Do you want to trade cryptocurrency, but you have limited knowledge of what you need to do? Well, We got you covered. In this article, we will discuss everything that you need to understand about cryptocurrency trading, be it with a broker or an exchange.
We will also provide you with some tips and advice about reading the market, analyzing the situation, and using the volatility of cryptocurrency to your advantage. So, without further ado, let’s start:
What do you need to understand about cryptocurrency trading?
Before we provide you tips on how to trade in cryptocurrency, we will first discuss the things you need to understand. Some of these include the growing currencies, the return on investment (ROI), understanding how the Blockchain works, and the best platform to trade-in. They will be tackled in depth below.
The cryptocurrency with the best growth
There is no doubt that Bitcoin is the cryptocurrency with the best growth. If you want to be in the cryptocurrency with the best increases in value, choose Bitcoin (BTC). Bitcoin is leading the crypto industry with a $128 billion market capitalization. Second in the race is Ethereum (ETH), with $19.4 billion market capitalization.
XRP (XRP) is placed third, with $8.22 billion market capitalization. Other runner ups include Tether (USDT), Bitcoin Cash (BCH), Bitcoin SV (BSV), and Litecoin (LTC), in that order. You can go with any altcoin that you prefer, but if you want to be on the cryptocurrency with the best growth, go with the ones mentioned in this article.
Cryptocurrencies with the best Return on Investment (ROI)
This section will rank the different cryptocurrencies based on their ROI for the first quarter of 2020. Dash leads the pack, with a vast 25457.0% ROI. This means that the price of DASH has grown 254 times its original price of $0.2574.
Next is Binance Coin, with 11309.9%, followed up by IOTA with 9000.0%. NEM takes the fourth place with 8229.6%, while Bitcoin takes a disappointing 5th place with just 4698.3% ROI. Ethereum takes the 6th place with 4622.6%, Neo is at 7th place at 3571.1%, and XRP is at 2846.0% ROI.
Not all cryptocurrencies experienced positive ROI, however. Some altcoins ended up with negative ROI, also known as value loss. They are Bitcoin cash with 60% negative ROI, Cosmos with 69% negative ROI, and Zcash, with 99% negative ROI.
Due to the coronavirus outbreak, these losses did not come as a surprise. The pandemic has impacted the economy and the stock market in the world. As such, this trend of negative growth is expected to continue for a while.
How does Blockchain work?
For traders that are a newcomer to cryptocurrency, understanding blockchain is probably the most complicated and puzzling areas. The Blockchain runs and sustains the cryptocurrency space. The potential for Blockchain is vast. Companies around the world are checking out methods to implement this technology to their systems.
The Blockchain contains three crucial components, cryptography responsible for securing the system through the use of encryption, then a decentralized network that includes a public ledger, and a way to process the transactions and other records that are required by the system.
In a blockchain, there are private keys and public keys. The public key is the public address that you send out to people to receive cryptocurrency. In contrast, the private key sends cryptocurrency from your account. To ensure the safety of these keys, it is encrypted with a digital signature.
This digital signature is processed in a decentralized ledger with the help of people mining cryptocurrency all over the world. The continuous process of encryption and decryption requires high computing power.
Transactions are validated with people mining from their computers. This means that the Blockchain sustains itself, and as long as people keep mining, the blockchain network will keep running.
The information provided by the sender and the receiver is compiled in a block, which will then be decrypted by crypto miners. This decryption does not reveal the sender and receiver’s identities, making cryptocurrency transactions anonymous and untraceable.
The best trading platform to choose from
When it comes to the most user-friendly cryptocurrency trading platform, Binance rules, the Binance exchange is made both for newbies and advanced clients. Binance features a built-in preference in its user interface to switch between beginner and advance mode.
This allows you to change the appearance and functionality of the exchange based on your experience level. This helps beginners into not being overwhelmed by too many options at the start, and also helps advance users who want more features.
