Trading for Beginners
A Beginners Guide to Cryptocurrency as With Ethereum and Bitcoin
In this tutorial for beginners, we explain how to trade cryptocurrency. The first step in trading cryptocurrency is to select a cryptocurrency wallet and decide on an exchange platform from which to trade.
The next step is to gain verification from the exchange you selected so that you can fund your account.
After obtaining exchange verification and you have added funds to your account, simply complete your order forms to begin placing trades.
Here is what you need to start trading cryptocurrency:
One or two cryptocurrency wallets
Cryptocurrency wallets include wallets offered on the exchanges or wallets like Trezor or Atomic Wallet with help with short term storage.
One or two cryptocurrency exchanges
Examples of cryptocurrency exchanges include places like Kraken, Coinbase, and Bittrex.
Consider trading dollars to cryptocurrency like U.S. dollars to Ripple or Bitcoin. You can also trade cryptocurrency to cryptocurrency as with Ethereum to Bitcoin.
Alternative Solutions Like Cash App and Coinbase for Trading Crypto
If you are looking for a solid all-in-one solution, Coinbase works as a wallet, exchange, and a platform to trade.
They do have a minimal number of "altcoins" or alternatives to Bitcoin like Litecoin, Ripple, and Ethereum. Because of this limitation, many traders turn to other exchanges like Kraken, Binance, and Bittrex so that they are not limited to the vast number of cryptocurrency assets.
It is a straightforward transaction as the trader can purchase Bitcoin on Coinbase using dollars and arrange to send the currency over to Kraken to trade the Bitcoin for another cryptocurrency.
In addition to directly managing cryptocurrencies, there are indirect ways to manage them. Options include:
- Apps like Robinhood or Square's Cash App. The Cash App is highly recommended for beginners because it is easier to use
- Cryptocurrency IRA (Individual Retirement Account) – You will want to keep in mind that IRA's have fees, but can be useful in long-term investing strategies
- ETCG trust, ETHE trust, or The GBTC trust, all of which are managed on the stock exchange
- There are positives and negatives to every trading option; however, only Coinbase or Coinbase Pro will allow for all of the following options from trading, investing, storing, sending, and receiving crypto all from a single platform.
Here are some tips and recommendations to help you begin with Coinbase. It's great for both beginners and advanced traders.
Suggestion: For an easy solution, choose Cash App, and Coinbase when you are prepared to begin investing and trading cryptocurrency in the real world. When you have advanced on from Coinbase, consider trying Bittrex, Coinbase Pro, or Binance.
Things to Know Before You Start Trading
Here are some additional details you should know before you begin trading cryptocurrency.
The regular stock exchange does not include cryptocurrency. It is suggested that you use either Coinbase or Coinbase Pro when you sign up for a Coinbase account. Coinbase is different from Wall Street and its exchanges. Although the general mechanics may be similar, they are separate and very distinct entities.
Beginning traders prefer Robinhood or the Square Cash App. Cash App is a popular choice for beginners because it lets you buy, sell, store, send, and receive Bitcoin the same as Coinbase. Cash App does not offer other cryptocurrency options like Coinbase. It gives users exposure to Bitcoin without getting into a lot of the extra details on exchanges and cryptocurrency wallets.
Another option, Robinhood is similar to Cash App in that it's not a full exchange. Robinhood is not yet available in all states, and it does not allow for withdrawals and deposits. It does feature a more extensive selection of coins than Cash App, and they have plans to allow transfers.
The trading of cryptocurrency stocks on the stock market is popular among beginners. GBTC (Bitcoin Investment Trust) is the trust that owns Bitcoin, and they sell shares on the stock exchange. It is a way of investing in cryptocurrency without having to trade it directly. In addition to GBTC, there is ETCG (Ethereum Classic) and ETHE (Ethereum). It is also good to know that GBTC trades at a premium, meaning that it is more expensive than purchasing bitcoins. The traditional stock market trades during bankers hours, whereas cryptocurrency trading happens in a 24-hour market.
