It is true that over 90% of crypto traders lose money and that most beginners here will probably quit within the first two years.
But the 10% that make it here go on to make fortunes and multiply wealth from this niche. So what is the difference between the successful and the unsuccessful crypto trader?
We believe that all this has to do with the mastery of the subject that in effect helps you learn how to remain profitable.
Traditionally, getting to this level meant you must have had years of training and countless hours of testing and trying out new trading strategies or subscribing to exorbitantly priced trading signal providers.
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Our Recommended Crypto Exchange for 2020
- 15+ Cryptos Available
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How to Trade Cryptocurrency in 3 Easy steps
Step 1: Open a CFD account
Open a free trading account with our recommended broker. Start by completing the account user profile before uploading such verification documents as your driver’s license to complete the KYC verification process.
Step 2: Deposit funds
After registration and the confirmation of your account details, you can proceed to transfer funds to your approved trading account using one of the provided payment methods.
Step 3: Demo and live trading
Begin trading on a demo account. The demo account allows you practice CFD trading in real time and in a risk-free environment while gaining a deeper understanding of the trading platform. Later on, switch to live trading.
Step 1: Choose a trading platform
1. eToro - Best for social trading cryptocurrencies
Etoro stands out as one of the best online cryptocurrency trading brokerage because of the social trading feature, low trading costs, and interactive platform. Here, you also get to trade a considerably wide selection of cryptocurrencies in the form of CFDs for international traders and actual tokens for U.S traders.
Registering for a cryptocurrency account with eToro is straightforward. Their copy trading feature as well as the easy to use trading platform have also made it attrcative for most beginners. The free wallet and highly sophisticated trading resources like advanced trade analysis tools and indicators on the other hand help pull in pro crypto traders.
There are no deposit fees, the trading costs and rollover fees are highly competitive but you will have to part with a $5 withdrawal fee.
- Minimum deposit: $50
- Best trading feature: Advanced trade analysis and market research tools
- Recommended for: Crypto trading beginners hoping to earn while learning
- Traders benefit from commission free trades and highly competitive trading fees
- eToro is also a highly regulated international online Crypto trader
- The account opening process is easy and straightforward
- One may consider their minimum initial deposit of $200 high
- You will be charged a 20% commission of the profits made from copied trades
2. Cryptorocket - Best for trading cryptocurrency anonymously
The Cryptorocket online trading platform supports the buying and selling of 30+ cryptocurrencies on its platform. These can be traded on two highly intuitive and easy to use platforms – the MT4 trader and the Cryptorocket proprietary web trader platforms.
The broker also some of the most affordable and highly competitive crypto trading costs. Some of the features unique to cryptorocket include the fact that it is blockchain based and less regulated. Both of these ensure that you don’t have to prove identity and allows for anonymous crypto trading. Plus the site focuses of pure Crypto CFD trades.
- Minimum deposit: $10
- Best feature: Allows for anonymous crypto trading
- Recommended for: Best for both veteran and beginner crypto traders looking to trade anonymously at competitive rates
- Broker features a highly advanced and easy to use trading platform
- The account opening process is easy and straightforward with n KYC verification requirements
- Has some of the most affordable crypto trading fees
- Crptorocket isn’t as regulated as most other trading platforms on this list
- The broker doesn’t have a mobile trading app
3. Tradestation - Best for advanced cryptocurrency trading platform
Tradestation has one of the most advanced and feature-rich cryptocurrency trading platform. It allows for CFD crypto trades on both its webtrader and mobile app platforms. Both of these are relatively easy to use and feature a wide range of trading and market analysis tools.
Beginners on the platform will also have access to the Tradestation Simulated Tool (demo account) where they can practice how to buy and sell using the highly sophisticated trading platform. There are two types of trading accounts offered by Tradestation, the TS Go account for relatively new traders. And the TS Select account for the veteran crypto trader.
- Minimum deposit: $0 for TS Go and $2,000 for TS Select account
- Best feature: Most sophisticated range of trading tools
- Recommended for: Both veteran traders looking for the most customizable trading platform
- Tradestation is one of the most advanced and feature-rich crypto trading platform
- Features a free demo account for use by traders inexperienced with either their platform or the crypto market
- Available in multiple trading platforms – both proprietary and the popularMT4 trader
- The broker maintains a complex and vague pricing structure
- One may consider the $2,000 minimum requirement for TS Select trading account high
Step 2: Learn how Cryptocurrency trading works
We advise that you start by learning as much as you can about trading crypto as quickly as possible.
