By Mark Ackman
Starting out your trading journey can feel a little intimidating, especially if you’re someone who likes to exercise caution before jumping into the deep end. While it is always a good thing for you to be careful, you should not let that become an excuse for you not taking any action.
Therefore, a good place to start in your crypto trading journey is to first learn a few important things about the market and what you should expect. Only after learning about these will you be able to start trading more confidently.
Hot and Cold Wallets
The first thing that you should know about before you start trading is hot and cold wallets. These are two main types of wallets that you can have when you start trading. The major differences between the two are connectivity and convenience.
A hot wallet is an online wallet that you can connect to your various accounts, and it will even allow you to have one wallet be the main source of your funds. However, since it is connected to the internet, you are at an increased risk of getting hacked.
Conversely, cold wallets do not connect to the internet which makes them safer, but that also means that transferring funds from it can be a major hassle.
Test Transactions
Even intermediate traders have no idea what test transactions are and why they are so useful. You want to perform these small transactions to make sure that the money is going where you want without someone possibly intercepting it. It also helps you see if you’re accidentally sending money to the wrong place.
Since sending money over the blockchain often means that it is almost impossible for you to get that money back. So, these tests make sure that the money that you are sending is going exactly where you need it to go.
Crypto White Papers
Cryptocurrencies will always have a whitepaper that they offer to their investors and traders. It not only shows the scope of the project but also goes in-depth about what makes it stand out from other cryptocurrencies. However, what you should be most concerned about are the empty promises and red flags.
If a company is not legit or it does not have the best intentions of its traders in mind, then it will likely make mistakes in its whitepaper. You also want to see the specific details that the company has to offer, which give a more nuanced look at how the company will likely perform. Therefore, you will be able to make much smarter investments.
Security for Your Keys
Keys are essentially passwords that you need to keep track of since they give you access to information about your assets. So, if anyone manages to get access to your keys, you could end up losing all of your investments. You want to keep these keys safe by storing them in a cold wallet, or you can even keep them in the hands of a trusted custodial service.
Be Patient
Finally, and possibly the most important thing that you should know before you start trading is patience. More specifically, you want to make sure that you don’t make any irrational or emotional decisions. One of the key reasons why trading is difficult for most people involved is because it can take a lot of focus and requires people to be impartial.
Furthermore, after you’re done with all of the necessary research to start trading, you just need to wait for the right time to put in your money. Remember that timing is very important since you want to get on when you can make the most money, and then get off before prices start to fall.
Conclusion
When trying to get into crypto, receiving meaningless and often harmful information. But if you just focus on these specific fundamentals of crypto trading, you will be much better equipped to deal with trading as a whole.