How to Become a Crypto Trader: A Step-by-Step Guide
The cryptocurrency industry is over a decade old and has come a long way from the launch of Bitcoin in 2009. The crypto market has seen the good, the bad and the ugly, yet it is still around.
Cryptocurrencies will likely stick around for a long time, especially as they keep evolving and becoming more accepted in the mainstream.
BlackRock, the biggest asset manager in the world, recently amplified this mainstream movement by applying for and receiving approval for the first-ever spot Bitcoin ETF in the U.S.
A spot bitcoin ETF is an investment you can buy and sell on the stock market. It follows the price of Bitcoin and allows you to invest in Bitcoin easily, like regular stocks.
Bitcoin on the stock market? Who would have thought? But here we are.
So, how do you get into cryptocurrency and become a crypto trader? This article will provide a step-by-step guide and the necessary steps to start.
A Step-by-Step Guide to Becoming a Crypto Trader
Here are 5 steps you can follow to become a crypto trader:
1. Educate Yourself on Cryptocurrency
Before entering the crypto market as a trader, it is essential to know precisely what and where your money is going. Cryptocurrency has been around for over a decade; thus, a ton of information, including online courses, blogs, and whitepapers, is available for potential investors like you.
Find out everything you need to know about the crypto-blockchain market ecosystem. Read up on common crypto terms and the different trading types available. Watch YouTube videos about blockchain, NFT, web3 and cryptocurrency. Listen to crypto podcasts and follow thought leaders in the crypto industry on social media.
Whatever your preferred method of consuming information, ensure that you apply critical thinking to the shared knowledge. Remember, this is an investment, and the goal is to profit.
2. Choose a Reliable Crypto Exchange and set up your wallet
Selecting a reputable and secure cryptocurrency exchange is non-negotiable. Research different exchanges and read their reviews online. Look at the team behind the exchange.
On Obiex, you can buy and sell Crypto at competitive market rates, use p2p trading and swap crypto without waiting for blockchain confirmation.
Furthermore, as a cryptocurrency exchange, we have established solid infrastructure and strategies to safeguard our customers against hacks and other security breaches. Read more about how we secure your assets here.
Once you set up an account on a crypto exchange, you can create different wallets for different cryptocurrencies. On Obiex, you get access to over 15 cryptocurrency wallets. Create an account for free here.
3. Start Small and Diversify
Diversification means investing in different crypto assets.
For example, Stanley and Thelma each have $1500 to invest in their crypto portfolios. Thelma invests $100 across 15 different cryptos, while Stanley invests all the $1500 in one Crypto.
Stanley will have heavy losses if the market crashes or falls, while Thelma will likely lose less.
Splitting your portfolio into low-risk, moderate-risk, and high-risk assets is advisable. If you have more high-risk investments, there's potential for huge gains and equally huge losses.
Conversely, more low-risk assets will bring minimal losses but low returns. Regardless of your risk appetite, your portfolio should be as balanced as possible.
4. Take Risk Management Seriously
Risk management is one concept both beginners and seasoned traders must always prioritise.
As a new trader, you must understand the best way to manage risk. You must also set up a strategy that helps you minimise loss.
For instance, your risk management strategy can involve establishing strict rules on when to hold or sell. You could decide to sell only when a coin or token has risen 20% or hold as long as the coin doesn't fall below 15%.
In the crypto investment market, beginners should consider setting aside a specific amount of money for trading and using just a small part of it to make the first couple of trades.
This approach ensures that they will still have money to trade if their investment moves against them.
To provide further context, let's say you set aside $100 to trade.
Then you buy $20 worth of BTC in the hope that it will rise and you can sell it, but instead, the price falls terribly.
Despite this loss, you will still have $80 left to trade. To state the obvious, the loss would have been more severe if you had used all the $100 to buy BTC.
In essence, always have a risk management plan and some money set aside to offset any losses you may experience when investing in cryptocurrency.
5. Learn from Your Experiences
Expect a learning curve in crypto trading. Analyse your trades, identify mistakes, and learn from them. Continuously improving your strategies and skills will lead to better results in the long run.
Trading Tips and Lessons from 5 Crypto Traders
Juwon, 7 years of trading experience
Don't be greedy if you want to keep your gains.
For the periods I tried to not be greedy and just take 10% every day, I made wins. But each time I was greedy, I had many losses.
Also, don't buy Crypto when there's hype in the market; buy when people want to sell.
A. Williams, 3 years of trading experience
Several lessons have stood out to me from my years of trading.
One, Patience - While some people make it quick in Crypto, others just have to go through that journey of consistent hard work before actually making real money, and I was one of them.
Two, Discipline - In the Crypto market, if you allow FOMO to rule your actions or do something outside your trading plan, it's likely to result in heavy losses.
Three, Contentment - I learnt that taking profit, irrespective of the size or amount, should be a top priority as no one knows the heart of market makers.
Four, Humility - No matter how much you make from trading, there's always someone richer and smarter than you. So to become better, learn from them.
Tony, 3 years of trading experience
Trading taught me patience. It sharpened my decision-making abilities, and I learned not to jump on everything you see in the crypto market.
Blessing, 2+ years of trading experience
I am impatient, but trading taught me to sit and wait and watch things play out as long as my analysis was done correctly.
Also, I now understand the value of little profits at a time. Most people just want to make a huge profit in a short time frame, but with trading, you learn to appreciate the little 2% here and there.
Williams, 2+ years of trading experience
Crypto trading taught me to trust my instincts more and know when to back down from things and look at them again, no matter how tempting it may be to continue pursuing them. Also, always take your profit and use Stop Loss.
To Recap
- Cryptocurrency trading offers a gateway to financial success. Like with any other investment or business venture, wins, losses, and lessons are part of the journey.
- If you're ready to start your crypto journey, join over 70,000 users on Obiex by creating an account today.
Disclaimer: This article was written to provide guidance and understanding. It is not an exhaustive article and should not be taken as financial advice. Obiex will not be held liable for your investment decisions.