If you want to invest in crypto, but you don’t really understand how it works, it can be disastrous if you just do something. You need to know what you are getting into and also learn as much as possible about the details of the market, so that you can learn more about the details of the coins you are working on, the use of the different technologies and what they stand for. Also important is the possible growth of the network and last (and most important), the profit you can get out of it in both the short and long term.
You have to realize that investing in crypto is more risky than investing in classic shares due to the (extremely) high volatility.
The fundamentals of crypto are essentially the following: does crypto get into the news positively or negatively, does the number of users grow, what is the number of transactions possible on the blockchain of that particular crypto, what are the costs, the confirmation time and above all: what is the security? It is also important to know which developments have taken place and which are planned for the future.
Understanding these basic principles requires an in-depth understanding of the dynamics that create the network.
To help all beginner traders in crypto, we have compiled below a short list of all the data a trader needs to get started.
Do Your Own Research (DYOR)
One of the most important things to do is read reports and research the company you are investing in.
This is called DYOR or also Do Your Own Research (do your own research). Just because 10 people shout on social media that something is good does not mean that it is. Do not listen blindly to online gurus (with many followers). They may well be paid to say this.
Think and research. Read what you can find and only then decide whether to invest.
Second, you need a good and powerful laptop or PC to trade. If you want you can even do this via a mobile, but make sure you have something from the latest generation. Given the high volatility of crypto, you want to be sure that your PC, laptop or smartphone can respond quickly to the market.
Press and media
Look up a few different media sites and blogs that you trust to help you make good choices. Definitely don’t limit yourself to one, as you want to hear both judgments and pros and cons. Recommended are for example Decrypt in English, CryptoTips in Dutch and ComparerBitcoin in French.
Read the coin whitepapers, even if they are quite technical. This allows you to know the vision of the developers, even if it is sometimes quite different from what the marketing team envisions..
For example, we can imagine that the Ethereum marketing team can appreciate Vitalik Buterin’s communication to attract investors, but that they would recommend that he wear a little more tailored suits sometimes instead of the colorful t-shirts in which he goes. A great example of this tip is seeing how Facebook CEO Mark Zuckerberg’s clothing style has progressed since his company was listed on the stock exchange.
In the whitepaper you often also see the roadmap with plans that the team has. See to what extent they have complied with the roadmap, and why they have not achieved goals, for example.
Ready for the next step
Reading charts is very important for a trader. Make sure you know the difference between a line chart and a candle chart (candlesticks).
Especially the latter is very important as crypto trading never stops. Where you can take a break with classic shares, this never exists with crypto.
Never forget to respect your stop losses when trading with charts.
There are plenty of detailed sites on the internet that can help you read graphs. Reading analytics and forecasts from charts is something a good trader should be able to do. If math or graphs are not for you then you better not get started.
Choose a known platform with sufficient liquidity
If you really want to start trading with cryptocurrency, make sure you choose an exchange over a broker.
If you want to trade on a well-known platform such as Bitvavo or Binance, make sure you know what the different menus are. A good crypto platform consists of much more than buying and selling crypto. There are options, ETFs, Futures, short / long, currency and crypto pairs, and scalping.
Make sure you become familiar with which crypto pairs are available and how the coin moves. Always be aware of the latest news about a particular currency and respond to them. Put reminders for yourself in the agenda to always check whether the social media of a particular currency has reported something new. Check whether the platform you wish to trade on also offers a media service.
Also make sure that the platform on which you trade offers a good wallet.
For this piece we certainly recommend our knowledge base. There you will find:
- What is a hot wallet?
- What is a cold wallet?
- What is a private key with cryptocurrency?
- How to make a free cryptocurrency wallet?
- What is a cryptocurrency wallet?
The advice is to only keep crypto on an exchange that you actually trade with. You keep profits and investments for the longer term in a self-managed wallet.
When you have successfully completed each level of the cryptocurrency journey – gaining knowledge, researching, choosing the best trading platform and making peace with the volatility – you can go ahead and dive into the world of trading bots. Again, this is only recommended for the more advanced among us.
Crypto bots are automated software that allows users to adjust trading strategies, code automated trading algorithms and use advanced methods to get the most out of the market.
There are many different trading bot suppliers, with which you can easily put together your own bot: CryptoHopper, HaasBot and 3Commas.
And last but not least, don’t forget to take your winnings from time to time.