The unstoppable fame gathered by crypto, short for cryptocurrency, and the thriving adoption and interest in this concept have piqued the interest of several investors. By 2023, the rate of crypto ownership worldwide stood at 4.2% on average, with more than 420 million global crypto users.
However, before jumping into the game, you must fathom its risks and rules. If you are wondering how to invest in crypto using a secure cryptocurrency trading platform, this article will guide you completely.
Understanding The Concept Of Cryptocurrencies
Going back to 2009, technocrats and millennials thought nothing more of Bitcoin than a fascinating phenomenon. Years later, the predictions of futurists and technicians about crypto’s bright future are coming true. Consequently, millions are being drawn towards cryptocurrencies today for potential investments and using a cryptocurrency trading platform.
Cryptocurrencies are an alternative to physical currencies, allowing individuals to make payments across the network. Established on blockchain technology, they offer a transparent and safe method for the transfer of funds.
Blockchains employ cryptography to keep track of transactions for transparency and save data, avoiding the chances of information manipulation. Moreover, cryptocurrencies have no central authority to control or manage them.
Hence, the decentralized nature gives power to individuals to execute transactions between peers without intermediaries. Given that a small number have a good grasp of these tokens with no regulation, almost every financial institution is unwilling to get a handle on them.
Different Between Crypto Investing & Crypto Trading
Exploring the land of cryptocurrencies brings you face-to-face with selling and purchasing concepts for digital assets. Amid this knowledge, you may get stuck with the question of “how to learn crypto trading?”.
For this reason, you must first discover the difference between crypto investing and crypto trading. One must also acknowledge the better option of the two. Regardless, every trader and investor has a single objective – making more profits.
The anticipated outcome times differ significantly. The outcome time extends from long to medium term. However, in trading, this period is medium to short term. As a crypto investor, you will buy and store digital assets for an extended period, stretching between months and years.
Meanwhile, a crypto trader only holds the position for several seconds to multiple weeks.
Considerations Before Making Crypto Investments
Traversing the adventurous path of cryptocurrency investment with a leading cryptocurrency trading platform demands the understanding that this is for the long term. Hence, your investments are for securing your future. To make knowledgeable and wise choices in the journey, you must consider a few things for investing.
● Assess Your Individual Financial Goals
Be truthful about your willingness to invest a certain amount from your monthly income. Determine the investment period and how much corpus you anticipate in the closing stages of the investment. You may curtail the investment costs by enduring investment and reinvesting potential gains.
● The Volatile Nature Of Crypto
Acknowledge that the market for cryptocurrencies is developing rapidly. As a result, crypto has a higher volatility than alternative asset classes. This point is crucial before making investments with the best crypto trading platform.
● Allotting Cryptocurrencies To Your Portfolio
Investors should begin with cryptocurrencies forming 2 to 5% of their portfolio on a reliable cryptocurrency trading platform. It ensures the asset class has a firm position in the portfolio while limiting the exposure.
According to the CFA Institute Research Foundation’s report, they plunged into Bitcoin’s impact on their diversified portfolio from 1st January 2014 to 30th September 2020. Throughout the period, a quarterly rebalancing strategy came into play in allocating 2.5% to bitcoin. It improved the gains of the traditional portfolio by 23.9%.
Given that the allocation was very tiny, its impact is significantly impressive. Magnificently, Bitcoin stood by around 2,875% across the duration. However, take these findings with a grain of salt, depicting that more purchases are a good decision. But this is only great for new adopters.
For instance, there would be no impact by July 2022 when putting the same crypto amount in December 2022. As per Edelman, you can build a blended portfolio of Ethereum and Bitcoin. These two possess over 60% of the total market share of crypto.
Edelman recommends a fifty-fifty or a sixty-forty split, depending on the favorite coin. Else, it is equal to making massive bets, which you must avoid considering the asset class has enough risks.
Leinweber adds while Ethereum and Bitcoin comprise the larger portfolio share, you must include smaller shares for various crypto assets to generate better long-term returns.
● Evaluate Risk Profile
Before you dive into the knowledge of “how to learn crypto trading,” evaluate the overall risk you are ready to accept regarding your investments. Individuals can look forward to investing in blue-chip cryptos if they are indifferent to risk.
