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There are two types of people who want to know how to trade with cryptocurrency. Those who can’t see the trees for the forest, and those who can’t see the forest for the trees.
One person sees the vast magnitude of cryptocurrencies as “Bitcoin and everything else”. This person goes in blind, buys some BTC or something similar on whatever exchange is selling, then awaits the outcome with enthusiasm.
Another person sees that there are thousands of currencies actively being traded with more being added as the days go on. This person feels suddenly overwhelmed at all the choices of currencies and exchanges and laws that he or she fears it will all go bust.
Let’s suppose you’re considering whether or not to invest, but are leaning towards starting. That’s why you’re here. Never forget the two main rules of investing in anything.
- Never invest more than you can afford to lose.
- Buy low, sell high.
- Don’t forget number one.
If you’re here, you’re already considering the idea, so let’s dive right in.
Excuses And Refutations
I don’t have enough money to get started.
Sure you do! Most exchanges, such as Coinbase, are free to join. If you’re not sure where to start or which currency to buy, just peruse the list of markets (Coins or Cryptocurrencies) that the exchange you joined offers.
I have yet to encounter an exchange that doesn’t offer Bitcoin (BTC). Besides Bitcoin, most exchanges offer at least several other favorites. Some exchanges offer over 1000 options. Don’t get carried away or scared off. Pick one that’s been around for a while.
You don’t have to invest much. Sometimes, an initial investment of $10.00 is sufficient. You can’t afford a Bitcoin? Or even an Ether? Fear not. Most of the bigger coins can be bought in percentages.
Yes, the exchange will most likely have a fee when buying and exchanging. But those fees are very small in most cases.
There are so many coins! I don’t know which one to choose.
The first thing you need to do is decide whether you want a coin in hopes of it gaining value, or whether you want a coin with stable value (stablecoin). There are plenty of choices either way, and you’ll find thousands who will defend or slam just about each and every one.
Picking a stablecoin will almost perfectly guarantee that you lose none of your investment – ever. It also guarantees that you will gain nothing from it. If you have ten dollars in a stablecoin such as Dai or Tether, you will always have that ten dollars in Dai or Tether, until you decide to buy more, sell it, or exchange it.
If you’re looking to make a profit, then you’ll want a healthy coin with an unstable value. The favorites are solid choices; they’ve gone up and down repeatedly, but investors, whether new or seasoned, retain faith in them.
Most exchanges list currencies by default in order of popularity. Bitcoin is always at the top. Lately, it’s been followed by Etherium. Litecoin (LTC) maintains a noticeable presence. If you want to be brave and go with something controversial, try Ripple’s XRP.
Just remember, anything that can increase in value can also decrease, which is why you NEVER ever invest more than you can afford to lose. If you’re poor, go with $10 or $20 in BTC or LTC. Billionaires may want to be more aggressive and start with $100,000 until they’re more comfortable.
What if the Internet crashes? Crypto will be worthless and I’ll lose everything!
If the Internet crashes, there’ll be a lot of problems more pressing than cryptocurrencies. Even fiat (government-backed) money will be endangered. Governments will falter, businesses will flounder, etc., etc.
There are places to store your cryptocurrencies besides the Internet. Hardware wallets that are the size of keychains can hold your digital money. You can even make a paper wallet. Scary stuff.
If you’re seriously worried about the Internet crashing, you need to stock up on canned goods, weaponry, and medicines. Some of us are old enough to remember the Y2K scare. I was at work at a software firm and nothing exciting happened, whatsoever. But I digress…
I just don’t know enough to invest.
There are plenty of ways to learn! No expensive courses are necessary. You don’t need to spend hundreds of dollars on books from Amazon – although buying a few to study as you go along can’t hurt anything.
Websites like this one are great places to start. When you’re savvy enough to start day trading and branching into Forex, there are sites with far more information.
Start lightly and learn as you go. Talk to other investors, read a few books, check plenty of online websites and articles and charts. You’ll get it. No need to become a master unless you want to invest millions of dollars.
My friends and family are against it.
Depending on your age and living circumstances, why care? Don’t invest more than you can afford to lose and you won’t ever lose anything noticeable. Take your time. You don’t need to explain everything to caustic debaters. It’s your life.
Steps To Starting That Portfolio
Join An Exchange Platform
Coinbase is one of the most popular exchange platforms for good reasons. It’s easy to navigate and offers a reasonably sized market list.
Making an account is easy. You’ll need to provide a picture of your ID and submit your bank account information. Coinbase is trustworthy with such things.
Whichever platform you choose, most have a built-in wallet to hold your crypto. Unless you’re buying hundreds of dollars worth of crypto, the exchange’s wallet should be enough. Otherwise, you’ll want to open an account with an online wallet or buy your own hardware wallet.
Select Your Cryptocurrency And Buy It
Unless you’re feeling super lucky and don’t mind a serious risk, pick one or two popular currencies to invest in. Less popular ones are either going down to quickly or haven’t been around long enough to gain trust.
If you followed my advice and opened an account with Coinbase, they have several currencies that will give you free coins for watching a series of videos. I got about $40 in crypto that way. Not too shabby.
Keep An Eye On The Market
Watch your coin’s value go up and up and down and down. Don’t make any panic sales. The biggest part of being an investor is knowing the right times to buy and sell.
Serious investors will wait out a period of heavy losses rather than sell for less than what they paid for something. Occasionally, however, even the toughest investors will make the decision to cut their losses and go elsewhere.
The difference between patience and humbly acknowledging defeat is different for everyone. Just don’t freak out every time a coin’s value goes down. For the most part, they rise again.
Autotraders, also known as trading bots, keep an eye on the market for you. They eliminate the rash decisions created by escalated emotions. A bot won’t sell your crypto at the first sign of a drop. It also won’t buy your best friend’s recommendation of a new coin based on the developers’ good looks.
If you are unsure of how to utilize a bot’s services, get a paper account to start with. Paper accounts are funded by pretend money. You choose how to invest your pretend money by giving the autotrader your chosen parameters.
Sound confusing? Don’t worry. The money is pretend. When you know how to make a little profit in fake money, put in the real thing and let the autotrader do its job.
My personal recommendation is Cryptohopper.
You’re On Your Way!
Happy trading! Are you ready to start? Still holding back? What did I forget? Just let us know what all is on your mind in the comments below! Thank you for reading.