Your Comprehensive Guide to Trading Cryptocurrency: Tips, Hacks, Step-by-Step

There are tons of people in the UK looking to take their first steps into the world of crypto.

With Bitcoin and many other cryptocurrencies rising in value in recent months, it’s not surprising to find many first-time investors venturing into it.

Numerous ways exist to make money through cryptocurrency. Cryptocurrency trading is one of these ways. However, trading cryptocurrencies is not as easy as it seems. You need to understand how to go about it and know the best tips to ensure successful trades.

Not to worry, this article explores crypto trading and comes packed with helpful success tips, hacks, and guidelines. So, dive into it and get the information you need to get to the next level of trading crypto. 

How Beginners Should Start Crypto Trading

Getting started with cryptocurrency trading begins with joining a crypto exchange with a valid UK registration. A good example is Coin Base. You’ll also need a cryptocurrency wallet to store your crypto assets. The good news is many crypto exchanges offer wallets as part of their services.

As alternatives, some platforms offer crypto wallets to investors as their primary service. These include Trezor, MetaMask and Atomic Wallet. Ensure you always secure and protect your crypto wallet by keeping to best practices. 

Best Cryptocurrency Trading Tips You Must Know

Cryptocurrencies are very volatile. A cryptocurrency may rise in value by 7% today and crash by 15% tomorrow or vice versa. Hence, it’s always best to be ahead of the game by staying informed all the time. 

As a crypto trader, you need to act quickly and take advantage of every bit of information you get to make as many gains or prevent as many losses as you can.  Here are some crypto trading hacks you should know: 

Don’t Go Big At First

When you start cryptocurrency trading, you may feel the urge to go big with your trades. However, huge trades are not the right way to make your first forays into the world of cryptocurrency. 

Instead, you should be cautious in your approach. Risk management demands that you start small. Due to the volatile nature of the crypto market, investing small amounts helps you understand how the market works. You should also avoid trading with money you can’t afford to lose. 

You Must Have a Secure Wallet

If you don’t have a secure crypto wallet, you may lose all your trading earnings before withdrawing it. To avoid losing your crypto earnings, ensure you use a secure crypto wallet. 

It’s best to perform cryptocurrency trading with reputable crypto exchanges that also provide wallets. However, if you want an independent wallet, you should choose one that meets your needs and expectations. There are mainly two types of wallets, namely: cold wallets and hot wallets. 

Cold wallets are those where you store your crypto assets offline. These wallets are generally more secure than hot wallets. On the other hand, hot wallets are those connected to the web. Hence, they are prone to cyber-attacks or hackers. 

The type of wallet you should use is dependent on the amount of cryptocurrency you’re holding. If you’re holding a small amount, hot wallets will suit you. However, you must ensure you register with a hot wallet provider with a credible reputation. 

Ideally, you should use a hot wallet and a cold wallet in tandem. You can keep a limited amount of crypto assets in the hot wallet. This amount is readily available for your trading needs while your bulk funds remain in a cold wallet. 

Do a Thorough Research of the Market

One of the key hacks to trading crypto successfully is research. You can only become a successful cryptocurrency trader by understanding how the market works and acting accordingly. However, it’s not easy to do this as the cryptocurrency market does not follow the same principles as the financial markets. 

The crypto market is highly speculative. Therefore, one can hardly predict the effects of global news and happenings on Bitcoin and other cryptocurrencies. 

If you want to expand your knowledge of the cryptocurrency market, you should master technical analysis, which is one of the best crypto trading techniques. Technical analysis involves reading crypto market charts and noting the key trends and patterns. Constant practice helps you to understand these patterns and make informed trading decisions. 

By practising technical analysis, you can make better decisions instead of relying on trading tips from other traders. There are traders out there waiting to profit from mistakes inexperienced traders make in the crypto market. They wait for inexperienced traders to buy and pump an asset’s value. When the asset rises in value, these tipping traders will exit the market with big profits. Hence, you should avoid entering a trade without researching and carrying out due diligence. 

Choose a Cryptocurrency Trading Strategy

You should think about the kind of crypto trader you want to become before trading. Your choice is most likely dependent on the amount of time you want to commit to trading and market analysis. It also depends on how quickly you want to realise a profit from your investment. 

Four categories of crypto traders exist. These are: 

  • Scalpers: They are the most active traders and make multiple trades daily for little profit. 
  • Day Traders: These traders go into the market within the day (24 hours). In that period, they will take advantage of the market’s short-term movements to make profits. 
  • Swing Traders: Swing trading is another one of the crypto trading techniques and involves in-depth technical analysis to identify market trends. 
  • Passive Trading: Passive traders hold their positions and focus solely on making long-term profits. These traders don’t panic when there is a market crash because they leave their investments for a long time hoping to cash out with profits at withdrawal.

Maintain Strictness With Your Stop-Loss Orders and Profit Targets

Due to the cryptocurrency market’s unpredictability and volatility, you should adopt a trading plan and keep to it. Before you open a position, determine the profit level that’ll please you and the losses you can handle. After doing so, set your target profit and stop-loss levels after placing the trade. 

