We all know what cryptocurrency is, or at least we should; the term crypto means encoded or protected, so all digital currencies have built-in security, as they all run on a blockchain. While there are many cryptocurrencies, Bitcoin is, without doubt, the most popular and with some basic knowledge, you can set up a trading account and trade a wide range of digital currencies.
Contract For Difference (CFD) Account
In order to trade, you need to set up a CFD account that allows you to trade crypto without actually buying it. You could, for example, buy (go long) or sell (go short) at any time, yet we don’t recommend you go straight into trading for real, at least not until you have a sound understanding of the commodities and markets.
The first step to trading crypto is to open an account with a reputable cryptocurrency exchange, such as Gemini, Coinbase or eToro, then you are able to buy cryptocurrency. We recommend using an established brokerage, where you can get the best advice from the experts.
Of course, taxation is part of crypto trading and traders use crypto accounting software that accurately calculates the amount of tax you have to pay. You need to set up a bookkeeping system at the very outset, otherwise, you will not be able to calculate your revenue; talk to an experienced tax accountant who works in the trading sector.
Link your trading account with your bank account
Once you have registered with a cryptocurrency trading platform, the next step is to link your bank account (create a separate account for trading only) and deposit some capital. It is not wise to go straight into trading, rather you should do some serious research into crypto markets and currency trends. There are more than 7,000 digital currencies that you can trade, which demands a lot of homework and research before making any investment.
Most crypto traders start with Bitcoin and like any other commodity, Bitcoin’s price fluctuates and the key to successful trading is to know when to go long (buy) and when to go short (sell). Google can take you to charts that show the fluctuation over any period you care to name; listen to top crypto analysts and have an open mind. Imagine if you had the foresight to buy a thousand Bitcoin when they were $1 each, you would now be a billionaire! It is important to understand that there is risk involved with any form of trading; don’t trade with more than you can afford to lose.
Start with a Dummy Trading Account
The best way to ease yourself into crypto trading is to start with a dummy account; choose a capital amount, configure your interface and start trading! The experience will familiarise you with the complex interface and you can explore the many powerful features; the only difference is you are not trading with real money.
It is important to set realistic trading targets; be prepared to invest in advanced analysis software and after a year of dummy trading, if you are up, then you are ready for some real crypto trading.