How To Become A Cryptocurrency Trader

Why are cryptocurrencies so popular?

Blockchain technology is not something disruptive. The first ideas were developed back in the 80s by early pioneers in computer technology, but the first significant breakthrough did not occur until the early 90s. Back then, it was difficult to come up with a use for publicly available journals with immutable data, but the idea of ​​​​turning them into currency appeared back then.

The revolution occurred in 2008 after the international financial crisis, which exposed the shortcomings of the modern financial system, based on debt obligations and a constant increase in consumption to the detriment of the stability of the monetary system. These vulnerabilities were hidden by governments until the market could no longer contain the speculative bubbles and allowed them to burst.

At this point, an anonymous developer under the pseudonym Satoshi Nakamoto first published his idea of ​​​​creating a completely decentralized digital magazine that could not be changed. This would protect the new digital currency from government manipulation and allow for a free economy.

What happened next is known to everyone. By 2021, the value of Bitcoin approached 70 thousand US dollars, and the world seemed to have gone crazy. Investors created a new bubble, which also burst, but without any serious consequences for most traders. Now the market has stabilized and created new opportunities for newcomers.

How to become a trader from scratch?

Even without serious starting capital, you can start trading cryptocurrency using the leverage provided by centralized exchanges that offer margin trading. This approach is risky, but allows you to start trading with a small initial investment.

• To start your journey as an investor in cryptocurrencies, you need to register on a centralized exchange. Examples of such exchanges are Kraken, KuCoin, Binance and others.
• Another trading option is the spot market or trading on P2P platforms. Here you use only your own funds, and the profitability is comparatively lower.
• Some investors choose a completely different route and try to automate their trading strategy as much as possible using bots.

All options can be profitable. It depends not only on the market situation, but also on your instincts, as well as on the right technical analysis strategy. You should not expect stunning success already in the first stages of work. Beginning traders need to have patience and adhere to the learned rules of working in the cryptocurrency market.

Cryptocurrency Trading Basics

What does a novice trader need to start investing in cryptocurrencies and other digital assets?

• A working device with an Internet connection. This could be a personal computer or a modern smartphone. The power of the device does not play a significant role.
• A valid account on one of the centralized or decentralized cryptocurrency exchanges, depending on the chosen trading method.
• Technical analysis skills and ability to use price charts on the TradingView platform or other analytical website.
• Starting capital for opening the first transactions and purchasing tokens. The amount of capital is essential, but you can start trading even with a small amount of money.

Let's look at each item on this list separately and talk about some of the nuances of creating accounts and trading.

Selecting the right device

Android and iOS smartphones support all the tools that we will discuss below. A personal computer based on Microsoft Windows, Mac OS or Linux is also suitable for working with the cryptocurrency market.

Why does the power of your equipment hardly matter? Most cryptocurrency exchanges provide access to all functionality through a browser, and calculations take place in the cloud, so there is no need for a powerful device.

On the other hand, many investors choose to work with bots. Automation products are hosted entirely in the cloud and do not require hardware installation. For example, you can set up an automatic trading system on the WunderTrading platform even using the simplest Android phone with the Chrome or Firefox browser installed.

How to become a trader and where to start?

Creating an account on a centralized or decentralized exchange usually takes only a few minutes. Funds are also credited to your balance almost instantly. The main thing is to choose a suitable trading platform.

If you are interested in peer-to-peer trading (trading directly between market participants), then it is best to work with local exchanges that operate in your country. Almost all regions have already established reliable exchanges operating as independent contractors.

Centralized exchanges are suitable for traders interested in margin trading or trading in the spot market, where currency exchanges occur without contact between participants.

Registration on a centralized exchange will require you to perform several actions:

1. Install the exchange's mobile application or go to the official website.
2. Start the account creation process.
3. Provide your phone number and email for verification and communication.
4. Be sure to enable two-factor authentication.
5. Top up your balance in a way convenient for you and start trading.

It is not worth starting to implement the last point without knowledge in the field of technical analysis. Before you start trading, you need to understand how the financial market works, why prices change, and how to extract valuable information from a price chart.

How to analyze cryptocurrency charts?

