How to start trading cryptocurrencies

by Commodity.com
Updated: July 3, 2020

This article will walk you through the process of how to start trading cryptocurrencies.

Cryptocurrencies have been around since the launch of Bitcoin in 2009, but only in the past few years has the concept of trading cryptocurrency become mainstream. This article will walk you through the process of getting started.

Pros and Cons of Trading Cryptocurrencies

Before we proceed any further, let’s take a look at the pros and cons of trading cryptocurrencies.

Pros

  • Cryptocurrencies are volatile, which means it’s possible to earn large profits.
  • Because cryptocurrencies are becoming more mainstream, there are many reputable and regulated brokers.
  • The popularity of trading cryptocurrencies also means there are many useful guides to getting started.
  • Cryptocurrencies are highly liquid, especially Bitcoin, the most valuable and well-known digital asset.

Cons

  • Due to volatility, the flip side of potential large profits is potential large losses.
  • The majority of all retail accounts lose money when trading crypto.
  • Cryptocurrencies are prone to security issues, which have caused major problems in the past.
  • Being unregulated, cryptocurrencies embody a degree of uncertainty.

Trading Cryptocurrencies

If you decide that trading crypto is for you, in spite of the risks and downsides, the first thing you should do is choose a broker.

There are many available, though the options may narrow based on where you live. (Some platforms restrict their usage to customers in select geographic areas and cryptocurrencies are even illegal in some countries.)

When choosing among the brokers that serve your geographic area, you should consider the following:

  • Whether the broker is regulated by the local authorities.
  • The broker’s reputation and what existing clients think about the services they receive.
  • Whether you can create a demo account to use and learn with.
  • The selection of cryptocurrencies supported (be sure to find one that offers the crypto options you’re interested in).
  • The quality of the platform. How easy is it to do research on the trades you want to make? How easy is it to trade?
  • Whether copy trading and social trading options are available to you. (These are options that allow you to copy the exact trades of successful individuals on the platform.)

Researching Your Trades

Once you’ve decided to start trading, picked a broker, and signed up for an account, you’re ready to begin researching the trades you want to make.

At a minimum, you need to decide what cryptocurrencies you’re interested in trading. Bitcoin is the giant of the industry with roughly two-thirds of the total market capitalization. But there are other good options, including Ethereum and Litecoin.

A good place to start is by reviewing analyses and opinion pieces regarding the options available to you at your broker.

In terms of trading strategies, you need to at least be up-to-date on what people are doing and saying in the cryptocurrency markets. Knowing what’s going on in the traditional economy is also critically important. In addition, traditional trading tools ⁠— such as technical indicators ⁠— can be useful.

But remember: trading crypto is extremely risky and you shouldn’t trade what you can’t afford to lose.

Summary

There are upsides and downsides to trading cryptocurrencies, but if you decide that this opportunity is right for you, the first step to getting started is to find and sign up with an appropriate broker.

After that, you can make your own way: your research, analysis, and goals will point the direction.

More info

“Best CFD Brokers Reviewed: Who’s The Best?” at commodity.com

One of the best brokers for trading cryptocurrencies is eToro, which offers both short- and long-term investments, copy trading, and a large number of crypto options.

Signing up and getting started with eToro is a fairly simple process. You begin by clicking Join Now on their homepage. eToro walks you through the signup process. You will have to provide basic information about yourself, agree to the site’s terms and conditions, and provide proof of identity and a simple questionnaire.

eToro can take a couple of days to verify your account. Until that is done, you will not be able to trade. You will, however, be able to use a demo account.

If you are interested in a different broker, you’ll find most provide a similar sign-up system.

Internal links

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