Some cryptocurrency traders may forget about “traps” existing on trading platforms. In order to help beginners to avoid it and start to make first money from trading, in this short article I’ve listed the most important tips.
1. Theory. Before your first deal on a trading platform I strongly recommend you to have basic knowledges. Learn or ask about Candlestick Chart (also called Japanese Candlestick Chart), Order Book, Spread and Depth Charts. You also must understand different order types. I will cover it in next articles.
2. Cryptocurrency platform fees. Different trading platforms have different fees. Using some of them you will pay a percentage of each deal, using another ones you will pay for income and outcome (payout) transactions. Understand platform rules before starting use it.
3. Technical analysis. Remember, the technical analysis is based on the information from the past. Don’t even try to predict the future cryptocurrency prices, no one knows it.
4. Arbitration. Some traders could think it’s very easy to make profit from the difference of the prices on 2 platforms. Yes, it could be possible but don’t forget about hidden dangers. The main problem, during the operation the exchange rate can significantly change. You can minify the risk if you will have fiat money and cryptocurrency on both platforms. There are few other problems such as small available volumes for the price you are interested on, orders execution delays, transactions fees.
5. Distribution. To minify possible risks, it’s better to distribute your money into different cryptocurrencies. For exemple, in your wallet you can have 40% bitcoin, 25% ethereum, 20% bitcoin cash, 15% litecoin. Never sell all your part from this distribution.
6. Common sense. Playing on a cryptocurrency trading platform pay the maximum attention and be careful. Remember, you just starting your trader’s way!
7. Tracking. If you want to be successful, track the latest cryprocurrency news, ranking and key indicators. Daily. It will help you to make correct decisions. Personally I use LiveMarketCap.com. Unlike CoinMarketCap, there you’ll find a news aggregator based on trusted sources (CoinTelegraph, CoinDesk, …). There are also few interesting indicators such as Inflation graph and CMGR (Compound Monthly Growth Rate). I will try to cover main indicators in next articles.
And probably the most important tip before you start. Don’t trade with money that you can’t afford to lose! Really. Beginners are ready to do a stupid things, like investment of the whole savings. And the stupidest one are borowing the money from family and friends and invest that in to the bitcoin, litecoin, ripple etc. So please, always consider the option that you could lose everything if you don’t know what are you doing.
That’s all. Happy investing!