Thanks to mass, multi-media coverage of Bitcoin and the myriad of subsequent cryptocurrencies, there has been a global rise in crypto trading of epic proportions.
This rise has meant that the typical investor profile has evolved to include novices dipping their toe in the crypto pool, those emerging from an involvement in blockchain technology and others from more traditional investment backgrounds.
So, when it comes to trading crypto currencies the requirement for information is as wide and varied as the sheer volume of advice available on the internet. If you want to know which digital currency trading platform is best for you, what beginners need to know about trading crypto currencies or perhaps some of the more intricate details involved in crypto trading, look no further.
We have compiled a comprehensive guide which includes information on the top cryptocurrency trading sites, a guide to trading bots, an introduction to margin trading and suggested crypto wallets. If you’re a newbie, a mine full of knowledge or somewhere in between, then please read on.
If you want to know more about cryptocurrency trading for beginners then you can look at it in much the same way as you might invest in other currencies on traditional stock exchanges, you can also buy cryptocurrencies. On an exchange, or through a broker, you can trade digital currencies for fiat money or other cryptocurrencies.
You will, first of all, need to use a base cryptocurrency like Bitcoin or Ethereum to purchase a new currency on an exchange with your domestic (fiat) currency e.g. UK pounds. This will convert your money into a crypto currency. Bitcoin, Ethereum and Litecoin are considered base currencies in the crypto world.
If you are a beginner at crypto currency trading we have outlined three basics tips below before you start trading.
Yes, you can. Altcoins are alternatives to ‘base currencies’ like Bitcoin and Ethereum and it is an abbreviation for the term ‘alternative to Bitcoin’. Altcoins you may already recognise are Ether, Litecoin, Ethereum and Dash.
There are hundreds of other altcoins on the market, with more and more emerging. They are typically considered more of an investment risk than Bitcoins but are still very popular with investors looking for the next opportunity.
If you want to trade in other cryptocurrencies then you will need to find the best altcoin trading platform for you.
The main currency trading companies trade in Bitcoins. You will need to convert your fiat money (legal tender like British pounds or US Dollars) into Bitcoins first to buy your altcoins and the top trading websites accept online payments.
If you want to delve a little deeper into the sphere of trading virtual currency (although we would recommend getting grips with Bitcoin Et al first) and start trading altcoins, then DGD trading – a Singapore based open-source crypto currency which is issued against real gold and available on the Ethereum network is an opportunity you might want to consider.
Token holders are issued against a gold bullion that is physically owned by the company and registered as a digital asset with a gold asset card is produced. The card goes through minting software and Digix tokens are created.
Another alternative is fct trading. Similar to the dgd platform, it is an open-source, peer-to-peer data validation platform built on blockchain, with its own token called the Factom (FCT) Built on a Bitcoin network, Factom’s proposition is unique. Litebit and Cryptopia are altcoin trading platforms where you can trade FCT tokens.
If you have decided to start trading in cryptocurrency you will need to use a crypto wallet. Serving the same purpose as the wallet in your pocket, a crypto wallet is basically a software program that allows you to store your own digital currency in a safe place. A ‘cold storage’ wallet is one that is held offline and considered to be more secure.
Wallets store private and public keys, similar to your bank account and PIN number. When you make a transaction with Bitcoin you are transferring the ownership to someone else. So that they can use the value of what you are sending, their private key must match the public address.
It’s crucial to keep your keys private and hidden to ensure you keep total control over your wallet and your coins. Having a back-up is also advisable as you will lose your funds without your private keys.
Coinbase is a popular storage wallet along with Electrum, Blockchain.info and Jaxx.
There are also hardware wallets available in the form of a gadget that looks similar to a memory stick. Ledger Nano S, Ledger Blue and Trezor are a few examples.
According to Coin Clarity these are the top five Crypto wallets of the moment:
Basically speaking, a crypto exchange is an intermediary digital platform where traders buy and sell coins using different currencies, sometimes referred to as Digital Currency Exchanges (DCE). There is no ‘best cryptocurrency trading site’ as all of them offer different services.
Before you begin trading, it is worth spending time looking through the different cryptocurrency trading platforms to see which is best for you. Exchanges have different strengths and weakness, some offer margin trading, some don’t. Some offer a simpler user-interface while others require tutorials, some are more established than others and others offer lower fees. Spend a bit of time looking.
To get an idea of the best trading sites we have listed below some of the most popular, as well as some of the lesser well-known:
When you have got to grips with the basics of trading cryptocurrency, it could be time to start looking at other ways to make profit through crypto.
As with traditional investment margin trading, traders borrow money against what they have in their existing funds to increase their capacity to buy. This is sometimes called ‘leveraging’ and ultimately, you must pay back the money you borrowed, plus fees.
Crypto currency trading sites that offer margin trading will have different options on leverage. Some offer short trading, when you bet on the fall in price and long trading, where you bet on the price rising. This allows a trader not to reveal the balance of your fund on an exchange.
Margin funding is risker, and some trading platforms require a certain criteria to be met before an account can be opened.
A trading bot can be helpful for both newcomers and experts in the world of trading crypto currency. These bots are programs that assess trends and patterns to conduct trades using algorithms. They have been used for a while in other markets like hedge funds and equity and have now emerged into the crypto arena with lots of different options available.
Some of the software is free while for others there are fee structures in place. So, which one do you choose? We have listed below a few different options. Some are more advanced, while others are straight forward. Although there is no designated Bittrex trading bot or Kraken trading bot, for example, there are bots that support these exchanges.