How To Be A Crypto Trader; The fact that technology is continuously having more impact on our daily lives cannot be overstated. This is very much pronounced in the financial service sector; as seen in the birth of a cryptography-backed form of monetary exchange — cryptocurrency. And it’s clear enough that this monetary system has been successful in combating the many loopholes in the fiat money structure, and it gave it a pretty wide acceptance range in a relatively shorter time range. Of course, people have recognized its potential to make a transformative impact.
However, there are more technicalities in dealing with cryptocurrencies than there are in fiat money, so it takes having a rich depth of understanding of the crypto modus operandi to become a successful crypto trader. Jumping on the train from a place of unrealistic sketchy details would have you waking up on a fine Sunday morning, to realize you’ve lost quite a fortune. This article takes you on the route of how to become a successful crypto trader.
What You Must Know And Do To Become A Crypto Trader
You must know your onions in the crypto world to begin. It’s not debatable. This is an integral part of becoming a successful crypto trader. The essence of becoming a crypto trader is simple; to make profits from crypto transactions. This can either be from accumulating crypto assets at lower prices and selling much later when the prices get high, or operating as a sole proprietorship crypto vendor that sells at a nonstandard price.
These are the questions that must be satisfied:
- How does the crypto market work?
- Under what market conditions can I make a profit?
- What are the possible determining factors that can influence crypto price shifts?
- Are certain crypto exchanges more trading-friendly?
Understanding these questions paints a picture of how the market works. Next, choose the trading pattern that suits your schedule. Examples of two adopted trading patterns are;
- Scalp trading
- Long-term trading
- Scalp trading
The scalp trading pattern is characterized by short-period trading moves. This technique leverages little price fluctuation occurrence within a short timeframe to make little profits. Traders on this end must exude a swift entry and exit strategy, otherwise, they can suffer losses that would swallow the gains gathered over time.
To be a scalp trader, you must soundly understand the concept of liquidity and market behavior. This would give you insight into the factors that trigger price shifts, and in turn, guide you to trade as ideal. It could be hourly, daily, or even within minutes. So it calls for constant attention paid to the market. In other instances, this pattern is also called day trading, as traders count their losses and gains from trading daily amidst rapid price swings.
- Long-term trading
As opposed to scalp trading, long-term doesn’t usually deliver gains within a short while. Instead, it requires patience, future calculation, discipline, and foresight to intelligently decipher what specific crypto is worth investing in.
The general principle of long-term crypto trading borders on buying and holding cryptocurrencies and selling when the prices appreciate. The principle explodes into two main facets. This first is tagged “holding”.
Holding requires buying and holding crypto for 1-4 years and selling at price appreciation. Gains from “holding” can only be drawn from long-term crypto value appreciation.
Holding also splits into two forms; lump sum and average investment. Lump sum involves investing a very high crypto capital in the market. It is done as a way to maximize profits on a positive turnout of trading events, although it could be fatal on account of a market downturn. Lump sum requires strong market analysis strength that can make accurate future crypto price predictions. “Average” can be subjective, so an average investment is an investment of a fraction of a trader’s overall crypto holdings.
(b). Dollar cost averaging
With dollar cost averaging, a trader makes periodic allocations of a predefined crypto amount. This pattern doesn’t usually consider the market nature; this means investment can be made regardless of the market nature.
Becoming A Crypto Trader; Exchange Consideration
The quality of adopted exchange also contributes to crypto trading success. So you have to analyze them and understand their respective strengths in key areas. Some exchanges are more effective in carrying out certain trading functions than others. So far, many reviews have shown that Dart Africa helps better in crypto-to-cash conversion, Finance offers better trading options, and Trust wallet is best for long-term crypto holding.
There’s no one-way-fit-all trading strategy that suffices for just everyone. The best way to become a crypto trader warrants that one understands their onion with respect to the many available trading strategies and analyzes their peculiarity to see how it aligns with what trading technique.