The Step By Step Guide to Trading CryptoCurrencies

If you have been paying attention over the past year you will have noticed how much emphasis has been placed on cryptocurrency trading.

Everyone is talking about it. News channels are running endless broadcasts. Well known investors have all chimed in on the future of the digital assets.

This all leaves a really important question. How does one actually get involved in trading cryptocurrency. Which services do you use and what coins do you consider buying. How much should you invest and what strategy will you use?

In this short post, we will attempt to answer all of these questions and give you a comprehensive overview of the best way to trade crypto.

Setting Yourself Up

Before you can begin trading crypto, you need to have a broker or exchange account in order to buy / trade the coins. Which one you decide to use depends on what sort of trading strategy you want to embark on.

If you are the more of the “Buy and Hold” type of trader, then you are better served to open an account with a cryptocurrency exchange such as Coinbase, buy the coins and store them in the wallet.

However, if you are interested in trading your coins on a daily / weekly basis then you are better served opening a brokerage account with a CFD broker. We are going to look at the analysis assuming that you are going with this option.

There are a number of CFD brokers that you can use but it is perhaps the wisest to make use of a regulated broker. This way you are protected in the case of any liquidity shortages at the brokerage level.

One of the most renowned brokers that you can use is IQ Option. They are based in Europe and are fully regulated. There are numerous benefits over similar platforms that we will not go into here. You can always read about IQ Option in online reviews.

Which Strategy

Before you can move onto which coins you would like to trade, you have to decide on the type of strategy that you would like to trade with. This is because many of the coins that you would consider are too small to run technical analysis with.

These small cap alt coins would be better served if they were traded as some more fundamental weekly based strategy.

For those who do not know, technical analysis is the practice of trading an asset based on information that is provided in the price of that asset itself. There is no fundamental information that is included in this analysis.

Fundamental information is based on the underlying technology, supply / demand and team dynamic that drives the value of the coin.

It is up to you to decide which strategy is better suited toy your investing style and there are a number of cryptocurreny options.

Which Coins to Buy

This is of course the most important part and it comes down to which coins you should actively consider investing in. This is of course no small feat as there are indeed thousands of coins that are available.

If you are going to be trading with technical analysis, then you are better served trading a coin that has a high market cap and is highly liquid. This is because you want to try and eliminate any idiosyncratic or non systematic risk form your trading.

Currently, the two coins with the largest market cap on the market are Bitcoin and Ethereum. These will have the volume that is required in order to trade and are most likely to conform to the typical technical analysis indicators.

If, on the other hand, you are more interested in investing based on project fundamentals, team members and technology protocols, then there are range of other alt coins that you can consider investing in.

What is most important though is knowing exactly what you are investing in as it is based on the fundamentals and not the price. You need to read the whitepapers, research the team and compile your analysis.

Only then can you confidently say that you have picked out a great project. It is also really important to make sure that you are spreading your risk out across a wide range of project types. For example, you should have a coin that is focused on privacy, a coin that is focused on payments and another that is focused on programming.

How Much Should You Invest?

This is also another really important factor to consider. How much you are willing to invest will be the driving factor in your returns / losses.

It probably goes without saying that you should never invest more than you are willing to lose. That goes for investment in traditional asset classes as well as crypto. You should only take a small proportion of your savings as your cryptocurrency investing pot.

Then, once you know exactly how much you are going to “play” with, you have to have a strong strategy of how you will realise your gains and cut your losses.

This is particularly relevant in the case of technical analysis day trading. Here, you are often trading on leverage and if the markets move against you, it is completely possible that could lose way more than you initially invested.

Hence, it is really important that you place tight stop losses around your positions. These are orders that are placed automatically when your position is above or below a certain level. They are used by all day traders.


As we have shown, investing in cryptocurrency is no small feat. There are number of things that you have to consider before you start. It is important for you to make sure that your motivations and strategies are well thought out.

With that being said, it can also be one of the most rewarding. You are participating in the new economy and you are investing in assets that are set to revolutionise the financial world.

Just make sure that you are investing responsibly and not taking undue risks. Always limit your exposure and know when to exit a bad trade.

Good Luck!

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