By Nathan Ferguson
The cryptocurrency was first established in 2009 and Satoshi Nakamoto was the first person to launch it and is considered the founder of Bitcoin. At that time, no one valued it and investors found it a foolish idea to spend money on an asset that hasn’t proved itself to be beneficial. Some investors spent some dollars on Bitcoin and the value of the investment was never increased as the crypto industry was still anonymous till 2013-14. Soon it starts getting fame and people tend to invest in it. Those who spent a few hundred dollars became millionaires as Bitcoin started seeing peaks with regard to USD.
Last November, Bitcoin hit over 60,000 USD. Investors went crazy and started putting their money in it, but soon after the value dropped. Many investors put their hard-earned funds in some cryptocurrencies that turned out to be fraud or devalued soon after many investors invested in them. So, cryptocurrency can be rewarding if done in the right way. if you jump into it without prior knowledge, you are definitely going to lose money, most probably by being a victim of scam exchanges or brokers.
The things you’ll need to start investing and trading in cryptocurrencies are listed here, along with advice on specific considerations for beginners. In other words, consider this a starter guide to cryptocurrency trading.
There is no single method for beginning cryptocurrency trading and investment. But I would argue that for all kinds of traders, the crypto Essentials listed below will be the ideal spot for most beginners to start.
Keeping Things Simple
A short and basic summary is here. Stick to the end to get the full insight. Dollars, Bitcoin, and Coinbase are key starter kit items. Alternatively, purchase BTC on Coinbase and hold it there (never forget to employ 2-factor verification).
Coinbase Pro, Ethereum, and perhaps a TREZOR or Ledger are other components of a solid startup kit. In other terms, purchase some Ethereum using Coinbase Pro to avoid costs, and think about keeping your long-term holdings in a physical wallet such as TREZOR.
In addition, more adventurous new users may want to take a look at Bittrex or Binance to trade altcoins, Coinbase or MetaMask Wallet for accessing Decentralized applications and holding tokens, Cryptohopper, or any other simple and direct trading robot if you want to put things on automation, and Cointracking or some other cryptocurrency tax tool that helps you keep a record. In other words, despite being more complex, some beginners might prefer to get directly into technical analysis, trading bots, and cryptocurrencies. and you may want to utilize some tax program if you’re doing that.
In general, one should stay away from Dubious exchanges, doubtful coins, doubtful lending platforms, suspicious ICOs, ambiguous social media posts offering free Token, etc.; small volume exchanges; tokens with limited volume and low market valuation; and anybody who predicts Bitcoin will reach $50000 without mentioning that it may instead reach $5000 or even $500 instead. In other words, beware of cryptocurrency frauds! Although BTC did reach $50,000, it naturally fell below that level first.
TIP: The particular exchange you should utilize may change if you reside outside of the United States. Please look into the best exchange in your area. The rest is common to all.
A Brief Introduction
Why this guide:
The aim of this guide article will be clarified with a little anecdote. When one person first begins producing electronic music, he has no idea where to begin. He tries to get answers from a wide range of individuals, salesmen, and the internet, but only receives a jumble of perplexing responses that lead him to purchase some unnecessary equipment. A DAW (like Logic or Ableton) plus a controller were essentially the solution.
I faced the same issue when I first began investing in cryptocurrencies. I questioned a lot of individuals and received some fairly confusing responses. Nevertheless, the solution for cryptocurrencies is nearly as straightforward as the one for digital music. You require a wallet and a platform to trade on for cryptocurrency. Moreover, as Coinbase offers both a trading and wallet service, the answer is effectively just “Coinbase.” Here is a much more thorough explanation of that response once that has been addressed.
Do Your Own Research
DYOR stands for “do your own research.” I would advise my family and friends to do this. The best option for you may differ from others. Doing your own research is crucial when it comes to cryptocurrency. You should always go with your own investment decisions when trading; nobody online who provides content for free is often qualified to offer financial advice or is in a legal situation to do so.
Prices typically move in waves rather than in straight lines. There are cycles and rotations that affect which coins perform well and when. If you HODL, be prepared to lose money frequently and occasionally for extended periods of time. When you look at the track record of the cryptocurrency market, you can observe that it has been shaped by surges and market fluctuations. One must keep in mind that 2013–2014 occurred, demonstrating that cryptocurrency markets can experience booms and crashes as a result of larger cycles.