What is a cryptocurrency and what are the different factors acting on its price? What are the different crypto trading platforms and what impact do they have in determining your profitability? What are the different challenges and promises rocking the crypto industry and what impact do they have on your profitability?
It is after understanding these basic facets of crypto trading that you max your chances of joining the consistently profitable 10%.
And to help you get started, we have come up with an ultimate guide on how to trade crypto profitably in 2021.
Read on to learn how to chose appropriate cryptocurrency trading analysis tools to get introduced to a step by step guide on how to create a trader account and execute your first trade.
Step 3: Choose an appropriate type of analysis
Now that you have decided on the type of trader you wish to become and familiarized yourself with the different internal and external factors affecting the crypto industry, your first step to trading is learning to analyze the crypto market.
It is at this point that you decide whether to employ fundamental analysis or technical analyses in decrypting the impact either of these has on the crypto price action:
Fundamental analysis is an all-inclusive price-determining tool used to determine the price movements of a cryptocurrency and its investment potential.
Ironically though, while the fundamental analysis is aimed at researching and determining the price at which to enter or exit a trade, it involves studying everything else except the price.
Facets of fundamental analysis that you must familiarize with include:
- Sentimental analyses: This tests the markets’ general opinion about a certain coin. Ideally, the more positive and optimistic the populace is about a coin, the higher its likelihood of performing well in the near future and vice versa. You can use such sentimental analysis tools as Sentiment Analyzer and Hootsuite Insights. You will also want to concentrate our analyses on high chat-volume platforms like social media as well as such popular sites as Reddit and Quora.
- Major news analyses: You also must always be on the lookout for hints and confirmations of major news and events. These range from partnerships, system upgrades and early detection and fixes of bugs that push the price up; to major hacks, loss of key partners and crypto coin developers that have a negative effect on the price of the coin.
- Demand and supply analysis: Mastering the different forces affecting the demand and supply of a crypto coin may easily pass as the most basic aspect of fundamental analyses. But also the most neglected. Most traders are too preoccupied with testing the market sentiments and following news that they forget to monitor the different factors affecting the demand and supply of the coin.
This refers to forecasting the price action of a specific altcoin based on its past performance. It is also referred to as charting given that all the types of analyses involved here will only take into account the price chart details. Some of the most important technical analyses tools that you must familiarize yourself with if you hope to succeed as a crypto trader include:
- Support and resistance: Excelling in technical analysis starts with the mastery of the support and resistance trendlines. Support, in this case, refers to the lowest price level at which the price of a crypto coin refuses to go past. Resistance, on the other hand, refers to the highest level at which the price of a coin hasn’t been able to hop above. These tell you the minimum and maximum price ranges traders are willing to sell and buy the crypto coin respectively.
- Moving averages: This is by far the most commonly used technical analyses tool and is available as both Simple moving averages (SMA) and Exponential moving averages (EMA). SMA involves summing up the price of a crypto coin over a specified period to determine its average price. EMA, on the other hand, involves averaging the price of the crypto coin over a given period while giving preference to more recent crypto performance data.
Step 4: Open a Cryptocurrency Trade
This is a leading brokerage providing money market services like forex, shares and commodity and cryptocurrency trading.
It is headquartered in Israel but has leveraged technology in the past few years to expand operations into virtually every part of the world. This exponential growth would see it named one of the fastest-growing fintech companies in Europe.
So, why crypto trade on eToro platform?
eToro is an industry pioneer when it comes to embracing social trading, especially copy trading.
The feature allows the beginner to continue learning about crypto trading while making elite-traders-like profits by copying the trades of leading traders at a small fee.
- Competitive leverages
Due to the large volatilities experienced in the crypto trading industries, most crypto exchanges and brokerage houses won’t offer leveraged crypto trading services.
With eToro however, you get to crypto-trade with leverages as high as 1:20.
The last thing you need is an exchange or brokerage firm that keeps looking for ways of eating into your deposits and cryptocurrency trading profits through hidden fees.
