Introduction to Crypto
Bitcoin is the first ever cryptocurrency that is native to a blockchain network with an eponymous title. There are many other blockchains in the cryptocurrency markets that also issue native tokens which are called altcoins, short for alternative coins.
Blockchains are usually open-sourced and decentralized protocols that allow anyone to participate in the trading.
At the same time, developers can view the source code of Bitcoin and altcoin blockchains and use them at their discretion. Furthermore, investors can view the transaction details posted on the blockchain ledger to ascertain their authenticity.
Additionally, anyone can become a node or participate as validators/miner on a blockchain network by completing the programming requirements.
Should You Invest in Bitcoin or Altcoins?
Bitcoin has been around since 2009 and has a strong market dominance and goodwill meaning that investors consider it a safe investment option. The global crypto leaderboard can be considered as an unofficial index with tokens with the biggest market caps.
However, trading is an intricate process that is a mixture of several aspects such as trading strategy, trading goals, budget, experience, technical knowledge, and market analysis etc. Investors should also consider that cryptocurrencies have higher price volatility in comparison to stocks, commodities, and forex markets carrying a greater trading risk.
Investors can also foray into crypto derivatives and leveraged trading options to increase their risk exposure.
The starting point for an investor is to set a personalized goal for the profits that they want to achieve. The next step is to formulate a suitable trading strategy that is tailored to their requirements. Investors must allocate a budget that does not exceed their risk appetite.
Investors can opt for short-term, long-term, long, and short positions depending on their knowledge and experience. When it is time to pick the suitable virtual currencies in their portfolio, the investors can conduct research and use tools such as fundamental and technical analysis.
Short-Term Trading Vs Long-Term Investing
Short-term trading is a method reserved for investors with considerable market experience and understanding of technical metrics. Short-term trading techniques include options such as swing trading, day trading, range trading, and scalping etc.
Traders usually opt for higher frequency of total trades, shorter trading duration, leveraged positions, and trading with massive investment budgets to ensure profits.
Therefore, this type of trading option warrants quicker profits, with a caveat of increasing the risk for sustaining losses. Long-term investment in comparison is more relaxed approach and suitable for beginners.
Fundamental Analysis Vs Technical Analysis
Market analysis is a very important aspect of how investors can improve their profit earning potential and minimize risk exposure. There are two basic types of market analysis namely fundamental and technical options.
Fundamental analysis is based on the performance of a given virtual asset as a whole depending on factors such as utility, whitepaper, decentralization, security, consumer reach, reputation, and community support, etc.
On the other hand, technical market analysis is defined metrics and indicators that investors need to learn and incorporate to track the performance.
Technical indicators compare the current price of a virtual currency with previous price and volume details and other associated factors. Some of the most popular technical indicators include candlestick charts, moving averages, and trend lines etc.
How to Purchase Bitcoin and Altcoins?
Investors can sign-up on a cryptocurrency exchange that is available in their region. Most trading platforms are regulated entities and require the consumers to complete the verification checks such as KYC and AML etc.
Investors can use credit/debit card to purchase cryptocurrencies or connect their digital wallet account to transfer funds or cryptocurrencies.
Investors can purchase or sell all cryptocurrencies that are listed on a centralized exchange platform based on the funds that are available in their wallet accounts.
Investors can access the trading tools that are available for the investors such as stop-loss, technical indicators, profit taking, notification and trading bots etc.
Cryptocurrency investment is a tricky process and it requires considerable work and research to ensure success. Therefore, many trading forums provide educational resources for their consumers and include notice boards to brief the account holders regarding risks associated with cryptocurrency investments.