Learning the basics of technical analysis is the first step of a trader on the path to success. Technical analysis is a set of special techniques and tools for creating forecasts of price changes based on two sources of information: price dynamics and trading volumes. Despite having only two main types of data, it is a complex discipline in which it is extremely difficult to become a true master.

Here are some tips and mini-tutorials to get you started:

• A typical price chart always has two axes. The horizontal one means time, and the vertical one means price. The price curve can be represented by a line, columns or so-called candlesticks.
• For a price chart to be truly useful, be sure to use technical indicators and comprehensive strategies. Analytical site TradingView gives users the opportunity to use hundreds of ready-made systems and indicators.
• Constantly hone your analytical skills, read about new strategies and try to integrate the most interesting solutions into your overall investment plan to get the maximum profit from trading.

Cryptocurrency trading strategy

Choosing the right trading system is another important step towards starting your trading career. During your interaction with the market, preferences and priorities will change several times, but you need to start with mastering basic strategies that can become the foundation for further deepening your knowledge.

There is no need to use so-called “strategies” like Martingale trading. Instead of systems where you need to rely on luck, use long-established technical analysis techniques:

• Finding trends using 3MA. Moving Average is a standard technical indicator that shows the average price of an asset over several periods. Three lines with different ranges allow you to identify strong and weak trends.
• Selecting the moment of reversal using RSI. The Relative Strength Index is widely used to determine whether assets are overbought or oversold. It looks like a dynamic curve that fluctuates between values ​​from 0 to 100. If it is closer to 100, then the market is overbought, and if closer to 0, then it is oversold.

What else do you need to become a trader?

Unfortunately, you cannot start trading without starting capital. If you have a large amount of money, then you should definitely follow the principle of diversification. Within the cryptocurrency market, you will have the opportunity to use a wide range of financial products to create a balanced portfolio:

1. Opening market positions in the cryptocurrency derivatives market (trading futures and renewable futures on centralized exchanges).
2. Purchasing tokens on P2P sites with transfer to a “cold” wallet (without access to the Internet) or purchasing assets on the spot market.
3. Automated trading systems using bots from WunderTrading and similar trading automation solution providers.
4. Staking cryptocurrencies to receive passive income from the operation of blockchain networks with the PoS (proof-of-stake) algorithm.
5. Copy trading is an investment style based on copying the actions of experienced investors on special platforms (WunderTrading marketplace, social trading on centralized exchanges).

The last three options are ways to create passive income, but the first two are real trading with the purchase and sale of digital assets. The investor's task is to balance all the ways to protect himself from risks.

In the absence of sufficient starting capital for diversification, it is worth concentrating your attention and efforts on working with one method of investment. Starting to trade using leverage right away is a recipe for failure. Beginners should get comfortable with the spot market and slowly build their portfolio.

How to become a successful trader?

There is no secret to achieving success in cryptocurrency trading. Like any other area of ​​life, it requires efficiency, conscientiousness and enormous effort. Don't believe bloggers who promise you huge profits after completing their courses. Don't try to make millions by investing in dubious projects.

A successful trader is a person with a clear plan, developed through many years of experience in trading the financial markets. This is a person who has the necessary skills and knowledge to create a reliable strategy that brings a stable income.

You can become such a trader only if you constantly work on yourself. There is also an alternative that allows beginners to quickly master the market and learn from professionals without major investments:

Invest in copy trading and follow the trading principles used by the best traders on the largest centralized platforms. This is both a way to create passive income and an excellent source of valuable knowledge.

Use the simplest trading algorithms and start trading cheap tokens using bots. This way you can test a variety of technical analysis strategies in real conditions and without significant costs.

Beginner Trader Tools

One of the best tips for a beginner: try all the possibilities, but do not risk all your capital at once. Here are some tips for selecting trading instruments:

• Be sure to register on several centralized exchanges, compare functionality and conditions.
• Create an account on TradingView and start testing different trading systems. Experiment with indicators and strategies.
• Sign up for an account on WunderTrading and try automated trading for free (the basic plan allows you to use up to 5 bots).
• Use apps and websites that help you track your investments and monitor your finances.

If you move measuredly and with a clear focus on achieving goals, you can become a successful trader. The main thing is to take your time.