How to Invest in Cryptocurrency

A guide on how to invest in crypto and whether it is right for you.

The cryptocurrency craze has everyone excited about the potential gains that one can make in the market. There is a market for both individuals looking to make a short-term profit as well as those looking to be in it for the long haul. However, there are plenty of those who still don’t know what to do in the crypto market, so here we will break down the basics of how to get involved in investing in cryptocurrencies.

Should I Invest in Cryptocurrency?

The first question that one should consider is whether investing in cryptocurrencies is worth it at all. After all, there are several factors that one needs to be aware of before they decided to commit to the investment in cryptocurrencies. Only after taking these certain factors into account can one be completely positive that this investment is right for you.

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The first factor to consider is the fact that the valuation of cryptocurrencies cannot be determined by traditional economic metric systems. Beyond this there is the jungle of regulation to consider which is extremely problematic for users. There is also the issue of hacking and fraud which you’re never truly protected from to consider. If these issues are something you’re comfortable with, then investment is for you, if not it’s probably best to put your money elsewhere.


How Much Should I Invest?

The best way to begin investing in cryptocurrency is to begin with smaller amounts which can give you a way of getting a feel for trading. This can later evolve as you get more confident and discover more. It is also worth remembering not to invest more than you are prepared to lose as the cryptocurrency market is very volatile.

Another aspect one should consider is how much of given currencies your portfolio should be made up of. Bitcoin is the most popular currency by far, and as such, it would be sensible to have the currency make up the majority of your portfolio. After all, other cryptos rely on Bitcoin’s performance to increase and decrease in value so it would be important to look at Bitcoin in terms of investment.


How to Invest in Cryptocurrency

Sign Up for an Account

Create an account on an exchange to be able to to commence trading. There are numerous exchanges to choose from for different purposes and different currencies. You would need to select which cryptocurrency you want to trade as well, as this will determine the exchange that you will use. Once you’ve done this, you can move onto the next step.

Buy BTC with Fiat

Now that you’ve created an account, it’s time to actually purchase the currency. Depending on where you’re located and which Fiat Currency you use you can use USD, EUR trading pairs to obtain your crypto of choice. Ultimately though, it’s most likely that you’ll need to begin by buying Bitcoin (BTC) to kick off your purchases–most altcoins cannot be bought directly with fiat cash. Once you have obtained some BTC, you can move on to obtaining other currencies. Coinbase, Gemini, Kraken, Coinmama, and Bitstamp all provide Fiat to Crypto Exchange values.

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If Necessary, Deposit BTC Onto Your Exchange

Sometimes, you may have to deposit the coins to your exchange if you did not buy them directly from that exchange.

Start Trading

Once you’ve set up you’re ready to go and can start buying and selling currencies for profits.


Types of Trades

There are four primary types of trades that you need to be aware of when considering investing into crypto currency. These are Scalping, Day Trading, Swing Trading, and Position Trading.

Scalping is for the user who wants to make money quickly. It is done quickly and efficiently, normally within a matter of minutes or seconds of purchasing the coins. You would be required to leverage a lot of money for each of these transactions and gain minor profits, but this is done in a short period of time. Making quick decisions is key here as analysis of markets in the short-term is less reliable.

Day Trading is another short-term strategy, but less intensive that Scalping. Day Traders normally do trades within periods of 15-30 minutes and analyze trends and see how their trades fit into those trades. Indicators and technical analysis are vital in this scenario, so RSI and MACD are important to utilize. News and information are also important in this scenario.

Swing Trading is the more common type of trading in the cryptocurrency market; it requires buying a trade and then leaving it for several hours or several days. It normally involves buying a certain type of altcoin, converting it into currency to purchase another coin and ride on the wave of profits. Once again, MACD and RSI come in useful in this scenario.

Position Trading is more of a kind of investment rather than trading, as it’s done on a very long-term basis. It is made of opening numerous positions and leaving them for several weeks, months or even years. It requires in-depth analysis and understanding which is constantly updated. However, the gains from this form of trading can be much larger than from other types.

Next Steps

Once you’ve completed your investments there is the matter of securely storing you cryptocurrencies to ensure that your funds are fully secure. While it is impossible to be 100 percent certain that your money is safe, there are steps that you can take to maximize your security which you can find here.

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