How to Trade Crypto on eToro
eToro has for the longest time been a crypto CFD trading platform. This was until it penetrated the United States market in early May 2019 where CFD trading is illegal, forcing them to evolve and start processing crypto withdrawals and even come up with an eToro crypto wallet, for the U.S market. The trading process, however, remains largely unchanged:
1. Start by creating an eToro trading account
Creating a trading account with eToro is pretty straightforward. They will only need your names and address followed by identity verification where you send them your photo and that of your government-issued identification document.
They will also ask you a few questions to test your level of experience in crypto trading and assess the amounts of disposable incomes.[/toggle]
2. Deposit cash
If you wish to trade in any of the 15 crypto coins listed on the eToro platform, you will need to first activate your account by making a deposit.
Note that the minimum initial deposit amount acceptable here stands at $50 but you only need a minimum $25 to enter into a crypto trade. [/toggle]
3. Alternative 1: Buy or sell manually
Entering into a trade here is quite straightforward. On your user dashboard, click on the Trade Markets Icon under discover.
This opens a crypto trading window with a list of crypto coins. Getting into a trade at this point is all about clicking on your preferred cryptocurrency and making a sale or buy decision.[/toggle]
4. Alternative 2: Copy trading
If you aren’t too confident about your crypto trading skills, don’t have time to carefully analyze trades or are just a beginner but still want to profit from winning trades, consider copy trading.
eToro makes it possible for you to copy the trades – the price entry and exit points – of some of the most experienced and profitable traders on its platform.
Under the discover section of your dashboard, select copy trades and this presents you with a list of all pro-traders that you can copy trades from.
Alternative 3: Trade a cryptocurrency copy portfolio
Still, under the discover section on your eToro’s user dashboard is the ‘trade-in copy portfolios’ option.
Here, the broker has pieced together different trade portfolios that comprise of highly diversified assets. These are expertly managed and the broker is also constantly monitoring their performance.
If you don’t feel like trading cryptos manually or copying other people’s trades, you may consider trading in one of the crypto coin portfolios listed therein.[/toggle]
Disclaimer: Transacting in virtual currencies is subject to various risks, such as price volatility, and is therefore not suitable for everyone. Your capital is at risk. eToro offers only Crypto (real crypto no CFD) so only buy with no leverage, later on this year eToro will also offer real stocks for trading.
Understanding the types of trades available for crypto-traders
There are two primary ways of trading Crypto. You can choose to trade in the crypto exchanges where you get to own the coins or through a CFD Broker where you trade cryptocurrency CFDs.
Both trading methods are equally profitable but adopt varied approaches to crypto trading.
For instance, if you hope to own the coins you are buying, you must also get ready to protect them. And this involves investing in different wallets for the individual coins.
Trading cryptocurrency, on the other hand, is relatively straightforward and does not involve the transfer of ownership of the traded coins.
You are only entering into a contractual agreement with your broker and betting against the price action. You, therefore, don’t need wallets and are exposed to such niceties of crypto trading like leverage that allow you to stake more than your trading account balance.
More importantly, you are exposed to innovative trading technologies that allow you to benefit from such innovative technologies as copy trading.
What are the pros and cons of cryptocurrency trading?
Factors affecting the crypto trades and the crypto market
After understanding the type of trades available, you will now want to gather as much information about the cryptocurrency market as possible.
This starts with identifying the different factors acting on blockchain technology and the cryptocurrencies and understanding how each affects the price, demand, and supply of different coins.
- Master the art of leveraging volatility:
Cryptocurrency trading is by far the most volatile form of trade. But for the most part, this volatility has almost always been presented in a negative light.
For instance, when Bitcoin depreciated in value from $3,000 to $2,000 and climbed up to $5,000 within three months in 2017, some bitcoin trading enthusiasts were quick to point out how quickly it is to lose money.
And while it is important to take this observation into consideration, you also need to bring objectivity. You need to learn how to master this volatility to your advantage by riding even the most volatile markets to profitability.
A case in point here would be waiting to buy when bitcoin price hits the trough and then riding it until it peaks and stagnates.
- Understand how blockchain works
Safe for bitcoin that was developed as an alternative to Fiat currency, most other digital currencies including the all-popular-Ethereum are tokens, specially designed to be within a specific blockchain.
In this case, anything that affects the blockchain will ultimately have an impact on the tokens.
