Beginner’s Guide to Cryptocurrency Trading and Investing

Einführung

If you want to know how to invest in cryptocurrency, you’ve come to the right place.

This short cryptocurrency guide is the ideal way to get started. It’s been put together by our team of Investment Mastery experts. It tells you everything you need to know.

The What, When & How of Cryptocurrency

Cryptocurrency is a simple, interesting concept. In essence, it’s digital money. It’s popular because anybody can send and receive crypto directly, peer-to-peer. In other words, it cuts out the need for third-party involvement of banks or governments.

Transactions take place on what is known as a decentralised ledger. It’s a public ledger that is stored on computers worldwide. The transactions are also recorded for everyone to see.

Cryptocurrencies are still a relatively new technology, having only been invented in 2009.  Those who got into it early with Bitcoin are now famously very wealthy!

As of now, recent developments are allowing us to enter a new exciting phase of global mass adoption. Crypto exchanges are being firmly established. “Big business” and governments are now taking it seriously. Indeed, governments are looking into creating national cryptocurrencies. In effect, digital legal tender.

The past couple of years has been something of an extended “watershed moment.” It has triggered a new wave of capital investment. Along with the global adoption of a growing new digital financial system.

What is ‘Cryptocurrency Trading’ and How Does It Work?

Let us first define the term “trading” before moving on to cryptocurrency trading.

In general terms, trading is the practice of purchasing and selling assets for a profit. Goods and services are examples of assets that are exchanged between parties.

When talking about crypto trading, this is in relation to financial markets.  It’s like how stocks, shares, money and gold might be exchanged for profit. Thus, crypto trading involves buying crypto when the price is low. Selling for profit when the time is right.   

(You can find out more about that on our cryptocurrency course).

We also have a step-by-step video training on How to get started with cryptos, including profitable strategies. Subscribe to IM Insider to know more.

It has been said that purchasing cryptocurrency is more than a financial investment. It’s also a statement of self-identity.

Distinction Between Investing and Trading

Investing differs from trading. It’s important to be aware of this distinction if you are going to start investing in cryptocurrency.

• Trading – focuses on earning profits faster
• Investing – focuses on holding assets for the long term

When investing, we must look for long-term patterns and ignore short-term swings.

Trading focuses more on short-term swings.

Thus, understanding the daily market is necessary to avoid risks or losses.

At the end of the day, every human’s primary purpose is to earn money in the form of dollars or other currencies.

Every day, new coins are created, but only a tiny percentage of them survive. The products that offer the best technology or solve a complex challenge are the winners.

At Investment Mastery, we teach you to both invest and trade cryptocurrencies at lower or no risk. How to safely invest or trade is a smart game that we help you to learn.

Concept of Blockchain

When the word “blockchain” is mentioned, most people’s eyes glaze over. That’s probably because the blockchain is the “boring” bit behind the scenes. It’s basically the mechanism that crypto operates on.

It has already spawned entire industries—and entirely new ways to make money.

Bitcoin is the glamour. The crypto celebrity.  Proponents promote it as:

• a store of value (“digital gold”)
• a medium of exchange (albeit less so presently due to volatility)
• a hedge against inflation

The primary purpose of Bitcoin investment is to obtain more coins.

It is worth noting the following.

When Bitcoin was first launched in January 2009, it was basically worthless for trading investments.

In May, 2010 it was still valued at less than $0.01.

Then things changed between February and April 2011. Bitcoin, with the exchange ticker BTC, reached parity with the dollar at $1. Then it all kicked off.

November, 2013 – the price went from $350–$1,242 in the space of one month. It’s been yo-yoing ever since.

Fast forward to 2021 and BTC hits an all-time high of nearly $69,000. Then slides dramatically once again to around $17,500.

The conclusion? Bitcoin as an investment and trading asset is HIGHLY volatile but equally FANTASTICALLY profitable.

It is the reason investors everywhere have been taking serious note since 2017. That includes us here at Investment Mastery. Which is why we have created this crypto guide.

But, we not only take note, we educate you how to invest in and trade cryptocurrencies – at lower or no risk.

Now of course there is more than just Bitcoin to choose from.

There’s:

• Ethereum
• Solana
• Polkadot
• Polygon
• Cardano

To name a few.

