Cryptocurrency trading is gaining a lot of momentum in today's world.
According to Fortune, people trade over $120 billion in crypto every day! Cryptocurrency traders make their money by buying crypto at low prices and selling it at high prices.
Although cryptocurrency is used as a means of payment around the world without the hassles of transaction fees, crypto traders profit from buying and selling it at exchanges.
In this article, I present to you the steps required to become a cryptocurrency trader.
What do Cryptocurrency Traders do?
Cryptocurrency traders use their knowledge of technical and fundamental analysis to predict price swings in the crypto market and make profits. But in general, they:
Understand and make the most of short-term changes in the market price of cryptocurrencies, altcoins and value tokens.
Buy cryptocurrencies when their market price is low and sell when their price is much higher.
Use technical analysis to identify and predict trends and patterns in the value changes of any of the cryptocurrencies.
Stay abreast of community discussions and news events to enable them to monitor the market price of cryptocurrencies.
Make optimal use of tools at the disposal of digital asset exchanges such as entry price, stop loss, and take profit to prevent errors, control trade and mitigate loss.
Maintain a successful trading strategy based on logic rather than emotions.
Steps required to become a cryptocurrency trader.
Here are the steps required to become proficient in cryptocurrency trading:
1. Build cash reserves first.
This is so simple, you need someone to help you misunderstand it.
Nebraskan Gooner, a professional trader, had to stack up two years' salary reserves before he ventured into trading. A lot of the professionals featured in this article also had a lot of reserves before venturing into trading.
One of the biggest risks of trading crypto is its volatility.
Cryptocurrency prices can go up and down very fast. It makes no sense to use the money for your rent, education, and living expenses to trade cryptocurrency. The only money you should put into cryptocurrency is money you are comfortable losing.
2. Define your risks and set a goal.
Trading cryptocurrency without a clear goal is financial suicide.
Are you going to be a long-term or short-term trader? What profit margin are you aiming for? What would be your loss margin? How long would you be doing this?
These and more are the questions you need to ask before you start to trade crypto.
Quidax advises new traders to answer these questions first before starting to trade:
What is my risk appetite?
What percentage of my time and resources do I want to invest?
Do I want to gain my profit immediately or am I okay with waiting?
Types of cryptocurrency traders, according to Finder:
Long-term traders.
Long-term traders buy and hold cryptocurrencies for weeks, months, or even years, to sell at a profit much later. If you believe the value of a cryptocurrency will grow in the long run and don't want the stress of actively trading, then this might be your style.
Short-term trading.
Short-term trading is about taking advantage of price fluctuations in the market and creating a trading strategy. It's more active, stressful, and risky than long-term trading, but it also offers faster and larger potential returns for those who do it right.
3. Stay committed to learning.
The depth of your research before you trade significantly determines the amount of profit you'll make.
It's an open secret that the cryptocurrency market is largely unregulated. The best principle is to study the charts and look for patterns in previous price swings. These swings can help you achieve better results on your trades.
Some patterns appear frequently on the market, and they are given names like "resistances" and "support," while other patterns can be obscure.
Please do not be dragged away by people on social media who share profits to drain your bank account. Understand how markets work, the various strategies to take while trading, how to take profit and put a stop loss, how to manage your greed and fear, and how to use trading tools before you step into the market.
Binance Academy is a great platform to learn.
How To Become a Cryptocurrency Trader: How These 10 Pros Did It.
1. Rtr Okere Chinonso Emmanuel.
Financial Markets & Business Analyst
What brought you into trading cryptocurrency?
Around my senior year, I was trading the normal financial markets, but along the way, I figured out some limitations.
The current financial markets have close and open times, and they don't open during the weekends. These limitations were not possible with the cryptocurrency market, and the volatility was high during the weekends. Then I made the switch to trading cryptocurrency.
What strategy do you use, and what is your best trading platform?
There are two types of analysis: technical and fundamental analysis.
These analyses give you a footing while trading cryptocurrency, but you must be aware of community discussions and news events that can swing the market to a different tune. Making predictions on moving averages can be cool, but be aware that things may not work out as you expect.
If this happens, you can exit the trade, take a profit, or add more liquidity and increase your stake in the market. No strategy works 100%; you need to be prepared for the worst but pray for the best.
What do you advise someone who wants to get into cryptocurrency trading?
I believe that no great cryptocurrency trader will have enough time to teach people classes and do a lot of mentorship programs.
Unless mentorship programs are another source of income for you, cool. Trading is so dependent on the individual, no matter what strategy you use. If you enter a trade with greed, the market can sweep you off your feet.
