Cryptocurrencies have become a popular asset to invest in. Many of these digital currencies have dramatically increased in value over the years, making them a great way to grow one’s money. But just how do you start trading cryptocurrency?

A lot of people have no idea how to get started or are confused by some of the terminology such as ‘cold wallets’ and ‘blockchains’. It actually isn’t that complex and you don’t need a lot of technical knowledge. To prove how easy it is, here is a guide on how to trade cryptocurrency in 7 steps.

Choose a Reliable Exchange

Cryptocurrencies are bought and sold through online platforms known as exchanges. The first step is to choose an exchange to buy your crypto from. Some of the most popular exchanges include Coinbase, Binance, Crypto.com, Gemini and Kraken.

Take the time to compare these exchanges. Different exchanges will support different cryptocurrencies, have different security measures, charge different fees and have different limits as to how much funds you can deposit - so take the time to compare them.

Make an Account

Chosen an exchange? It’s time to make an account. The sign-up procedure varies depending on the exchange you’re using, but usually you’ll need to provide an email address and verify your identity with some form of government ID.

You may have the option to set up two factor authentication, which can help to further secure your account.

Deposit your Funds

Once your account has been verified, you can deposit funds into your account. Some exchanges require you to deposit a minimum of $50, while others require only $1.

The options for depositing funds vary depending on the exchange with some accepting bank transfers, credit card or PayPal. Be wary of exchanges that charge fees to deposit money.

Choose a Cryptocurrency

You’re now ready to buy some cryptocurrency. Take your time to compare different types of cryptocurrency and check to see if they are rising or falling in value. Bitcoin (BTC) is the most popular and well established cryptocurrency.

Ether (ETH) is the second most popular option - it comes with transaction fees called ‘gas fees’, but can be used for smart contracts and other applications. There are many other cryptocurrencies that you can consider too. Be wary that not all cryptocurrencies can be bought through all exchanges.

Place your Order

Chosen your cryptocurrency? The exchange should have a trading section where you can now place your order. You can choose between a market order or a limit order. A market order allows you to buy your cryptocurrency at the market price - you will usually receive your cryptocurrency straight away.

A limit order allows you to alternatively set the price at which you would like to buy your cryptocurrency - the order is placed when the cryptocurrency reaches this price.

Look after your Investment

Once your order has been placed, you should receive your cryptocurrency straight away. If there are issues, you can use a blockchain explorer like Arbitrum block explorer to monitor the transaction. Your cryptocurrency will be deposited in a hot wallet in your exchange account.

For extra security, you may decide to move your cryptocurrency to a cold wallet - this is pretty much a USB stick for storing crypto on that allows you to store it offline. Keep an eye on the value of your cryptocurrency so that you know when to sell or trade.

Trade/withdraw your Crypto

You may plan to let your cryptocurrency rise in value and then convert it back into regular currency to make a profit. Alternatively, you may decide to try a crypto swap in which you swap one cryptocurrency for another.

Most people will choose to convert their crypto back into regular fiat currency so that they can withdraw it. There should be a withdrawal section in your account. Consider the fact that there may be withdrawal fees.

Summary

If you’ve invested in stocks and shares before, you may find that crypto trading is a similar process. The important thing to remember is that you own the crypto and must keep it secure as you would with regular money. Some crypto exchanges offer a degree of protection such as insurance if you get hacked.

However, you won’t be protected if you lose your cold wallet or give your password to someone else. As with any investment, don’t invest more than you’re willing to lose. Make sure to also time your order right - make sure you don’t buy a cryptocurrency as it is falling in value.