Source: Pixabay
The cryptocurrency trading market is coming into its own. While there are still many around the world who are unsure of how to go about buying into crypto, or who just don’t trust it yet, the numbers indicate that broadly, investment is on the rise. This past spring, Asia Times reported that 11% of people in Indonesia — one of the most populous countries in the world — now own cryptocurrency. The same report named other well-populated nations such as the Philippines and Brazil as major adopters as well. And at the outset of 2020, Hackernoon wrote that 14% of Americans owned cryptocurrency. That number may not sound particularly large, but when it’s contrasted with the 12% that own gold, one starts to see just how prevalent crypto investment is becoming.
These numbers are likely only going to grow moving forward, making it more necessary than ever for people who are invested to learn the ins an outs of the crypto market. With that in mind, here are a few of our own tips for how to be a better cryptocurrency trader.
1. Learn Individual Cryptos Well
Even among cryptocurrency veterans, there is a temptation to lump all of these assets in together. Sometimes this is a valid way to assess the market, because cryptos often move in similar patterns to one another. But ultimately it’s important to remember that cryptocurrency is a category consisting of numerous assets with different functions. Bitcoin is not ethereum; ethereum is not ripple; ripple is not tether, and so on. Even if these assets often move in similar patterns, it’s important to learn them as individual cryptocurrencies. Study their histories, purposes, and potential so that you can recognise favourable conditions for one versus others.
2. Do Trading Demos
As you may know, modern investment tools connected to stock markets, cryptocurrency, and even forex often have features that go well beyond the actual trading. They might include social components to connect traders, automated features that can assist with trades, and advice and input from top traders, for instance. Additionally, FXCM’s Trading View Pro points out that some of these same trading platforms can also allow traders to “execute demos” before actually investing. This basically means that with the right trading tool, you will be able to conduct practice cryptocurrency trades — an invaluable way to learn the market and figure out how you want to trade before you put real money on the line.
3. Forget Comparisons to Other Assets
Comparing assets in order to broaden your understanding of a given market can be a good thing. However, associating assets directly with one another may lead to misunderstandings — particularly when some of those assets are still brand new, as is the case with cryptocurrencies. We mention this because right now it’s all too common for people to connect certain cryptocurrencies with other commodities. For instance, it’s common to hear that bitcoin is new-age gold, and litecoin is its silver. There are ways in which these comparisons make sense, but it’s important not to take them for more than they’re worth. Assess cryptocurrencies for what they are rather than what they’re compared to.
4. Set Up Ongoing Education
Most important of all is to consider how you can continue to educate yourself about cryptocurrency after you’ve started trading. Experience may be the best teacher, but you shouldn’t assume that once you start you’ll simply figure it out. Instead, take advantage of the experts, articles, books, and additional content that’s already out there making sense of this ever-expanding market. You might even start with one of the ‘14 Podcasts to Learn About Cryptocurrency’ we’ve highlighted in the past!
Through these steps, you can make sure that you’re prepared to enter the crypto world responsibly, and become the best trader you can be.