Additionally, liquidity is not an issue in Binance since it is always included in the list of exchanges with the most volume. Binance also features discounts in the form of BNB tokens, allowing you to save money just by using the exchange.
Bitfinex is among the earliest cryptocurrency exchanges that are good for people new to trading. Bitfinex usually comes with a massive exchange volume, so you shouldn’t stress about ease of purchase and sale while trading on the Bitfinex exchange.
Also, the user interface of Bitfinex is excellent, without any clutter. It also features enough directions and guidelines on every page that can help people with the exchange’s difficulties. If you chose to go with Bitfinex, you would have to prepare your ID for authentication and wait for 15 up to 20 business days before you can start trading.
One of the advantages of Bitfinex is that they have mobile applications designed for both Android and iOS, so you can still trade and do crypto transactions on the go.
3 . Coinbase
Supporting Bitcoin, Ethereum, Bitcoin Cash, and Litecoin, Coinbase is another alternative cryptocurrency exchange. You can exchange fiat currency for cryptocurrency within this exchange so that you can readily trade.
Coinbase is convenient since it enables you to purchase cryptocurrencies by using credit or debit cards.
Additionally, Coinbase provides its users with a Coinbase crypto wallet, which integrated with its trading activities. This makes it convenient to receive and send cryptocurrency to other people to trade or as payment.
How to find the most ideal cryptocurrency broker?
In this section, we will give you some tips on finding the ideal cryptocurrency broker. Even though cryptocurrencies are operating for more than 10 years, there are still many scams, fraud, and theft that you can encounter.
This has caused many cryptocurrencies and cryptocurrency exchange websites to adopt changes to the restrictions concerning cryptocurrency. With the increase of altcoins, the number of exchange platforms has also increased.
These days, platforms have turned out to be the primary way to obtain cryptocurrency. Below, we will list the characteristics of the best cryptocurrency broker.
1. Have a good relationship with their community
This is an essential factor in determining if a crypto exchange is good since it will allow you to determine if the platform’s connection with their community is good. When their products and policies are precise, chances are they are legitimate, and you can trust them entirely since they are not hiding anything.
A broker’s interaction with their community will reveal their business practices and behavior. If people are leaving good reviews about a particular cryptocurrency exchange, and if the trade is active when it comes to daily transactions, you can then trust that exchange.
Do not sign up with a crypto broker that doesn’t provide their terms and conditions, fees, and other essential details.
2. Trustworthy customer support
The customer support of a crypto trader is also an aspect that you should look at if you wish to discover an excellent cryptocurrency trading platform. Their reaction to the inquiries of their consumers demonstrates their integrity in providing service.
You should go with a trading platform that has unique, efficient, and fast customer support. While trading cryptocurrency, you will inevitably have some problems that you cannot solve on your end. As such, you must have access to excellent and functional customer support that responds promptly.
For this reason, customer support is a vital element that can help you assess the dependability and standing of a forex trading Singapore platform.
3. Numerous transaction options and minimal fees
A functional cryptocurrency broker has a lot of choices when it comes to payment methods. The more payment method a cryptocurrency broker offers for receiving and sending payment, ideally, the more established they are in the field.
Additionally, you should consider any deductions and fees that they impose on your transactions. Always compare it with other competing cryptocurrency brokers, this way you will know the standard fee percentage for a good cryptocurrency exchange.
What are the strategies to start investing?
In this section, we will discuss some of the strategies you can employ while trading and investing.
1. Trading on exchanges
Cryptocurrency exchanges are legal in Singapore, and there is no registration required by law. As such, you are free to do trading activities on any exchange of your choosing as long as you have an account and the funds to trade with.
2. Protect your cryptocurrency while trading on an exchange
Some exchanges provide their crypto wallet when you sign up on their platform. Using their provided wallet might be convenient. However, you must have a separate wallet that works outside of the exchange.
This will give you more utility since you will still be able to access your cryptocurrencies even if the transaction is down. Additionally, having different software and accounts for your exchange and wallet is great for your protection.
What you should know about trading on exchanges?
