Cryptocurrency Trading – The Ultimate Beginners Guide for Zimbabweans

Cryptocurrency Trading – Overview and tips when trading

Over the past few years, cryptocurrency has become increasingly popular in a variety of countries. With the increase in popularity, there has been an influx of scam channels that are trying to take advantage of beginner traders.

With the increase in popularity, there has been an influx in cryptocurrency providers

Before Zimbabwean beginner traders invest in cryptocurrencies, there are a few factors to consider pertaining to familiarizing themselves not only with the process of trading cryptocurrencies, but what it entails, as with any other financial instrument.

Before beginner traders start trading, they should familiarize themselves with the trading platforms that are used for cryptocurrency trading. Having basic knowledge of chart types, order books, spreads and depth charts is fundamental.

Traders should compare the platform fees pertaining to cryptocurrency trading as each trading platform waives its own fees. Traders need to ensure that the fees are within their budget and they need to compensate for possible losses as result of trading.

Traders should conduct a technical analysis before they start trading which is based on historical data as there exists no accurate way in which future prices can be predicted or determined as there are often no trends present on which predictions can be based.

When trading cryptocurrencies it is important for beginner traders to minimize any possible risks by distributing money across different cryptocurrencies instead of only focussing on one.

Beginner traders should also familiarize themselves with cryptocurrency related news to stay up to date with developments, rankings, and key indicators. This will aid them in making sound trading decisions.

Safety tips in choosing a Cryptocurrency Trading Platform

With the increase in popularity, there has been an influx in cryptocurrency providers and merely choosing a platform at random may put traders at risk of great losses.

When choosing a trading platform, beginner Zimbabwean traders need to look at the following points to evaluate whether the trading platform is legit:

Conduct thorough research – should a platform promise great profit, investigate it first and visit review sites to verify information. Obtain as much information as possible to verify the legitimacy of claims made by the platform.
Pay attention to the support provided – make sure that the platform’s support can offer detailed answers in due time and beware of platforms trying to over-market their products and services without being to provide substantial information.

When looking at trading platforms designed specifically for trade in cryptocurrency, traders can look at some of the following:

eToro
AvaTrade
Binance
Coinmama
Exness
Coinbase, and various others.

How to start trading Cryptocurrencies

As soon as the trader has selected either a cryptocurrency broker or a trading platform that is safe and regulated, the trader can move to the next step of deciding on the cryptocurrency that they would want to trade.

When deciding on a cryptocurrency the most important is choosing one that has the highest potential. When looking at which cryptocurrency would suit the trade, it is important to consider the following:

Infrastructure – this includes application development, cloud storage, VPS, and funding amidst other factors.
Technology which includes the transaction processing, a reliable and easy to use user-interface which is easy to adopt and use.
Development team and whether they are experienced and skilled along with the provision of enough developers.
Growing popularity which is determined by the rising demand for the cryptocurrency, the amount of people using it and its coverage in the media.

Traders need to use historical data to determine the trend of the price and whether the current price is at a high or a low compared with previous price history. Traders need to stay up to date with price movements continuously.

Should other traders sell cryptocurrency for a relatively low price, the trader should consider buying it and should the price start to rise, traders need to have an exit strategy planned that will determine the ideal time to exit the trade.

Source: Forex-trading.co.za

Traders need to stay up to date with fundamental influences which may affect price movements in either an up or a down direction, this includes:

Government regulations.
Media Exposure along with other influences such as individuals who have particular influences.
Mainstream acceptance such as a well-known firm backing up the project.
Technological changes, software updates and improvements
The state of other markets will influence that of cryptocurrency

Order Types

Traders need to ensure that they understand the fundamental differences between limit order as well as market order in addition to learning how stops work and how to apply them.

Market orders involve the buying or selling of a cryptocurrency at the current market price while a limit order can be placed by a trader on the order book and then waiting for it to be filled by the market order of another trader.

Stop orders allow traders to place a market order only if and when a certain price condition is met.

Market Volatility

When trading cryptocurrency, traders need to be aware that it is an extremely volatile market and while a trader can make profits one moment, they can lose it in an instant. It is important that traders mitigate their risk and use hedging where possible.

Trading on Margin and Leverage

When starting to trade cryptocurrency, it is important for traders to familiarize themselves with trading on margin which allows the trader to borrow money against the current funds they possess.

When trading on margin and using leverage, traders need to take care as it can increase the chances of profits, but when used incorrectly, it can result in great losses at well which is why certain regulating and authorization entities impose leverage limits.

More information pertaining to margin trading and leverage can be viewed here.

Final Thought

Trading cryptocurrencies, like with other financial instruments, can be a complicated undertaking and beginner traders are advised to familiarize themselves with terms and processes first by making use of demo accounts before trading with actual funds.

There are a lot of factors to consider before trading complex financial instruments, but this in itself should not discourage beginner traders. The important thing is that beginners start with the theory of trading cryptocurrency before moving over to practicing trading.

It is important to use trading platforms that provide educational data pertaining to trading on the platform which they provide along with general information pertaining to trading cryptocurrency so that beginners can familiarize themselves with it.