Cryptotrading: This is what cryptotraders should consider when investing in Bitcoin, Ethereum & Co.

Despite some ups and downs, 2023 can be called the year of cryptocurrencies. Both institutional investors and private investors have stocked up on the digital currencies Bitcoin, Ethereum or other coins. But cryptocurrencies are subject to extreme fluctuations and are as risky as they are easily manipulated. What beginners and crypto enthusiasts should consider when crypto trading in order not to lose all their invested money, we have summarized in this article.

Before crypto trading: a good research

A good preparation and research is essential before crypto trading. So, interested investors should do extensive research first. The first item on the list: finding a suitable securities account. Those who want to get into crypto trading should do so through reputable providers. For example, European crypto exchanges have higher security standards than Asian providers. In particular, you should avoid scam sites. You should not choose a provider that you have never heard of before.

Our recommendation: with a low-cost custody provider, you can keep crypto trading costs under control particularly easily. Both our crypto exchange comparison and our crypto broker comparison will help you find the right provider. There, we have reviewed both crypto exchanges and crypto brokers for their advantages and disadvantages.

This cryptocurrency is suitable for the beginning

Not every cryptocurrency is suitable for getting started in crypto trading. Financial columnist for MarketWatch and author of non-fiction books on investing and trading in the stock and options markets, Michael Sincere, advises sticking to the most popular and well-known cyber currencies when starting out as a crypto trader. Bitcoin is suitable for this purpose, for example. After gaining some experience, one can venture into the second largest digital currency, Ethereum.

Cryptotrading: rules when buying cryptocurrency

According to Sincere, there are other rules that crypto traders should follow when investing in Bitcoin, Ethereum and Co. We have summarized the tips of the professional for you.

Small sums can also get you to your goal

Every professional trader once started small. This also applies to the sums invested. According to Sincere, it is advisable to rather start with little money. If necessary, the sum can still be slowly increased. However, it does not make sense to invest several thousand US dollars directly in cryptos. Crypto beginners in particular should keep their expectations realistic at the beginning and aim for smaller profits.

Trade only with your own money

Sincere advises all interested parties: never buy on margin. This is because crypto trading is a hot potato. It is true that you can make a lot of money with crypto trading if you are right. However, the opposite case can also happen: You may end up owing more than you invested. Deal well with the risks of cryptotrading beforehand and do not borrow money to be able to buy cryptocurrency.

When cryptotrading buy and sell – this is how it works!

Are cryptocurrencies like ETFs suitable for long-term wealth building? When should traders buy and sell? Sincere has a clear opinion on this, “Whenever you trade a volatile financial product like crypto, you need to routinely take profits.” Furthermore, he says, in crypto trading it is advisable not to hold losing positions. If a cryptocurrency falls, one should not be afraid to sell it promptly.

Set mental stop losses

The prices of cryptocurrencies such as Bitcoin, Ethereum and Co. are often subject to strong fluctuations. Thus, it is hardly possible to set real stop losses. For this reason, Sincere advises mental stop losses. Another alternative is to use time stops. In doing so, you decide in advance on a specific day by which you will sell your positions, and then follow that plan. According to Sincere, potentially large losses can be prevented in this way.

Discipline, diversification and diligence

Crypto trading is all about having a plan. This helps traders decide when you should buy or sell. You should always follow this plan and stick to your own rules as well. In particular, technical analysis can be helpful in crypto trading. According to Sincere, the main focus should be on the moving averages and the Relative Strength Indicator (RSI). These indicators are quite easy to understand and interpret even for beginners, he said.

The last and probably most important rule in crypto trading and also securities trading: diversify! Because you should never put all your assets into a single financial product. As a general rule, crypto traders who are still in their early days should be cautious when trading Bitcoin, Ethereum and Co. For example, it could still be years before digital currencies are accepted or even supported by the government or institutions, if that will ever be the case. The top priority for traders – regardless of the financial product – should therefore always be
skill, discipline and due diligence.

Crypto trading – what you should do

  1. Inform yourself about the potential and risks of the different cryptocurrencies. Decide whether investing is an option for you.
  2. If you would like to start cryptotrading, you will need a securities account. Open a customer account at a crypto broker or crypto exchange of your choice.
  3. Trade only with your own money and set mental stop losses.
  4. Buy your preferred cryptocurrency and be sure to look for a favorable rate. This is because cryptocurrencies are particularly susceptible to fluctuations.



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