CRYPTO TERMINOLOGY

Wallet

A bit like a bank account, you use a wallet to store your cryptocurrencies. Two types of wallets exist – a hot wallet and a cold wallet.

A cold wallet remains offline while a hot wallet remains online.  Generally, they are less susceptible to hacking and other threats.

Exchange

An exchange allows you to purchase, trade, or convert fiat money into digital currency. In other words, cryptocurrency.

Similar to the stock exchange, market rates on a cryptocurrency exchange vary.  

An exchange or wallet will be vital components of your crypto trading plan. There are various cryptocurrency exchanges and wallets available.

When choosing yours, pay extra attention to reputation, services offered and after-sale services.

Financial Risk

Purchasing goods and services with cryptocurrency happens online. It does not involve disclosure of personal information.

Cryptocurrency also provides privacy advantages for consumers. Many exchanges use Know-Your-Customer (KYC) methods to identify users or customers.

Market Movements

Extreme swings in the market can happen. Because of their high volatility, cryptocurrencies attract attention and investors.

Everyday price changes can give traders excellent profits. But they also carry a higher risk.

Unlike the stock market, cryptocurrency transactions do not occur from a single location.

Therefore, weighing up market movements is an important technique to understand and master.

Fear and Greed Index

The Fear & Greed Index is a swing-o-meter tool you can use to gauge the crypto market.

It can swing from Extreme Fear to Extreme Greed and anywhere between the two. It involves a score between 0-100.

Extreme Fear (0-24) means cryptos are trading well below their intrinsic value.

Extreme Greed (75-100) means cryptos are being bid way above what they should be worth.

The actions of the crypto market are highly emotional.

When the market price rises, people frequently become greedy. This leads to FOMO (Fear Of Missing Out).

In addition, selling coins is a common irrational response to seeing red numbers.

The Fear and Greed Index is updated accordingly as per the market movements.

Other fear factors include:

Volatility (25%), market volume (25%), social media (15%), surveys (15%), dominance (10%) and trends (10%).

Zinseszins-Rechner

A low-risk strategy Albert Einstein once called the “Eighth Wonder of the World.”

Compound interest is ‘interest on interest.’ It’s what happens when interest is added onto your principal investment sum.

Using the power of a compounding interest calculator can be a highly effective approach to increasing your wealth. It’s known as compound growth strategy.

Why are we mentioning this here?

Because it’s important for any crypto investor and trader to have a financial target in mind. Say you want to make £100,000 in 2 years. Setting that goal, you may reach £75,000 by the end of your allotted timeframe.

However, set a target of £150,000 and you will reach the £100,000 you were seeking.

Having a target helps set your mind-set, which is vital to your success.

WAYS TO MAKE MONEY THROUGH CRYPTOS

1. Invest in Blockchain Trading Companies

Blockchain is rapidly becoming adopted as a key aspect of new technology. This includes:

• Artificial Intelligence
• Finanzen
• Many other “mainstream” industries and enterprises

Blockchain.com, for instance, was founded in 2011. It now has 83 million wallets created with 37 million users. It has seen more than $1 trillion transacted.

Blockchain is here to stay, as any learn crypto trading course will tell you.

Investing in companies that will profit from blockchain technology is key.

Many publicly traded companies use blockchain technology in their operations. They provide clients with blockchain-related servicestake partipate in the crypto industry.

Some companies focus solely on blockchain technology and/or cryptocurrencies. Others incorporate products or services that involve blockchain technology into their business model.

2. Invest in Small Cap Companies

A Small Cap crypto company is one whose market value is considered to be low – i.e. between $300 million and $2 billion.

Using a small cap strategy can make you money in cryptos because you are investing in crypto companies that show potential to grow. Such as Bitcoin. Think Microsoft, Amazon, Netflix and other now big name companies. They started as an idea, attracted funding, early investors. If you had got in with them early on and stayed the course, you’d be rich.

A small cap strategy involves daily monitoring of a market chart. The idea is to wait for “highs.” Then price drops of 25%, 50% or 75% with companies that have solid growth probabilities.

It’s a very effective method, especially as it involves very little risk using a 1-3 risk/reward strategy. It really is key to how to buy cryptocurrency successfully.

