Trading cryptos is very fun and you can make some quick bucks if you trade wisely and carefully. However, if you have not traded cryptos before are looking to step into this industry, there are some important things you need to know before you dive into the domain of crypto trading. So what are these important aspects and why is it pivotal that you know everything about them? This article will be covering these points. Make sure you go through all of them and understand them fully before you actually begin online trading.
Trading on any exchange means you should comprehend the types of orders.
This is actually a very important thing that you ought to know before you begin crypto trading. Unless you are making use of a brokerage service such as Coinbase or Cash App, you will have to fully comprehend the difference between a market order and a limit order. Furthermore, on some of the crypto exchanges around the world, you will also have to comprehend how stops work. If you are trading cryptos on an exchange, ensure that you familiarize yourself with the slippage concept. Cryptocurrency markets may be lacking in liquidity. Hence, it is in your best interest to be extremely careful when you place large market orders so that you do not end up losing all of your investment!
Trading Cryptos is Taxable
Any crypto trading expert will tell you the same thing that it is critical that you tread very carefully and do not make any rash decisions if you do not comprehend the tax implications of crypto trading. You might not know this but there are some ugly traps that you can end up in when you trade certain crypto coins. For example, they are not always regarded to be “like-kind assets.” If you find this to be confusing, it is prudent to just stick to trading American dollars for crypto coins until you fully understand this unique concept. If you are new to the crypto world, it is also advised that you read up on crypto and taxes online. A simple google search will yield several useful resources that you can study to gain more familiarity with the subject.
Fully securing your crypto accounts is extremely wise
It is very important that you bear in mind that you can lose everything if your crypto account gets hacked by someone or if you manage to lose access to your crypto wallet. This is the last thing any crypto trader would ever want! In addition, since there is no means you can use to recover your investment is most of the scenarios, security is critical here. You should take all the important measures to ensure that you do not compromise on security in any kind of way. This is for your own benefit!
It is strongly recommended that you employ stringent practices such as 2FA and a strong password to bolster the security of your account.
For the protection of exchange, it is suggested to go for dual-factor authorization on a Coinbase crypto account as this is the most powerful security measure and will keep all of your crypto coins safe as no hacker can ever assume your identity and access the exchange. When it comes to the protection of your crypto wallet, it is imperative that you copy your pin or seed onto any device that you keep offline. In addition, it would be wise to also have a backup have them both fully encrypted. Just make sure that you do not lose any of the passwords!
Overall, security is essential at every level and one of the most important aspects to consider even before you begin your crypto trading journey.
Wrapping it Up
To summarize, the aforementioned points are very important for any person to keep in mind before they begin crypto trading. This is particularly true for beginners who have no experience in crypto trading before. In addition, do your own due diligence and study as much about trading cryptos before you actually engage in it. In this way, you will be prepared and you will not be caught off guard by anything. Good luck!