In this section, let’s tackle the two important parts of a cryptocurrency wallet. First, there is the private key. The private key will give user access to your cryptocurrency, and allows a person to send money from your account. As such, you should never give your private key away.
Next, there is a public address. This is the information that you give out to people who want to send you payment. In short, the public address is the one you should give away, and the private key should remain private. Easy to remember, right?
1. Adjust to the volatility of the cryptocurrency market
You need to adjust to the extreme volatility and unpredictability of the cryptocurrency market. As opposed to the traditional stock market, cryptocurrencies such as Bitcoin are known to have meteoric increases in value. Likewise, there can also be huge losses.
You should be prepared to take more risks and be active in trading all the time. Additionally, you should use everything to your advantage, which includes being updated and interpreting news about cryptocurrencies. This will be discussed in further detail below.
2. Follow the news
You should always be updated with the latest cryptocurrency news and developments since they have a direct effect on the increase or decrease in the price of cryptocurrencies.
You must subscribe to websites, social media accounts, and personalities that provide accurate and updated information regarding cryptocurrency. You should also follow the news about other cryptocurrencies, even if you are not trading them.
This is because the most prominent cryptocurrencies, such as Bitcoin, affect altcoins.
Analyzing the news and the latest development of cryptocurrency is always important. You should be aware of whether particular news has a positive or negative effect on the price of cryptocurrency and react accordingly.
For example, when cryptocurrency was banned in China, its rate decreased for a bit. Meanwhile, whenever there are government regulations that support cryptocurrency, the value of cryptocurrencies tends to have an upward trend.
The rules of investing
In this section, we will discuss some of the rules of investing that you should follow (or try to follow). This will ensure that your trading will be as successful and as risk-free as possible.
1. Invest only in cryptocurrency that you believe in
You should only invest in cryptocurrencies and altcoins that you believe in doing well. By doing so, you will be a confident investor, and being confident does a lot for a trader’s morale. However, do not rely entirely on confidence. You should also back up your trading activities with strategies.
2. Invest only what you can afford to lose
This is a tip that originated from stock market trading, and it is also applicable to crypto trading. If the industry is flourishing, it’s really easy to get carried away and invest a lot. Ensure that you continue to be self-disciplined and adhere to your set spending plan.
3. Branch out your investments
Another investment tip from the stock market, diversifying your portfolio, should also be practiced in cryptocurrency. Do not invest in a single cryptocurrency only. You should branch out your investments to multiple cryptocurrencies, to be on the safe side. The reason why is that even if one investment got hit with negative growth, your other cryptocurrencies could still carry you, reducing the risk that you have.
4. Always be updated
This has been discussed earlier, but we still included it here to stress it out – stay updated on the current news. Being updated is your best ace to a profitable trade.
5. Do not fall victim to “fear of missing out”.
Fear of missing out, also known as FOMO, is something that plague crypto trader. Whenever a cryptocurrency experiences a high gain in value, you will be tempted to jump out and shift your investments to that cryptocurrency. That is a high risk to take, and it will be better to just stick with cryptocurrencies that you already have investments in.
The taxes in cryptocurrency trade differs by country. Some countries have relaxed cryptocurrency trading laws, while others impose a tax on it. In Singapore, registering and trading within cryptocurrency exchanges are 100% legal. The city-state of Singapore has pushed a more friendly approach to the emergence of cryptocurrency than some nearby countries.
Cryptocurrencies are not regarded as a legal tender in Singapore. It is instead considered as goods, and due to that classification, it is imposed with Goods and Services Tax, the value-added tax equivalent in Singapore.
People engaged in trading and investing in cryptocurrency should have a steady cash flow to keep it going. Also, you will need a lot of money to be effective at your trading, similar to stock markets.
While you can still trade even if you only have a small number of funds to trade, you will be limited when it comes to earning. If you need additional money to trade in cryptocurrency, why not get a personal loan from GM Creditz? Visit their website now or give them a call at 6588 1886.