Important Things You Need To Know Before You Start Trading Crypto

Millennial Magazine - trading crypto

Cryptocurrencies are decentralized digital currencies that work without having any central authority controlling them. They are characterized by the fact that they provide near-instantaneous payments virtually free of charge, and offer higher anonymity than regular currencies. With the abundance of practically overnight success stories, the popularity of cryptocurrencies is constantly rising and more and more people are looking to invest in them. If you are thinking of joining in on the action, and making an investment in the crypto market, there are some important things you need to know about it first.

1. The Different Coins

The first step on your road to trading crypto is to acquaint yourself with the different coins that are on offer. While there’s a plethora of them, and more seem to be coming out almost daily, not every coin would be considered a safe investment. However, there are those that are well-established that stand out from the crowd.

  • Shiba Inu (SHIB) – One of the more recent coins that only entered the market in 2020. You can learn more about it if you click here, but to put it shortly, SHIB aka Shiba Token has rapidly surged in popularity and quickly became one of the top 10 largest cryptocurrencies available. It has its own DeFi platform and rewards system. Apart from that, it operates within its own NFT marketplace as well, known as the Shiba Inu Incubator.
  • Bitcoin – The very first cryptocurrency ever made, Bitcoin was invented in 2009 by Satoshi Nakamoto. It was created to let people have an alternative payment method that is decentralized, anonymous, and secure.
  • Ethereum – Created in 2013, Ethereum can also be used as a crypto token for other applications outside of just financial transactions. This is made possible by its structure which allows the creation of new cryptocurrencies on top of it, called tokens.
  • Litecoin – Created in 2011 and very similar to bitcoin, Litecoin has managed to get itself ahead of some other coins with its faster transaction times and lower fees.
  • Ripple – Ripple is a company that aims to serve as a faster and more efficient version of the traditional banking system. It is also among the largest cryptocurrencies by market capitalization.

If you’re just starting to invest in crypto, it’s a good idea to stick to the true and proven coins, and stay on the safer side until you get more comfortable. Besides that, the more popular coins allow you to only buy a certain percentage of it. In other words, you don’t have to buy an entire coin, but an o.x of it, which is a good way to dip your toes in the water and see how everything plays out without risking much.

2. Safety Measures

The world of cryptocurrency trading is rife with hacks and scams. You have to be extra careful when it comes to your safety because new coins are being created every day, only to disappear a few days or weeks later. This is why it’s important to take steps to protect yourself, both from a legal point of view, and the financial one. Additionally, there are a few things you can do to secure your security and privacy when trading crypto:

  • Use a VPN – A virtual private network allows you to encrypt your internet connection and anonymize your activities. It also makes it much harder for anyone to monitor what you’re doing online.
  • Have A Hardware Wallet – These wallets are hardware devices that can be connected to a computer through a USB, which stores the private keys of the crypto coins in there. The keys are stored offline and protected by a PIN code.
  • Use Cold Storage – This is a term used in crypto trading that means storing your coins in an offline wallet that doesn’t have access to the internet, which cannot be hacked.

As with any investment, you need to make sure that you take all precautions to secure yourself before you start trading. This extra work will help save you time, frustration, and even money in the future.

3. Calculate The Risk Before You Start Trading

One of the most common mistakes people make when they start trading crypto is that they don’t consider how much they’re going to invest in their trades and look only at the amount of profit they could get. To put it simply, only invest the money you’re willing to lose, and that won’t affect the way you live your life. Even if you aren’t looking to make a profit, but are simply curious about the market, it’s important to understand how much money you’re willing to lose and won’t worry about before you start trading.

It can sometimes be difficult to resist the feeling of missing out on a great opportunity. However, when it comes to trading, it’s always important to keep a level head. As a general rule, if you catch yourself feeling like you have to invest now or lose out, the best thing you can do is take a break, do an activity you enjoy, and come back to it once you’ve cooled off. At least until you’ve had time to think it through.

4. Study The Market

There are various factors that affect the prices of cryptocurrencies, and it is crucial to stay up-to-date on all of them in order for you to make an informed decision when buying or selling coins. For example, such market factors include news about crypto companies receiving investment, new technologies being created, and various changes in the market. All of this information serves as valuable data, so it’s important to take your time and study all these factors before considering investing in certain coins.

There is a lot of information out there about crypto trading, and it can be hard to sift through most of what’s available and determine what you should invest in, how much you should buy, which strategies will work best for your goals, and how to use them. Reading up on white papers, as well as news about currencies you’re interested in, and even visiting public forums, will give you the information you need to get started. Sometimes there are projects that sound fantastic on paper, but in reality, wouldn’t serve any valid purpose or be useful for anyone upon completion of their stated goals, and learning more about it from different sources can give you a better understanding of the market, which in turn, means that you’ll be able to make better investments.

Doing some research and taking the time to understand all of your options before you start trading will help you avoid making costly mistakes. This will allow you to have a better experience as a trader, and most importantly, keep yourself safe from any mishaps or scams. Crypto trading is not always an easy task, but putting in the effort to do your research and take the time to learn all you can about it will help you become a better, more knowledgeable trader.

What do you think?

Written by Trueman

Trueman is a fin-tech and culture writer for Millennial Magazine. As host of The TrueMan Show, he covers all things related to stocks, tech and culture. He's a market analyst by day and a talent scout by night, combing the Internet for noteworthy startups, influencers and culture warriors.

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