Affiliate Links:
When it was possible, I put affiliate links on this page. If you utilize a few of the links to purchase a good or service, in most circumstances we both benefit (this isn’t true if you don’t). None of these products were chosen by me due to the obvious affiliate links; rather, I chose the products for which I wanted to use affiliate links. So don’t feel obligated to use them.
Why do I recommend TREZOR over Ledger wallets in some situations where there are other good options? no justification. I just chose the option I believe has the advantage when there are multiple great choices available. Choosing the best physical wallet for you should be simple once you are aware that such a thing exists. see the following point
Risks Involved
Cryptocurrency is risky and resembles the wild west in its volatility. This situation is a good example of the old saying, “Don’t gamble more than you can bear to lose.” Please be warned that cryptocurrency traders frequently only talk to other people about their wins. Many investors and traders will suffer significant losses before talking about cryptocurrency as if everything was “moons and lambos.” Look at the historical charts over the last two years; try not to get too caught up in the weeks or months. Historically, cryptocurrency performs well in brief surges and moreover spends so much time losing value.
Key Concepts and Things in a Crypto Starter Kit that Make Sense
Let’s start with the fundamentals:
- Exchange
For trading and investing, there is an exchange: Coinbase/GDAX. GDAX for trading the main cryptocurrencies, Coinbase for exchanging USD to BTC, and ETH back and forth. Gaining access to GDAX by joining Coinbase. For trading alternative assets, try Kraken, Bittrex, or Binance (Kraken also trades in USD, but it’s not available in all states). Although Bitfinex is fantastic, newbies should avoid it due to the high entry hurdle. When you join Coinbase and purchase or sell 100 USD worth of cryptocurrency, you’ll receive 10 USD worth of BTC for free.
You can exchange coins for USD or USD for coins. To make sure you are receiving a decent bargain when you trade coins for coins, you must determine the values of both coins. However, when it relates to exchanging pairings amongst coins, the market usually values currencies fairly. Start trading USD for cryptocurrencies until you understand coin-to-coin transactions.
It may make sense to conduct coin-to-coin exchanges to increase your holdings if you want to invest in cryptocurrencies but don’t worry about long-term financial profits taxes. BTC and ETH are required for coin-to-coin trading on the majority of exchanges, making them crucial. Tether (USDT) or a similar stable coin should normally be used on marketplaces if using dollars is not an option).
- Wallet
For long-term cold storage, use a wallet like TRZEOR (a physical wallet; the Nano S from Ledger is a viable option). A replica of the blockchain can only be hosted in a soft wallet. If you wish to manage everything through Coinbase, use the 3rd-party hosted wallet known as Coinbase Vault.
- Trading bot:
Cryptohopper for trading process automation. There are many different bots available, but for a beginner’s introduction to algorithmic trading, Cryptohopper is the best option in terms of cost, convenience, and network. You can start using them without having to pay anything because they give a free trial. If you choose to automate your trading, begin with a very little sum of money until you become familiar with the program. It would be an understatement that automated trading does not guarantee profitability.
- Recommended Coins
The three most essential coins to purchase are Bitcoin (BTC), Ether (ETH), and XRP (also known as Ripple). BTC) is the apparent pick, while Ether is a close second. The best bets, in my view and generally speaking, are a well-researched choice of the top twenty or so currencies by market valuation.
Although BCH, ADA, and TRX, shouldn’t be disregarded, they haven’t been around as long as Bitcoin, Ethereum, Litecoin, or Ripple, for instance, therefore I favor the more reliable, long-lasting coins. If you trade currencies farther down on the list or invest in ICOs, think about leaning more heavily towards the top cryptocurrencies. Utilize Coinmarketcap.com to calculate it. There isn’t a link, but I think Bitcoins and Ethereum should compensate me for promoting them.
- Avoid These Coins
Avoid buying coins that aren’t purchased directly from a reputable exchange. The exception might be a well-known ICO that you took the effort and time to research. To be clear, you should stay away from exchanges like Bitconnect (a fraud), ICOs that seem in any way suspect, and nearly every coin that is promoted online, particularly if it offers rewards like a referring code (the more aggressively they promote it, the worse the idea).