3. Investing in ICOs

An initial coin offering (ICO) is a process to raise funds for the development of a new coin, service, or app.

Investors can obtain a new cryptocurrency coin created by the company in exchange for their investment.

This coin or token might be used to invest in the business or project, or it could be used to buy assets from the company.

Anybody can launch an ICO. Therefore it is imperative you undertake in-depth research to verify the company’s legitimacy.  That provides some protection against being scammed.

4. Crypto Staking

Staking is a way to secure a part of your cryptocurrency to contribute to a blockchain network.

It allows cryptocurrency holders to earn money from coins in their wallets.

Crypto staking participants must commit their cryptocurrency until the predetermined time frame.

Another must have is a trading account.

What is a Trading Account?

A trading account keeps the various investment assets that an investor has purchased. Much like a bank account.

A trading account is necessary to hold any asset and purchase new ones.

It functions as an interface between the investor and the trading account.

It is impossible to buy or sell an asset without a trading account.

Place the order using your trading account. The exchange will receive your request to purchase or sell.

When everything is finished, the asset(s) are deposited in the trading account, and the necessary sum is taken out of the bank account.

Attributes of a Trading Account

There are trading accounts for currencies, commodities, bonds, gold, exchange-traded funds, stocks and now cryptos!

Unlike physical trading, you can open crypto trading accounts online without going to a bank or broker’s office.

Trading accounts offer one-point access.

You can access crypto exchanges through a single trading account.

Creating an online trading account allows you the freedom to trade on your phone, PC, or other devices.

Step-by-step Guide to Opening a Trading Account

Numerous investing opportunities become available after opening an online trading account.

A trading account can be opened in a few easy steps:

Step 1:

After extensive research, select a brokerage platform to open a trading account. Things to consider – the fees they charge, the trading platform’s user interface, and the value-added services.

Step 2:

After deciding on a broker, you must complete an account opening form and a Know Your Customer (KYC) form.

Step 3:

Scan and submit important documents, such as proof of address, proof of identification, and proof of income.

Step 4:

Submit your phone number.

Step 5:

Enter your email address.

Step 6:

By accepting ‘I agree to the terms and conditions’ your account is created, and you will start receiving updates on your mobile device.

Crypto Brokerage Platforms

A crypto brokerage platform or exchange is used to buy and sell cryptos. You can also open a trading account on these sites.

There are many exchanges in operation. It is up to you to choose the one that you feel suits you best:

Download the Cryptocurrency eBook to obtain detailed information on cryptocurrency trading and investment:  

Important Learnings About Cryptocurrency Taught in Our Course

1. One essential skill to get before is how to comprehend market movements. This helps you avoid losses.

Market volatility is such that we educate you to only invest in assets that you can afford to lose. Especially if you’re a beginner.

In our online trading course, you will learn how to analyse market movements better.

2. We teach you about market patterns and temporary price trends. This helps you learn when to buy low and sell high.

3. Many factors must be taken into account when trading cryptocurrencies.

Such as:

• The theory of cryptocurrencies
• crypto exchanges
• cryptocurrency security
• crypto trading strategies

These are some of the topics we teach in depth and help you get to grips with.

4. We teach you appropriate techniques to assist with your trading decisions. We make you aware of unexpected risks.

5. We teach you how to monitor weekly and monthly price charts. Thi helps you assess market patterns.

6. Mining is an essential component of Bitcoin. It protects your bitcoin by preventing your bitcoin wallet from being hacked.

In our course, we teach you about this critical aspect as well as how to protect yourself from scams.

7. Bitcoin has become an asset with considerable value store over recent years.

It can even be considered in the same light as gold – with one exception; gold isn’t available to everyone.

Our course teaches you how bitcoin can be bought, kept, retrieved, and exchanged for years to come.

8. Anyone trading in cryptocurrency should enter the market with a daily aim in mind. It’s best to define short-term goals rather than long-term strategies.

Remember, the aim of trading is to generate small profits from regular transactions.

In our course, we help you set small daily goals for yourself. Then after attaining these small goals, we help you devise big ones.

9. Using real-world examples, our investing in cryptocurrency course ultimately aids in your understanding of trading cryptocurrencies.

To conclude

We hope this Beginner’s Guide to Cryptocurrency Trading and Investing has got you excited and motivated to learn more.

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