The cryptocurrency market can be incredibly volatile. Trading cryptocurrency can be hectic. You can quickly make a fortune and lose it just as fast when you trade Ethereum, Bitcoin, a stock like GBTC Bitcoin Trust, or another type of coin. With cryptocurrency trading, it's best to try and mitigate risks by understanding the technical analysis, and by not taking the long position in trading.
If you trade only the top coins like Ethereum and Bitcoin, you lower your risk of losing everything quickly. Alternative cryptocurrencies can be riskier to trade although they can offer fast gains on a good day of trading. Look for coins with lower volumes and market caps for a better risk and returns.
For a genuine cryptocurrency trading experience, the best place in the U.S. to buy, store, and sell coins is Coinbase. Currently, they offer Bitcoin Cash, Ethereum, Litecoin, Bitcoin, and a small amount of other currencies.
If you are an advanced cryptocurrency trader, you may want more a complete platform like Kraken, Bittrex, Binance, or Coinbase Wallet.
Coinbase is an excellent place to start as you can easily trade dollars for cryptocurrency.
Beginners have a variety of selections when it comes to how they begin trading cryptocurrencies. They can simply click a few buttons on Cash App or grab TREZOR, Binance, or Coinbase to get started.
Suggestion: You can invest in or trade cryptocurrency, or you can use it in transactions wherever the types of coins are accepted. As a developer, you can get paid in cryptocurrency. You can also use software and a graphics processing unit to mine coins. With all of these methods, it is still a good idea to get set up for trading. Miners will want to sell some coins, and developers need funds to run their projects.
Mining Cryptocurrency: Mining is an excellent way to earn cryptocurrency through investing. Traders will want to trade dollars for cryptocurrency on an exchange because there is an investment and many complexities associated with mining.
Everything You Will Need to Know to Start Trading
After reviewing all of the details above, you may want to start trading actual cryptocurrency. Here are some helpful tips:
- Beginners should look for companies with good reviews and a solid reputation for wallets and exchanges. They should also begin by trading more prominent coins in 2020 like Ethereum (ETH) and Bitcoin (BTC).
- Begin with Coinbase because it is the most popular cryptocurrency website, and they offer a single platform for a variety of wallets that include Bitcoin Cash, Litecoin, Ethereum, and Bitcoin. They also have a currency exchange.
- Once you fully understand Coinbase, you may want to move to Coinbase Pro, or others like Kraken, Bittrex, or Binance.
Suggestion: The first step to take as a beginner is to invest in a primary cryptocurrency like Bitcoin. You can then trade dollars for cryptocurrencies on an exchange. Another good step from here would be to trade Ethereum or Bitcoin for others.
You may also try trading crypto pairs, which can pay off, although it is riskier and more complex that single trading.
Please note that margin trading is not recommended unless you understand fully and are an expert. Because cryptocurrency is a volatile trade, your funds could be wiped out instantly with margin trading.
It is also essential that you fully understand the tax implications of cryptocurrency trading. In the U.S., cryptocurrency is considered to be property like most investments. It is not treated as currency.
Getting Started with Coinbase
Sign up for Coinbase online at Coinbase.com. Signing up will create a digital currency wallet you can use to store your currency.
Connect your credit card, debit card, or bank account to exchange digital currency.
Purchase cryptocurrency (trade dollars for cryptocurrency).
Sell cryptocurrency (trade cryptocurrency for dollars).
Sign up for another exchange and trade one type for another. Record all of your transactions for record-keeping and tax purposes.
Here are some essential tips that will help make the process easier:
- Always use a strong password and two-factor authentication to protect your account.
- Take advantage of all security precautions in Coinbase and Coinbase Pro. They are insured, but if your account is hacked, there may be a problem because the insurance only covers the company if they are liable.
- When increasing your limits for buying and selling, add all possible forms of payments. You will save money on fees with a bank account. It is suggested to use your bank account to buy cryptocurrency through Coinbase over other forms of payment.
- It takes three to five days to get your bank account approved for trading.
- Limits are placed on how much you can purchase or sell in a week. You can add a photo I.D. along with other forms of payment to get your limits increased. Your limits are automatically reviewed as you trade over time.