How to Start Trading Cryptocurrency

How to Trade Cryptocurrency

Cryptocurrency is a marvel of the digital world. It has revolutionized online payments for millions and captivated investors’ interest with how rapidly it can grow in value. Learn how to trade cryptocurrency in this guide.

Trading cryptocurrency

WHAT IS CRYPTOCURRENCY?

Cryptocurrency is a non-physical currency that facilitates financial transactions – you can use it to make online payments for goods and services. Also known simply as ‘crypto’, types of cryptocurrency include Bitcoin and Ether.

All cryptocurrencies are decentralized as they operate on blockchain technology. So, they’re not backed by the government or any other central authority. This means increased efficiency through factors such as cutting costs, e.g. overhead costs and transaction fees.

Cryptocurrency has been around for over ten years and has seen a general spike in value – to the delight of investors. The record of ownership of cryptocurrency is stored on a blockchain, where transactions between users’ digital crypto wallets are added.

While crypto is almost in its teen years, it’s safe to say that it’s far more volatile than the average adolescent. This means more opportunities to trade these types of financial assets.

1. UNDERSTAND HOW CRYPTOCURRENCY TRADING WORKS

Getting a solid understanding of how cryptocurrency works is fundamental to enhancing your probability of success when trading it. Early investors had the last laugh as the value of crypto surged through the roof over the years. The grass may have been greener, but it’s important to consider current market conditions, along with possible impacting factors when making trading decisions as any cryptocurrency could always go either way.

Trading cryptocurrency means that you’re speculating on the price movements of non-physical currencies. As a trader, you can go long on cryptocurrency if you think that the price will go up. You’d make a profit if you predicted the price movement correctly. But if the price moves against your position, you’d incur a loss.

2. PICK A CRYPTOCURRENCY TO TRADE

Once you’ve done your research, you can take your pick from tastytrade’s selection of non-physical currencies to speculate on its future price.

With a Trading cryptocurrency account, you can get exposure to these cryptos.*

Aave (AAVE)
Basic Attention Token (BAT)
Bitcoin (BTC)
Bitcoin Cash (BCH)
Cardano (ADA)
Chainlink (LINK)
Compound (COMP)
Dogecoin (DOGE)
Elrond (EGLD)
Enjin Coin (ENJ)
EOS (EOS)
Ethereum (ETH)
Kyber Network (KNC)
Litecoin (LTC)
Maker (MKR)
OMG Network (OMG)
Paxos Gold (PAXG)
Polkadot (DOT)
Polygon (MATIC)
Shiba Inu (SHIB)
Solana (SOL)
Stellar (XLM)
Tezos (XTZ)
Uniswap (UNI)
0z (ZRX)

While Bitcoin is the most popular and has the largest market cap worldwide, ether seconds it in terms of market capitalization.
* You can trade the CME Bitcoin and Micro Bitcoin futures contracts with Trading cryptocurrency – the other cryptocurrencies listed here are the actual coin.

3. OPEN A TRADING ACCOUNT

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Have your commission capped at $10 when trading cryptocurrency2

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4. CREATE A TRADING PLAN

cryptocurrency

Creating a trading plan is a must for anyone taking positions on the markets. You can document precisely what you hope to achieve and how you’ll do it using a trading plan. When thinking about this, there are some essential aspects to bear in mind.

CONSIDERATIONS FOR CRYPTO TRADING PLANS:

• Choosing an asset, e.g. cryptocurrency, and looking at the types of the instruments you’re interested in. In this case, you could consider non-physical currencies such as Bitcoin, ether and Litecoin
• Considering trading styles, e.g. day trading, and deciding on strategies to employ, such as trend trading or scalping
• Planning your position sizes carefully based on the capital in your account means you can boost your capital efficiency while limiting your risk
• Knowing what the various futures product price ranges are means that you can allocate money to trades more accurately, also boosting capital efficiency
• Aligning with your risk appetite using tools such stop orders and limit orders as well as adjusting your position size
• Taking advantage of binary events through news trading, taking positions based on occurrences and related developments that might affect the markets
• Thoroughly checking whether the relative price movements of a product are slow-moving or rapid, regardless of volatility generally being high in the crypto market
• Limiting losses in case of correlated positions by deciding on ways to hedge them
• Sticking to your specifications on when to enter or exit a trade affects the affordability of other trades as well as how much of your capital you’re risking
• Frequently monitoring your positions and your overall portfolio, and finding your ideal time intervals to do this; plus, you can supplement this with automated orders