total of $530 and that investment would now be worth $1715 a 223.75% increase (these numbers are accurate at the time of writing).

Meanwhile if you still wanted to trade on a regular basis you could have spent the past year learning and could now use the profits you made with Bitcoin to start without touching your initial capital. 

If you really wanted to be hands off you could also invest in one of the various managed portfolios that are on offer but be cautious about handing your funds over to a random company, make sure you do your research properly as there are a lot of scam artists out there.

Undersand your crypto trading strategy and how to use research tools

How to buy

There are several options such as Over The Counter (or OTC) for larger purchases when you don’t want to affect the market itself and you’re looking for a discreet longer term investment, most exchanges now offer this.

However, for average investors the easiest options are either to join a credible exchange such as Bitstamp and Binance or alternatively purchase through a website such as crypto.com or uphold you can even buy through paypal these days.

While it may seem daunting at first the process is a lot simpler than it once was, all exchanges now accept debit or credit cards, you can also use bank transfer and they all have clear instructions in the help sections if you’re finding it all a bit tough to navigate.

Once you’ve purchased your crypto you can keep it on the exchange wallet if you’re planning to trade with it regularly. However, if you’re planning to hold it for a long time it might be wise to purchase a cold wallet such as a ledger or trezor hardware wallet as these are offline storage options that are incredibly difficult to hack, think of them as a private vault for your crypto.

Research Tools

Like anything you turn your hand to you should be regularly developing your knowledge and honing your skill set. There are a number of online tools that will really help you in this field. The first port of call should be Investopedia, it’s a one stop shop for all things trading and investing, there might be more in depth websites but this is a great starting point as everything is explained in a clear easy to understand manner. Other sites that will be particularly useful in the crypto space are coinmarketcap.com, coingecko.com and coinmarketcal.com these will give you a basic overview of the asset you’re interested in and the future events associated with that asset plus links to their websites and info on where the asset is being traded.

Social media is another great tool for finding out what’s popular in the space and the general sentiment around that asset. However, you should always do your own research before investing don’t blindly follow some twitter influencer’s suggestion because they have thousands of followers, you have no idea where they entered the market (or if they even did) or what their intentions are when shilling a project, they may just want their followers to pump an asset so they can dump their bags or worst still they may be being paid to promote a project. Always do your own research.
Now you have the basic tools to get started go forth and make your millions or lose the lot either way enjoy the rollercoaster that is crypto, it’s not for the fainthearted. 

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