- Taking Care Of Taxes
The tax reporting will become more challenging if you trade or move cryptocurrency around more. When you use, sell, or exchange cryptocurrencies, you must pay capital gains tax since they are considered an investment property. An application like CoinTracking can help you arrange your trades. This is the most complex of the solutions I’m recommending, but there aren’t many other possibilities.
Let’s discuss some bonus information now:
- Reducing Fees:
You can trade cryptocurrencies without paying any fees if you will fund your coinbase USD wallet, transfer the funds to GDAX, and then use limit orders on GDAX. In the absence of this, exchanges and brokers usually charge for orders (market orders may cost more or less depending on the exchange).
- Understanding orders and order books:
Purchase and selling orders are entered into the order book. These are ordered with limited restrictions. Market orders are immediate purchases or sales of limited orders. When certain price thresholds are reached, stop orders are activated. For more info studies on the various order kinds.
- Research:
There are numerous significant websites, but there isn’t just one for research. For more information on technical analysis and to hear a variety of forecasts, visit TradingView. A summary of the market may be seen on CoinMarketCap. Research can benefit from Reddit, Facebook, Twitter, and BitcoinTalk, among other sites. Your ally is Google. Keep in mind that humans make mistakes frequently, and even the finest analysts frequently make mistakes (more often in the short term).
- Mining:
The majority won’t begin by mining. But if you’re curious, you can discover if it’s for you by reading a mining guide for amateurs.
Strategy: In order to succeed in crypto, it helps to have a firm understanding of the chart patterns, investing techniques, and some indicators. Generally speaking, it is prudent to average in & out of positions; avoid going all in at once to reduce the likelihood of market timing errors. Since you are trading rather than investing, using stops is also prudent (do not simply hold onto a position in the hopes that it will rise again; instead, HODL with purpose). Double tops, bear flags, double bottoms, bull flags, and other common patterns should be recognized. Learn to employ tools like Fibonacci retracement levels, RSI, Stoch RSI, and MACD. To learn more about any of those phrases, use Google.
- Forks:
You receive extra coins for holding a coin that forks. You must, however, store it in an approved wallet or another platform that accepts the fork. While forks are a wonderful bonus, you shouldn’t chase them to the point where you end up making terrible trades or investments. Study the fork.
Keep A Level Head And Prioritize Logic And Strategy Above Feeling:
We have feelings because we are human. Trading is hampered by emotions. Your decision to buy HODL and the top into the ground is driven by emotions. Keep an eye out for FOMO in particular (the fear of mission out). Create a plan based on the market’s past performance, and ask yourself why if you suddenly decide you need to change it.
Signals, Pump-And-Dump Teams, Manipulation, And Organic Price Movement:
“Signals” are recommendations to purchase or sell, and software typically generates them. They can, in the best situations, tell you whether a coin is a worthwhile investment or not. Some signals are broadcast in groups (referred to as “signal groups”) and thus are based on reliable information that is challenging to understand without the help of software. These might be helpful.
Pump and dump organizations are this counterparts in the underhanded world. These are the groups that amass a coin and afterward pump (rapidly boost the price), leaving unwary FOMO purchasers to purchase as the pump group leaves the marketplace (as they “dump” the coin). This harmful practice is widespread in the cryptocurrency industry, though. Try to stay away from these groups, and make sure not to fall prey to their schemes.
Let’s face it, there is some market manipulation. Some of what appears to be manipulation, meanwhile, is really just widespread FOMO and speculation. Cryptocurrency prices are very speculative and highly volatile since it lacks some fundamentals.
Bottom Line:
The main goal of a beginning kit is to transfer money from dollars into the most popular cryptocurrencies back to dollars. You’ll probably want to store cryptocurrency and exchange some coins in between. Therefore, you require a wallet and an exchange. Making ensuring my tax information is accurate, checking charts, and automating some trading are all equally important to me.
Finally, capital preservation underlies everything else, including strategy, controlling emotions, and avoiding frauds. Conservative strategies such as averaging in and out, and avoiding pumps and dumps are very effective in the volatile market that is cryptocurrency. Given everything above, in my opinion, a decent beginner kit includes everything mentioned above but also includes the following: Bitcoin, coinbase, GDAX, Ether, dollars, TREZOR, Tradingview, Cryptohopper, and Cointracking or any crypto tax software that assists you to keep records).