For instance, banks and technology-based companies are constantly embracing the security and integrity features of the different blockchain protocols in their day to day operations.
This is always a plus to the network whose net impact is an increased token price. Bugs and hacks, like the ones rocking Ethereum blockchain, on the other hand, tend to push the crypto-coin price downwards.
- Internal forces and how they affect trades
If you are to go pro with crypto trading you must also commit to mastering all the different internal factors affecting the price of one or all crypto coins.
For instance, is a particular crypto exchange site believed to inflate trading volumes?
Have hackers discovered another exploitable bug with a crypto coin? Has another coin reached its minable limit?
These are all internal crypto industry factors that affect the demand and supply of a coin as well as its price by extension.
- External factors and their influence on crypto prices
There are a host of factors that have a direct impact on the demand and supply of the crypto coins and the crypto trade but tend to emanate from outside the industry.
These include threats of crypto trade regulation by different governments, actual ban of cryptocurrencies and crypto trade – like in the case of China, negative media reports about crypto hacks that create negative sentiments towards the trade, a coin’s adoption by multinational industry influencers brand or even hiked electricity prices that affect crypto mining.
Learning about these and more external factors and their impact on crypto price and trade goes a long way in helping learn how to analyze trades and forecast the price action actions. [/su_list]
What do you need to know before taking up a trading position?
- Stop loss and take profit and limit orders
You now are all set, but before you start buying and selling crypto, you must first learn basic risk management practices and how they protect your capital.
And the most basic involves learning how to use the stop loss and target profit orders. Stop-loss is a market order that pulls you out of a losing trade while target profit is the point at which you would like to get out of a winning trade before it tips.
You must also learn to use limit orders – the maximum price at which you are willing to buy a crypto coin.
- Position size, risk amounts and risk/reward ratio
You will also want to establish a base for your cryptocurrency trading strategy. This is informed by the position size – the number of units of an altcoin that you are willing to trade, such as 5BTC or 15 XRP, the risk amount – the amount of money that you stand to lose should your forecasts fail, and risk-reward that signifies the potential mounts you stand to gain should your forecasts come through.
These should then help you come up with an ideal risk-to-reward ratio that you should strive to adhere to for all your trades.
- Leveraged crypto trading
Leveraged crypto trades ensure that you score above average profits when you have your analysis and price predictions for a particular digital coin right.
But they will also result in above-average losses if you are wrong. It on this basis that we advise you to practice moderation when it comes to leveraged crypto trading.
- Learn how to secure your funds
If your trading strategy and choice of trading platform involve owning the traded crypto, you must embrace the most upbeat methods of keeping them safe.
We understand that in the spirit of profit maximization, you may be tempted to leave these coins with the crypto exchange if they promise to invest them safely on your behalf and pay attractive interests.
But in light of the numerous vulnerabilities, most of these exchanges are exposed to hacks – case in point being the MTGox and Bitfinex hacks- we advise that you consider withdrawing your coins and saving the keys in a hardware wallet.
This is a physical device that keeps the private keys used to access your crypto coin assets safe. And some of the most popular hardware wallets include: Ledger Nano S Wallet, TREZOR wallet, KeepKey wallet[/su_list]
What is a cryptocurrency?
This refers to a digital currency that was specially designed to serve as a medium of exchange within a blockchain network. Their influence has since spewed over to the world and most conventional brands and institutions are gradually recognizing these digital coins as an accepted medium of exchange.
Is crypto trading a good way to make money?
Yes, the volatility experienced in the cryptocurrency industry has transformed crypto coin trading into one of the most profitable money market trades. These have however been a source of pain and unimaginable capital loss for traders that staked high on poorly analyzed trades.
What are the most traded coins?
The last thing you need when it comes to crypto trading is sticking with a little-known and low-volume traded coin that no one wants to buy. We advise that you first invest in the high volume and high demand coins like Bitcoin, Ethereum, Ripple, Bitcoin Cash, and Ethereum Classic. You can also consult different cryptocurrency trading charts to single out digital currencies with the highest transaction volumes.
Between shares and cryptocurrency trading, which is more profitable?
Crypto trades are by far more profitable than investing in shares and stocks. This can be attributed to the surge in popularity for crypto coins and less bureaucracy in investments due to a lack of regulatory policies.