Before crypto trading: A good research
A good preparation and research is the be-all and end-all before crypto trading. Interested investors should therefore first inform themselves extensively. The first item on the list: to find a suitable depot. If you want to get into crypto trading, you should do so via well-known providers. For example, European crypto exchanges have higher security standards than Asian providers. In particular, you should avoid scam sites. You shouldn’t choose a provider you’ve never heard of before.
Our recommendation: With a cheap custodian provider, you can easily keep the costs of crypto trading under control. Both our crypto exchange comparison and our crypto broker comparison will help you find the right provider. There we checked both crypto exchanges and crypto brokers for their advantages and disadvantages.
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Not every cryptocurrency is suitable for getting started with crypto trading. The financial columnist for MarketWatch and author of non-fiction books on investing and trading in the stock and options market, Michael Sincere, advises sticking to the most popular and well-known cyber currencies at the beginning of his career as a crypto trader. Bitcoin, for example, is suitable for this. After gaining some experience, you can venture into the second largest digital currency, Ethereum. Crypto trading: rules when buying cryptocurrency
According to Sincere, there are other rules that crypto traders should follow if they want to invest in Bitcoin, Ethereum and Co. We have summarized the tips of the professional. Small sums can also get you to your destination
Every professional trader has started small. This also applies to the sums invested. According to Sincere, it is advisable to start with little money. If necessary, the sum can still be increased slowly. On the other hand, it does not make sense to directly invest several thousand US dollars in cryptos. Crypto beginners in particular should keep their expectations realistic at the beginning and rather aim for smaller profits. Trade only with your own money
Sincere advises all interested parties: Never buy on margin. Because crypto trading is a hot potato. Although you can earn a lot of money with crypto trading if you are right. However, the opposite can also happen: in the end, you may owe more than you have invested. Deal well with the risks of crypto trading beforehand and do not borrow money to be able to buy cryptocurrency. Buying and selling crypto trading – here’s how it works!
Are cryptocurrencies such as ETFs suitable for long-term asset accumulation? When should traders buy and sell? Sincere has a clear opinion on this: “Whenever you trade a volatile financial product like crypto, you routinely need to take profits.” Furthermore, in crypto trading, it is advisable not to hold any loss positions. Should a cryptocurrency fall, one should not shy away from selling it in a timely manner. Set mental stop losses
The prices of crypto currencies such as Bitcoin, Ethereum and Co. are often subject to strong fluctuations. So it is hardly possible to set real stop losses. For this reason, Sincere advises mental stop losses. Another alternative is to use time stops . You decide in advance for a specific day by which you sell your positions and then follow this plan. According to Sincere, this may prevent large losses.
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Crypto trading is about having a plan. This helps traders decide when to buy or sell. You should always follow this plan and also stick to your own rules. In particular, technical analysis can be helpful in crypto trading. According to Sincere, the focus should be on the moving averages and the Relative Strength Indicator (RSI). These indicators are quite easy to understand and interpret even for beginners.
The last and probably most important rule in crypto trading and securities trading: Diversify! Because you should never put all your assets into a single financial product. Basically, for crypto traders who are still in their starting shoes, caution is required when trading Bitcoin, Ethereum and Co. For example, it could be years before digital currencies are accepted or even supported by the government or institutions, if that ever happens. Therefore, skill, discipline and due diligence should always be the top priority for traders – regardless of the financial product. Crypto trading – what you should do
Find out about the potential and risks of the different cryptocurrencies. Decide whether an investment is suitable for you.
If you want to start crypto trading, you need a custody account. Open a customer account with a crypto broker or crypto exchange of your choice.
Trade only with your own money and set yourself mental stop losses.
Buy your preferred cryptocurrency and be sure to pay attention to a favorable rate. Because crypto currencies in particular are particularly susceptible to fluctuations.
JASMIN MENCIN – GUIDE EDITOR
Jasmin Mencin has been part of the advisory board since the beginning of 2021. She is responsible for robo-advisors, neobrokers and cryptocurrencies. She completed her studies in German studies and pedagogy with a master’s degree. During her studies, she gained her first experience as a content writer in the field of languages.
*This means the asterisk: Our guide articles are objectively researched and independently created. In this way, we want to help as many people as possible to build up assets independently and to make the right decisions in financial matters. In order for our information to be available free of charge, clicks on links are sometimes remunerated. We mark these so-called affiliate links with an asterisk. Finanzen.net GmbH, but never the author individually, receives money when readers click on such a link or conclude a contract with the provider. Whether finanzen.net GmbH receives remuneration and in what amount has no influence on the product recommendations. For the advice editors, the only important thing is whether an offer is good for investors and savers.
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