A lot of people are running ads and duping people in the name of mentorship programs. They just collect money, do surface-level analysis, and share it with people in the form of signals.
Others using these signals may not be ready to pay attention to the market and do due diligence while trading. If a slight change in the market happens, the "mentor" can pull out of the market while the students may be left out to dry.
What do you suggest?
If joining a mentorship class works for you, go ahead.
You must be aware that no one will trade more effectively than you. People have different learning curves, so if a mentorship class can bring you up to speed, great! But you must pay your dues first before you enter the market.
Learn how to analyze the charts and trade for yourself.
There's a lot of free information on the internet to get started. You can start trading with demo accounts first to increase your confidence.
Also, have a lot of cash reserves before you start trading cryptocurrency.
Someone trading with a $10,000 portfolio and someone trading with a $100 portfolio should not trade with the same lot size or leverage. With a slight change in the market, the person with $10,000 has a lot of advantages. The person with $100 can see his whole portfolio go to the wind because of fear.
2. Alvan Okey.
Cofounder at BlockchainUNN
What brought you into trading cryptocurrency?
I wanted to make an extra income and be able to fend for myself.
Trading just seemed like the next option to multiply my portfolio. It has been an invaluable experience.
What strategy do you use, and what is your best trading platform?
I use different strategies depending on what I see on the chart.
Some of which are: support and resistances, imbalances, trendlines, and many others. From the chart, I make a calculated guess before I know what to follow.
Currently, I don’t think I have the best trading platform. I use exchanges ranging from OKX, BingX, and MEXC.
What do you advise someone who wants to get into cryptocurrency trading?
The first thing you need to do is learn about the markets.
If you want to get into cryptocurrency trading, get a good mentor, learn, unlearn, and relearn. This is critical because, without proper guidance, your money will be thrown to the wind. Don’t rush into it without proper planning and strategy in place; if not, you will regret it.
3. Micheal Chukwuma
Cryptocurrency Analyst.
What brought you into trading cryptocurrency?
I started trading cryptocurrency in my sophomore year at the Federal University of Technology, Owerri, when I got wind of the financial independence one could achieve using it.
What strategy do you use, and what is your best trading platform?
The strategies I use depend on what I see.
Although I take market structure and momentum into consideration before entering my trades, that doesn't mean I can't change based on market fluctuations. I trade mostly using futures on Binance, the famous cryptocurrency exchange.
What do you advise someone who wants to get into cryptocurrency trading?
Learn!
Trading volatile asset classes can be financial suicide if you don't have the requisite knowledge. Be ready to pay your dues before putting your money into the market; don't be greedy; and stick to your strategy.
Strategies work well, but you also need to know when to change. Keep all these in mind, and you will turn out fine.
4. Chioma Onyekelu.
Blockchain Forensic Specialist
What brought you into trading cryptocurrency?
I went into trading the financial markets to be able to have a good source of income to fuel my dreams.
Trading the financial markets, especially the cryptocurrency markets, enables me to earn extra sources of income.
What strategy do you use, and what is your best trading platform?
Initially, I started as a full-time trader, but as soon as I was able to get some placements into my career, I made it part-time.
I swing trade because I don't trade daily.
Hence, I can be patient with the market to come to my point of interest, then execute and hold till my take-profit level. I trade on centralized exchanges that are registered and compliant, as well as have liquidity.
What do you advise someone who wants to get into cryptocurrency trading?
I will say that trading the financial market is a soft skill that anyone will need to learn.
It’s more than what we see on social media platforms, as it is a skill for the smart ones. I was privileged to learn the basics of the financial markets through my finance course at UNIC.
My advice to anyone willing to get into cryptocurrency trading is to first understand the theories behind the financial markets.
Learn how the traditional finance market plays with stocks, bonds etc. Then, learn about the cryptocurrency markets. Aim at becoming a professional and learn the skill for yourself.
It pays more than blindly following the market because the financial markets are seasonal. Know when to be in the market and when to stay away from the market, and you will be fine.
Currently, I’m carrying out my thesis research in partial fulfillment of my Masters Degree in Blockchain and Digital Currencies at the University of Nicosia, Cyprus.
5. Moses Egbo
Data Analyst.
What brought you into trading cryptocurrency?
What brought me to cryptocurrency was the technology and, more importantly, the opportunities it brought.
What strategy do you use, and what is your best trading platform?
Strategies differ and can apply to different times and seasons.
Before anyone can talk about strategy, they must learn a lot and understand the current market conditions. This expands on what to do and what not to do. But the simplest strategy is to buy the dip when it's at a cheap price and then sell when it recovers or pumps.
This might sound easy for newbies, but it will take experience to know when to execute each of these steps.
