What is Crypto Trading?

After reading this concise guide, you will learn the answer to the question “What is crypto trading?” and the steps you need to take to start trading crypto.

In this article

1. Crypto trading: What it is
2. How to trade cryptocurrencies?
3. Frequently Asked Questions on Crypto Trading

The popularity of cryptocurrencies made many people take to crypto trading. Several crypto trading platforms exist, and crypto traders use various trading strategies.

We will start with the basics by answering “What is crypto trading?” and then move on to crypto trading strategies.

Crypto trading: What it is

Crypto trading refers to buying and selling cryptocurrencies. Traders buy cryptocurrencies in exchange for fiat currencies. They sell crypto to get fiat currencies, alternatively, they might trade one crypto for another.

Crypto traders use crypto exchanges and brokerage platforms for trading. They use a wide range of trading strategies to maximize their profit. The crypto market is volatile, therefore, sudden profits and losses are common occurrences.

How to trade cryptocurrencies?

Crypto trading involves the following steps:

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1. Open a cryptocurrency exchange account and fund it

Cryptocurrency exchanges allow you to trade cryptocurrencies. You need to open an account by providing the necessary personal information.

You need to link a bank account with it and fund the crypto exchange account. Debit cards and wire transfers are common ways to fund a crypto exchange account.

Many traders use centralized exchanges like Coinbase. Some traders prefer decentralized exchanges (DEXs) like Uniswap.

2. Buy a cryptocurrency wallet

You will need to store cryptocurrencies, therefore, you need a crypto wallet. There are custodial wallets, software wallets, hardware wallets, and paper wallets. You will have a public key and a private key.

Custodial wallets are managed by crypto exchanges. These and software wallets offer less security, however, they make crypto trading easier and quicker.

Hardware wallets are the most secure since you store your crypto offline. Paper wallets are secure if you don’t lose them.

Many crypto traders store a portion of their crypto assets in a wallet like the Coinbase wallet for trading. They might use a hardware wallet from Ledger to store the crypto assets that they want to hold for a long time.

3. Choose cryptocurrencies to invest in

There are thousands of cryptocurrencies. You can invest in leading cryptocurrencies like Bitcoin and Ether. They have large market caps, and their prices are relatively predictable. Many crypto traders invest mostly in these cryptocurrencies.

Crypto traders also invest in lesser-known altcoins. They have smaller market caps, and they are less predictable.

4. Select crypto trading strategies

There are many crypto trading strategies to choose from. Crypto traders with experience in stock trading can also use stock trading strategies. The following are popular crypto trading strategies:

• Day trading;
• Range trading;
• Scalping;
• High-frequency trading (HFT);
• Dollar-cost averaging;
• Building a balanced portfolio;
• Avoid getting influenced by hype;
• Taking trading calls based on primary research;
• Arbitrage.

Automated crypto trading is increasingly popular. Crypto traders can use automated crypto trading platforms like Coinrule.

As the crypto trading market is on the rise, many organizations, from startups to established companies, are considering starting a crypto trading-related business, be it launching a crypto exchange or building a crypto wallet.

Developing a software solution like this requires a team of professional programmers with niche skills and expertise in advanced technology such as blockchain. DevTeam.Space has helped multiple customers implement their blockchain-powered projects and can assist in developing yours.

You can contact us via a short specification form to get a free discovery call with one of our tech account managers, who has extensive experience in managing similar projects.

Frequently Asked Questions on Crypto Trading