You should maintain discipline when trading cryptocurrencies. If you don’t maintain discipline, you risk exposing yourself to avoidable losses. Don’t be overcome by greed to the point where you hold a position for more profit after reaching your target profit level. 

Things can change quickly in the crypto market, and your bid for more profit may eventually lead to damaging losses. However, if you maintain discipline, you’ll avoid such circumstances and take your profit once you achieve the desired level. 

Leverage Cautiously

With leverage, you can hold a higher stake in a crypto trade than your account’s actual capital allows you to. It’s an appealing feature and can lead to huge profits. However, you can also lose huge amounts of money if the trade goes wrong. To use leverage successfully, you should balance between risks and rewards. 

When trading Bitcoin and other cryptocurrencies, you must leverage with extreme caution. For newbies to crypto trading, it’s best to avoid leverage trading until you’re confident about your trading strategy and have hands-on experience in the market. 

Diversify Your Cryptocurrency Portfolio

One of the best cryptocurrency trading tips you’ll find is to diversify your portfolio. Unfortunately, one of the many cryptocurrency trading mistakes beginners make is obsessing over Bitcoin. These traders, many of whom are first-timers, forget there are thousands of other crypto assets that they can trade. 

Trading in other crypto assets is equivalent to hedging your investments. Hence, when the value of one of the cryptocurrencies you invest in crashes, you may offset your losses if the other crypto asset rises in value and gives you profits. 

Another advantage of diversification is that it boosts your gains when the market conditions are good. For example, if you invest wisely in two cryptocurrencies and both enjoy massive rises in value, it means you get to hold two valuable assets. 

Although portfolio diversification is good, ensure your portfolio isn’t over dilute. You should assign worthwhile capital to each cryptocurrency asset you’re trading. Hence, you need to balance things out to ensure all your assets have good profit potentials and minimum risks.

Buy and Hold Crypto Assets

Buying and holding crypto assets is similar to what a passive trader does. You can hold crypto for weeks, months, or years, depending on your choice. Holding your crypto assets has multiple benefits. 

These include: 

  • You avoid crypto’s short-term volatility. 
  • You avoid overtrading
  • You can make profits without committing a lot of time

Avoid Bringing Emotions into Play 

One major observation about crypto trading in 2021 is that many investors attach their emotions to trading. One of the noticeable consequences of emotional trading is FOMO, which means Fear of Missing Out. According to FCA Research, almost 20% of crypto asset buyers in the UK purchase an asset because they feared missing out on it. 

Cryptocurrencies’ volatility means there are times some crypto coins will rise high in value within a short time. At such times, the temptation to buy the coin is high because you’ll fear missing out on their upward trend. Though tempting, buying during an upward trend is against cryptocurrency trading’s basic rule of buying low and selling high. 

If a cryptocurrency rises, you may have already missed out on its upward trend. Therefore, you may end up paying too much for a crypto asset that may fall in value. If this happens, you’ll lose a significant sum of money. 

One of the cryptocurrency trading mistakes beginners make is falling victim to the “Fear of Missing Out.” Don’t be a victim. Don’t be in a rush to jump on the bandwagon and lose heavily afterwards. 

Don’t Buy a Coin Just Because It Has a Low Price

One common mistake most beginners make during cryptocurrency trading is buying crypto-assets just because they have low values or seem affordable. 

Just as you should not base your trading decisions on the FOMO, you should also avoid buying coins just because they are low-priced. Instead, your reason for purchasing a coin should hinge mainly on its market capitalisation. 

Like traditional market stocks, you gauge cryptocurrencies by their market capitalisation. To determine this, use the formula:

Market Cap= Market Price X Total Number of Available Tokens

Based on market capitalisation, owning a coin valued at $10 and with 1million tokens is the same as owning a coin worth $100 with 100,000 shares. T

Therefore, your decision to own a coin or not should be mainly because of its market cap instead of its price. Investing in coins with higher market caps is always the way to go. 

Beware of Scammers

The cryptocurrency market is decentralised. Hence, there are few regulations in place. The absence of regulations means that scammers can take advantage and defraud unsuspecting traders of their hard-earned money. To avoid falling victim to these scammers, do the following: 

  • Use reputable crypto exchanges and wallets.
  • Avoid crypto Ponzi schemes at all costs.
  • Ensure your bitcoin wallet is secure. Don’t share your personal details or login information with anyone. 

Make Money with Trading

You are now set to begin your cryptocurrency trading journey. Before you do, ensure you go over the tips you learned here and act accordingly. Remember to adopt a crypto trading strategy. Whichever strategy you adopt, you must do well to remain secure and manage risks effectively. 

Always remember that the cryptocurrency market is volatile. Therefore, you should tread cautiously when trading. Perform well-thought-out and researched trades and not those based on emotions, hearsay, or dubious tipsters. 

Things change quickly in the crypto world. Hence, you should always be ahead of happenings by staying updated with the changes as they occur. Stay one move ahead by checking out our website for cryptocurrency-related news, signals, and trading help. We’ll give you all the help you need to guarantee a stress-free journey into the crypto world. 

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