Those ready to take additional risk may keep an eye on reduced market capitalization altcoins for crypto investment. Further, the crypto market is comparable to other financial markets and sways by external influences. These factors include accessible technology, speculation, global events, legal landscape evolutions, and market sentiment.
● Conduct Market Research
Seek trustworthy information sources, become a part of cryptocurrency communities, and gather relevant data. All these will help you learn the evaluation process of a cryptocurrency trading platform and determine the market’s direction.
How To Select The Top Cryptocurrency Trading Platform?
Here are the most crucial factors for you to consider when deciding on the most ideal platform:
● Reliability:
It would be useless if you cannot take out your profits efficiently, no matter the number of trades you perform. Seek a reliable cryptocurrency trading platform with a clean history and market reputation. Seek a platform with multi-signature and 2FA (two-factor authentication) for added security.
● Mobile Application Availability:
The option for adaptable online trading is always beneficial. A platform with a mobile application ensures you can open your portfolio without the need for a computer. Moreover, many crypto traders favor smartphones over computers for day trading.
● UI/UX:
Another imperative standard to consider is usability. Today, the majority of trading platforms utilize standardized software. An incredible trading platform will guarantee a user-friendly interface, an embedded programming language for showcasing technical indicators, and tools for technical analysis.
● Brokerage License:
Several brokers often provide the exact trading platform. Nonetheless, employing a platform with a brokerage license is always pleasant. Sad to say, the services offered by many brokers go beyond the coverage of local regulations.
Therefore, choosing the ideal license can be challenging as different jurisdictions provide varying licenses. You must consider the regulation and license for trading within a jurisdiction. The financial administration will carefully audit and observe the trading activities, privacy policy, and leading execution policy of a company.
● Trading Conditions
Are you aware of the trading conditions of your cryptocurrency trading platform? Take into account the spread and additional fees brokerages charge when operating on a trading platform. These fees can take away a cut of your earnings, particularly for day trading and scalping.
Types Of Crypto Investment Platforms
Here is a table to help you familiarise yourself with different types of crypto investment platforms to begin your journey on how to learn crypto trading.
Criterion |
Decentralised |
Centralised |
Peer-to-Peer |
Instant Exchangers |
| Security | High | Low | High | Medium |
| Commissions | Low | Medium | No | High |
| Liquidity | Low | High | Yes | Medium |
| Fiat Availability | No | Yes | No | No |
| Coin Holder | User | Exchange | User | User |
Choosing the right platform is crucial to meet your preferences and requirements. Consider the disadvantages and advantages before making the right pick.
Storage Of Cryptocurrency
Investors and traders use crypto wallets to store their cryptocurrencies. These wallets are of two types – hot and cold. While a hot wallet connects well with the internet, the same is not the case with a cold one. However, these wallets are unique software programs designed for storing your cryptocurrency.
These wallets keep the public and private keys that help users access the blockchain that comprises everyone’s cryptocurrencies. A user will need both keys for a successful transaction. These keys will help you unlock your crypto on a blockchain.
You can find several virtual wallets, including mobile, online, hardware, and desktop wallets. In the case of hot wallets, ensure you are maintaining their security. Many prefer VPN to safeguard and encrypt their online transactions.
Data encryption adds another protective layer to keep online transactions anonymous. It will ensure you safely invest in crypto on a cryptocurrency trading platform.
Holding & Selling For Taking Crypto Profits
The final step to investing in crypto is to hold and sell. The game plan for cryptocurrencies extends generously, considering the communities and foundations they benefit. Crypto usage is distinct and goes beyond the current available knowledge.
Therefore, investors must not consider cryptocurrencies a simple scheme for getting rich quickly. Consequently, have a duration of investment and book crypto profits regularly.
Additionally, it is crucial to understand the developing nature of the crypto market compared to other investment opportunities. Therefore, several coins will come into the market, build hype, and die down. Moreover, as an investor, you must know about the typical scams.
Conclusion
In a limited time, cryptocurrencies have become a hot household name. Crypto stands in a new spot as an international currency with the potential to replace the national currency unit.
While these are improbable fantasies, it is not far from the truth that many seek them as a viable investment alternative. Many look for a reliable trading platform to invest in their favorite cryptocurrencies and build a solid portfolio for a promising future.