A Beginner’s Guide to Trading Cryptocurrency

Cryptocurrency trading can be tricky for beginners—there are so many things to keep track of, from market prices to the volume of available tokens. How much do they cost? What are we geo-locating? Are there any good opportunities to buy or sell? These are just some of the questions you’ll need to consider as a crypto trader.

If you’re just getting started with crypto and want to avoid making rookie mistakes that cost you money, here are a few things to consider in order to avoid the most common pitfalls. Still, as with all financial products, you should do your research and make sure you are aware of risks and laws that may apply in your jurisdiction. Simply put, speculative crypto trading is risky and should not comprise the entirety of one’s investment portfolio.

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What Is Cryptocurrency Trading? 

Cryptocurrency trading is the buying or selling of digital assets on an exchange. You are trying to take advantage of price fluctuations within the market to make a profit. Trading is either short-term or long-term (with short-term trading often done over a couple of hours or days). Long-term trading is done over weeks, months, or even years. Before you begin trading, you’ll need to understand how the market works and how to find the best price for the asset you want to buy ors ell.

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Crypto Market Hours: When Does the Market Open and Close?

The crypto market is open 24 hours a day, 7 days a week. You can trade at any time of day or night and every day of the year. As you might expect, there are certain hours of the day when the market is more active than others. Experts say that the best time to trade is during the Asian market hours, which are the hours between 8 AM to 6 PM in their local time zone. This is when there is the most volume in the market, which means you will have the best chance of getting the best price. Typically, the weekends are quieter as traders take a break from the hustle and bustle of the week.However, many businesses take weekends off too. This means that the market is a bit quieter, and you may have a better chance of getting a better price. 

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Trading Strategies for Beginners

There are so many different trading strategies that it would be impossible for us to cover them all. That said, there are some common strategies that many beginner crypto traders use. What time of day do you trade? Are you day or night trading? Are you trading on an up or down trend? All these factors will affect your trading strategy. Take a look at these common strategies and see if one of them is right for you.

Day Trading

Day trading is the process of buying and selling an asset within the same trading day. You’re looking for quick movements in the price of the asset and will often close the trade before the end of the trading day. You’re almost always going to be trading on an up or down trend and will have to have a very quick reaction time to make sure that you get out before the trend changes.

Swing Trading

Swing trading is similar to day trading in that you want to make quick movements with your investment. The difference is that you’re looking for slower, but larger price movements that take place over several days or weeks. This is a great strategy if you have some free time to look at the market and see what’s going on.  

Position Trading

Position trading is when you hold an investment for a longer period of time. This could be a few days, weeks, or even months.This is a great strategy if you want to buy an asset that isn’t currently at a good price. You can wait for the price to drop and then buy when the price is lower.

Margin Trading

Margin trading is a high-risk trading strategy that is best left to experienced traders only. In margin trading, you borrow money from the exchange to buy more assets than you’re allowed to purchase outright. While this can be a lucrative strategy, it can also be risky if the price of the asset you’re trading drops below the amount of your loan.

There are a lot of different strategies that you can use when trading cryptocurrencies. The best way to learn is to try them out and see which one is best for you.

Helpful Tools for Crypto Traders

There are a variety of tools out there designed to make trading easier. Here are a few of our favorites:

Cryptocurrency Price Trackers

Most crypto traders keep track of the market price and volume of different tokens and coins. These price trackers are like stock market trackers but designed for crypto.

Trading Charts and Graphs

Charts and graphs give you the ability to track different tokens and coins. You can see the price of a particular coin or token over some time. This helps you to decide when to buy or sell.

Crypto Trading Chat Rooms

Join a chat room where you can talk to other crypto traders and get their advice. You can also use these chat rooms to track and follow the advice of more experienced traders and help you build your knowledge base.

Common Mistakes to Avoid

Not having a defined trading plan.

You’ll most likely be more successful if you have a defined trading plan that you stick to. This includes your daily trading hours, what you’re looking to trade, how much you’re willing to risk, and what your exit strategy is.

Not tracking your profits.

You need to know how much profit you’ve made and how much profit you’ve lost to make better decisions in the future. You can track your profits with a trading spreadsheet. This will also help you to understand your profit and loss.

Not keeping track of your losses.

It’s easy to forget about the losses you’ve made. If you don’t keep track of them, they might never be recovered. Make sure that you keep track of your profits and losses so that you can learn from your mistakes.

Manage your expectations.

Trading is not about getting rich quickly. It’s about making smart decisions that help you to grow your money over the long term. If you’re being greedy and trying to make a profit too quickly, you might make a mistake that costs you money.

The Risk and The Rewards

While crypto trading is an exciting new opportunity to build wealth, it can also be very risky. So, take your risk management philosophy seriously. Traders who want to minimize their potential exposure and worst-case scenarios must have a comprehensive plan to understand how much they are willing to lose and able to lose to avoid financial ruin. This is true for all types of investment, but especially for crypto, as it is extremely challenging to consistently predict future market behavior.

Traders should always look to continue educating themselves and examining their risk threshold. Acutely aware of the need for those looking to achieve financial freedom to diversify their portfolios, Sprocket is a platform positioned at the intersection of digital asset trading, decentralized finance, and traditional banking. Sprocket is on a mission to open access to both conventional online banking services as well as new blockchain-enabled investment opportunities.