Let’s talk about money because it’s still early in the month, and you are still planning where to invest your money—either because you seek to expand your investment portfolio or because you are tired of not saving or investing your money.
Being Saturday, you plan to go out with your friends, share your ideas, get their opinions, and decide what best works for you. The good book says that where there’s counsel, things go well, doesn’t it?
One thing for sure is that one of your buddies will advise you to try crypto trading (now that our president said his government will embrace crypto mining). He will back up his suggestion with a story about his friend (who you probably have heard about) who is in this trade and seems to be doing well.
You are now excited and pulling that long pensive look—the one you pull when you aurora peering into the future and see yourself rich. No, wealthy.
Then you will ask your friend how to go about this crypto trade. After taking a sip from his bottle and deciding that he perhaps doesn’t have a working knowledge of the same, he will tell you to check it up on YouTube—the tutorials should do you good.
So why not let me save you the hustle? I will share with you the basics of crypto trade, after which you can take a deep dive and seek greater knowledge. Are you ready?
Let’s start. What is crypto trading?
Crypto trading involves buying and selling digital currencies on a digital platform. Cryptocurrencies are digital or virtual currencies that use cryptography for security. They are decentralized and typically operate on blockchain technology. There are two primary methods of trading cryptocurrencies: Contract for Differences (CFDs) and the actual trading of the coins. Let’s start with demystifying the former.
CFD trading entails predicting or speculating on the movements of the cryptocurrency. What happens here is that an individual gets into an agreement with a broker to exchange the difference in the price of a cryptocurrency from the time the contract is opened to when it is closed.
Picture this: You and your friend agree to bet on the price of a crypto coin, and you predict that the coin will appreciate. If the coin moves in the direction of your prediction, you earn—the difference in its value is your earning. The vice versa is also true—if the coin’s value takes an opposite direction to what you predicted, you have to pay the difference in value.
Okay. While CFDs can offer high potential returns, they also come with significant risks, including the possibility of losing more than your initial investment due to leverage.
Please note that you don’t need to have the actual coin when trading with CFDs you just speculate on price movements without actually owning the underlying asset.
You get it, right?
Good. Let’s move on.
Trading with the coins involves creating an account on a reputable exchange, depositing funds, and then using those funds to buy or sell cryptocurrencies.
By holding the actual coins, you can benefit from any increase in their value over time. You can either hold your assets (coins) on the crypto exchange or in a personal wallet. You can either do so in your hot wallets (online) or cold wallets (offline) but cold wallets are generally considered more secure.
Now, trading using the coin is technical, and you would do really well to read up on a few things, like when to trade (because I have come to realize that timings are very key in this trade), strategies to use (staking, holding, day trading ), and so on. Here are a few common strategies:
I also advise that you diversify your investments and learn to manage the risks. Key risk management strategies include setting stop-loss orders and not investing more than you can afford to lose.
Alright, now let me address the question that you now have—the most important, I dare say. Is crypto trading profitable?
Yes, crypto trading can be profitable, thanks to its high volatility in the market—the high fluctuations provide ground for traders to make a profit. You especially stand to gain massively during a bull market. The last one we had was in 2021, and Bitcoin hit its highest price ever of $69,000, and the crypto market made millionaires overnight.
The next Bull Run is projected to happen in 2025 after the 2024 Bitcoin Halving. Therefore, keep learning and be prepared when the time comes. You could be the next millionaire.
Ah I see you now. You are now grinning ear to ear, charged, elated, and you can smell your millions of cash—like the putrid air before the rains but don’t get too excited. Watch out for the pitfalls. What pitfalls? I’m glad you asked.
It is imperative that you do the following:
- Avoid impulsive trading.
- Avoid investing more than you can afford to lose (there are also losses in this trade, you know).
- Avoid falling for get-rich-quick schemes.
You will do well to watch out for these.
Lastly, be aware of the regulatory environment. Cryptocurrency regulations vary by country and can impact how you trade and invest. Always stay informed about the legal requirements in your region.
All the best, my friend. I give you my blessing as you venture into this trade. It shall be well.
P.S. Don’t forget me once you get rich.
+ There are no comments
Add yours