Feeling curious about trading in cryptocurrencies? Whether you’re a complete beginner to the Forex market or more seasoned, chances are, you’ve already come across cryptocurrencies. These decentralized coins are very different from traditional established financial markets for a pretty important reason – unlike fiat currencies (which are controlled by central banks and governments), cryptocurrencies operate on blockchain technology. That means no single authority has control over the entire network – good news for many!
Crypto has been on the rise for well over a decade now (yes, it really has been that long) and it’s making some pretty hefty changes to the trading and investments landscape… so a lot of people want to know more about it! If you do too – well, you’re going to find everything you need in this guide!
The Decentralizing Process
What are the key milestones of decentralizing?
2009 was exciting for many of us – because it marked the inception of Bitcoin, aka the world’s first decentralized digital currency. We still don’t know for sure who “invented” it!
And a new era for crypto utility got underway in 2015, when the Ethereum project brought smart contracts to the forefront. This milestone allowed developers to produce decentralized applications (dApps).
2017 is next on our list. This was the year of the Initial Coin Offering (ICO) craze, which saw a global boom in token sales taking place, with investors around the globe wanting in on new projects.
In 2020, DeFi came into its own, as decentralized protocols started gaining traction. This was followed by the domination of Non-Fungible Tokens (NFT) projects in 2021, where we began to see anything and everything encapsulated in these digital assets.
More recently, we saw crypto ownership hit an all-time high in 2022 with over 400 million users, while 2023 ushered in the reign of Memecoins and stablecoins. What a journey so far!
With over 23.000 cryptocurrencies now in existence, it seems fair to say we’re truly in the era of decentralization… but before we can get to grips with the value of crypto, we’ve got to understand its consumer appeal and utility. Beyond simply being a way to store and transfer value, crypto tokens and their underlying blockchains can be used in an extraordinary number of ways – across many industries.
The “original” crypto, Bitcoin, which was invented by the still-unknown “Satoshi Nakamoto” in 2009 is often referred to as digital gold for its limited supply and increasing demand. Like gold, many investors see BTC as a legitimate long-term store of wealth. However, it’s also becoming increasingly used by consumers as a secure way to carry out online transactions. We’re seeing this in many different areas, including new and exciting crypto games where you’ve got an in-game cryptocurrency, and in more traditional spheres as well. That might be buying items online via crypto, playing at an online casino Canada platform that offers crypto rewards and payment options, or even purchasing fine art in Europe – the opportunities are getting more limitless by the day.
Meanwhile, Ethereum, the second-ranking token by market cap, has proven to be a core technology in the development of decentralized finance applications and smart contracts. Equally useful as a consumer token as it is a blockchain network, the Ethereum network supports a wide array of on-chain and 2nd layer projects.
Why Should You Trade Crypto?
Are you already a Forex trader? You’ll already be pretty used to moving in the money market and there are plenty of exciting and profitable trades to be made in fiat currencies. Why, then, should you consider adding crypto to your trading portfolio? Well, decentralized assets possess several attractive features that differentiate them from traditional fiat currencies, such as:
High Volatility
First up, this is an asset class that’s known for its price swings, presenting lucrative opportunities for traders who are able to capitalize on those rapid market movements.
A 24/7 Market
The crypto market isn’t like the traditional forex markets that operate on specific schedules. It runs continuously, offering trading opportunities around the clock – so traders can react to developments in real time.
Diversification
Cryptocurrencies help traders diversify their portfolios. By including crypto projects, traders can potentially reduce overall portfolio risk through exposure to non-correlated assets.
And if that’s not appealing enough? There’s more good news. Being decentralized, cryptos aren’t subject to government or institutional control. So, if you’re a trader concerned about central bank policies and other interventions affecting your investments, that layer of anxiety can be removed with crypto.
The accessibility of these digital assets also ensures their widespread appeal. Compared to some fiat currency markets, cryptocurrency markets have much lower barriers to entry so you can start trading with relatively small amounts of capital. eTrading apps and tools can help in this matter, too.
How to Trade Cryptocurrencies
Considering adding crypto to your portfolio? What do you need to know? Well, firstly, it’s important to be aware that this is a market known for its extreme volatility. While investments in cryptocurrencies can be highly profitable, dramatic price fluctuations naturally increase their risk factor. Before making your first trade, you’ll need to employ rigorous risk management strategies and conduct in-depth market analysis.
Market analysis sounds like an onerous task but it really is crucial to making savvy crypto investments. It’s also so easy to get started! For instance, you could go down the technical analysis route, analyzing things like historical price data and chart patterns predicting future price movements. Tools that you might already be familiar with like Fibonacci retracement, RSI, moving averages etc. can be handy here.
And, while you should never base your entire strategy around it, conducting some fundamental analysis will also be beneficial. Factors like market demand, project development, adjacent tech trends, and the latest crypto news stories can help you to assess the intrinsic value of a coin or blockchain network.
As a first-time crypto trader, you’d be best placed to make your initial trades in a few of the leading tokens. The market itself is highly influenced by emerging technology trends, which is great if you’re tech-head, but this means an almost overwhelming number of projects can be launched with each new innovation… Sticking with the tried and true coins really does mitigate the potential of increased risk.
At the time of writing, the top 5 coins are BTC, ETH, USDT, BNB, and Solana. If you want to do some research of your own, websites like coinmarketcap.com are a great resource for checking current crypto prices and market caps and for getting the lowdown on the projects worth keeping an eye on.
And what about actually setting up crypto trades? It’s fortunately relatively straightforward! Selecting a reputable exchange or trading platform is paramount, and from there, you simply create and fund your account, and place your trades. Depending on the platform or exchange you’re using, you can execute trades using market orders, limit orders, stop-loss orders, and take-profit orders.
