Wherever you turn today, be it the news, YouTube, or social media, everyone seems to be talking about cryptocurrencies. As the technology evolves and matures, interest in digital currencies as an investment class has gradually moved from a niche asset for enthusiasts to something that institutional investors have begun to take seriously.
At the start of the year, Elon Musk announced that Tesla had bought $1.5 billion of Bitcoin and in more recent months the entrepreneur has been focusing his attention on Dogecoin.
At the same time, meme stocks like GameStop and AMC have been encouraging more retail investors to take an active role in the stock market. For many of these investors, the next step after this has been to venture into crypto trading.
Of course, there are plenty of guides out there that can show you how to buy Bitcoin and explain the meaning of all the unique crypto terminology. But if you’re starting out, it can help to know how to get the most out of your trading activities. Here are some simple steps you can take to do it.
Find the Right Exchange
Although Bitcoin is now over 10 years old, in the finance world, it’s still a spring chicken. For that reason, the exchanges are still maturing, with some offering different services and access to different coins.
It’s important to check which exchange you join because not all offer the same levels of security. There have been some high-profile hacks, bankruptcies, and closures in recent years, including Mt. Gox, Cred, Livecoin, CryTrEx, and Tradesatoshi.
Therefore, it’s worth doing your research into which sites offer the best protections. After all, you don’t want your first venture into crypto trading to be a bad experience.
Take Advantage of New Customer Bonuses
Once you’ve found some exchanges you trust, it’s worth checking which ones offer the best deals.
The world of cryptocurrency trading is incredibly competitive, especially among the exchanges that are all vying for your business. Of course, some more established brands like Coinbase and Binance can use their size and longevity as selling points, but that isn’t enough on its own.
There are so many exchanges in the market that many are offering small amounts of cryptocurrency or fiat money to new customers that sign up and make a trade. This is something we also see in the online casino industry, with brands offering free spins and other sign up bonuses to new customers in the hopes that they choose them over a competitor.
Savvy and frugal cryptocurrency traders can take advantage of as many of these offers as they can as a way of building up their portfolios without spending as much of their own cash.
There are literally hundreds of promotions running at any one time and they change so often that it’s not really possible to list them all here. However, some popular offers available right now are an up to $250 bonus from BlockFi, a $25 sign-up bonus from Voyager, and a $10 sign up bonus from Coinbase.
Sure, $10 here and $25 there won’t take you to the moon, but every little helps as you start out on your investing journey.
Be On Guard for Fees
Whatever you’re investing in, fees are a hidden enemy that slowly eat away at your profits. Even cryptophobic investors like Warren Buffett advise people to spend time minimising the fees they pay as while 1% here and 2% there may seem like small amounts, they all add up to big chunks of your capital.
Transaction fees are the most common charge that exchanges make. Thankfully, several major platforms like Binance have managed to keep fees low, coming in at around 0.02% to 0.1% per transaction.
You may also want to check which deposit methods are the cheapest as most exchanges charge for card purchases.
Don’t Let FOMO Get You
Crypto trading is enticing. The wild fluctuations in the price of Bitcoin can see its value go up by 10% or more each day and can make it seem like a great idea to buy all the tokens you can. Unfortunately, the volatility works both ways, and you can see prices fall by just as much.
While the market is getting exciting and there’s endless talk of “going to the moon”, many investors are left with the dreaded fear of missing out. Filled with this FOMO, they’ll change their strategy, buying up more of a particular coin in the hopes of also cashing in.
Except, by the time everyone is excited, most of the growth will have already happened, and you risk falling into the trap of buying high and selling low.
Instead, it’s best to stick to a strategy. As you begin your crypto journey, that might be to just make small and regular purchases to achieve what’s known as “dollar-cost averaging”. This lets you gain exposure to the market without risking too much of your net worth in one go.
Keep Your Crypto Secure
Cryptocurrencies are valuable, that’s why you’re investing in them. Valuables attract thieves, so it’s important you protect against them. Leading exchanges allow you to enable two-factor authentication (2FA), to help protect your account from being compromised. You should definitely have this turned on before you make a deposit.
You should also be sure to use strong passwords and never use the same one for your email account and crypto exchange account. Preferably, you’ll have a different password for each site.
As you build up a large portfolio, you may want to start looking at “cold storage”. This essentially means transferring your cryptocurrency to a form of offline storage. Moving your tokens out of the exchange and onto a physical device or your computer like this can protect you in the event of the exchange being hacked.
There are different apps and devices you can use, so it’s worth doing some research into the different options to find out which one works for you.
It’s also worth remembering that you should treat any cold storage device in the same way you would cash or physical gold. If you lose it or damage it, there’s no way of getting it back.
Andrew is a writer that does most of his work on cryptocurrency-related topics. While he’s primarily interested in Bitcoin, he also follows major altcoins and the innovative ideas that new cryptocurrency and blockchain projects are bringing to the table.