What do you advise someone who wants to get into cryptocurrency trading?
Start with the knowledge first. Learn!
Also, you should bear in mind that cryptocurrency is not a get-rich-quick scheme. That's why the first three letters are CRY. It's so easy to lose a lot of money without proper knowledge. Learn first, and then execute.
6. Nenyenwa Sylvia
Cryptocurrency Trading Tutor
What brought you into trading cryptocurrency?
I came to crypto to make money.
I wanted to support my parents, as they provided for my upkeep. The cryptocurrency journey also brought me to meet new people and make new friends.
What strategy do you use, and what is your best trading platform?
I use a lot of them.
The strategies I use depend on the direction of the cryptocurrency market. They include smart money concepts, retail trading, and many others. I mostly use the Binance app to trade.
What do you advise someone who wants to get into cryptocurrency trading?
Learn before you earn.
It's a process. You need knowledge before you start to make money. Get a mentor—not one who will be posting charts and PNLs, but one who can see the charts and know what they are doing.
Get someone to guide you from the ground up.
7. Onwuemene Esther
Digital Entrepreneur
What brought you into trading cryptocurrency?
I only came into the investment space with a Ponzi scheme that crashed.
After realizing my losses and getting adequate knowledge, I got into cryptocurrency to learn the basics of trading the financial markets. From the basics, I worked my way up.
What strategy do you use, and what is your best trading platform?
I use a lot of strategies, such as the concept of demand and supply, to determine what happens when I enter the market.
I don't have a particular trading platform. I just use what works for me.
What do you advise someone who wants to get into cryptocurrency trading?
It won't always be easy. You may not get a lucky break, and you have to think long-term and trust the process.
8. Ikechukwu George.
Founder, Techy Jaunt
What brought you into trading cryptocurrency?
Well, I started trading cryptocurrency mainly because of the gains.
I wanted to invest and 100X my profit in a short time, which led me to an error. When I realized that this wasn't possible, I kept learning until I understood the strategies needed.
What strategy do you use, and what is your best trading platform?
Trading is not what I do mostly in the blockchain ecosystem; I am more into the business part of the blockchain.
But trading-wise, I use the fundamental analysis approach. I do my research, buy gems, and sell when prices are low. I use Binance and VTrader for trading purposes.
9. Obeta Merit Favour.
Country Program Manager, ImpactPlus.io
What brought you into trading cryptocurrency?
Cryptocurrency trading is a seamless means of transaction; it is very easy and fast, and there are no intermediaries.
I loved that I could send and receive money at any time without centralized bank policies. Its ease of payment is what brought me into the space.
What strategy do you use, and what is your best trading platform?
I do spot trading, and my best platform is Binance because I get to use the P2P platform to exchange my crypto for naira and vice versa.
For storing my crypto assets, I prefer self-custodial wallets like Trustwallet.
What do you advise someone who wants to get into cryptocurrency trading?
From my perspective and the sort of trading I do, I think basic spot trading knowledge is a necessity for everyone, as that's the future of finance.
This will help limit the hassles around international payments. I advise newbies to learn, understand the process, and carefully practice because that's the only way not to lose their funds.
10. Ugonna Nwaka.
Cryptocurrency Analyst.
What brought you into trading cryptocurrency?
My journey started in April 2020, during the pandemic, when I heard of the cryptocurrency Ethereum.
I bought it for around $20. I soon forgot about the coin until around November 2021, when I saw the increase in the worth of my investment. I began to ask my friend, who introduced the coin to me, and my journey started with trading cryptocurrency.
What strategy do you use, and what is your best trading platform?
I move with the flow of the charts.
I don't particularly make use of one strategy, as different strategies can come into play in different circumstances. I trade depending on the state of the market, what I see on the charts, and my gut
What do you advise someone who wants to get into cryptocurrency trading?
The best advice is to DYOR - Do Your Own Research.
Don't pay much attention to social media influencers who post about the latest coin to buy or the latest airdrop to follow. Do a lot of research before you begin to trade, and trust your gut.
Most importantly, don't be greedy. Do all these, and you'll be fine.
Conclusion.
Trading cryptocurrency is a great way for people to make money in the financial market.
While different strategies and methods exist, it's best to do a lot of research and evaluate your investment needs before you begin to trade.
Cryptocurrency is a very volatile asset. Even the most experienced traders can lose their whole investment portfolio in one bad trade.
Cryptocurrency trading is extremely risky. Get a proper understanding of the market, research the various cryptocurrencies you want to trade and stay up-to-date with crypto news.
Please note that this series is for educational purposes only and is not financial advice. Consult a financial adviser before you take a step.
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