If you’re reading this, I assume you know cryptocurrency basics — for example, that crypto is digital or electronic money not backed by a government or bank. To protect your account, you probably know to store crypto in a digital wallet, preferably offline on a computer, thumb drive, or mobile device. And you should know that crypto currencies are extremely volatile, highly risky and easy to manipulate.
If you still want to trade crypto, let’s discuss security. First, open an account with a trading platform you can trust such as Coinbase or Robinhood. Yes, there are other platforms but you have to start somewhere. These two well-known, reliable providers will do the job until you can separate the good from the bad.
By the way, absolutely avoid fancy online brokerage firms or crypto exchanges that you’ve never heard about. Many are scam sites designed to exploit your inexperience. Please do basic research and never give your money to unknown companies. Here’s an idea: Call or email the brokerage before transferring your money and determine its level of service. Better yet, see if the company even exists.
Second, although there are thousands of cryptocurrencies (some real, some fake), stick with the most popular and most liquid crypto in the world: bitcoin
After you gain more experience, feel free to trade other cryptos (after bitcoin, Ethereum
is the second-largest).
Now let’s talk about trading. The first question most beginners want to know is, “Can I make money trading crypto?” The answer is yes, but it takes skill, discipline, and due diligence. Crypto is still in its early stages and it could take decades for it to be accepted and backed by a government or institution (if ever). Until then, buyer beware.
The worst part is that the crypto universe is populated with dark money, manipulators and pump-and-dump manipulators who give misleading advice on social media, lure you into buying their bogus currencies or try to convince you to join their phony crypto exchanges. Right now, crypto is pure speculation, but as long as you do your research you should be able to avoid scams.
Since you’re now aware of some of the risks, here are the top 10 rules that every beginner crypto trader should remember and obey:
1. Scale into a trade rather than plunking down large sums of money: If you’re new to trading cryptos, it’s a mistake to put large sums of money into bitcoin (or other cryptos) all at once. Because crypto is so volatile, instead of buying $1,000 in bitcoin, for example, start with $200, and if it’s moving in the right direction (up), add another $200. Keep adding until your position size is fully funded.
2. Buy and sell at extremes: Whenever you trade a volatile financial product such as crypto, you must routinely take profits. If your gains are extreme, sell half or all, but take something off the table. Resist the urge…