Cryptocurrencies and their trading represent some of the newest and most popular modern financial technologies.
With the interest in this field growing, it is getting difficult for many to choose suitable cryptocurrencies for trading that match their investment level.
The following article will dwell on the best cryptocurrencies for trading and will provide a step-by-step guide necessary for a beginner to get started, along with some useful tips that are sure to help achieve success.
We are going to look at some leading cryptocurrencies in the market: Bitcoin, Ethereum, Binance Coin, and Cardano.
If you are interested in investing in cryptocurrencies, you have to read this article before starting to trade.
The Importance of Beginners Learning About Cryptocurrencies and Trading
Cryptocurrencies are generally considered one of the most exciting and rewarding investment fields for many people, and trading is among the most popular ways to invest in them.
Therefore, the novices in this field should have an idea of cryptocurrencies and their trading beforehand.
These are the basic things a beginner in the market needs to know, whereby he will be able to avoid most of the mistakes made by every new trader and causing big financial losses.
Furthermore, the learning process contributes to a better definition of the basic terms used by people in business and modern traders and investment skills. It is, therefore, very important to learn about cryptocurrencies and trading for beginners as one considers success with the avoidance of risk.
Cryptocurrencies and 10 Common Cryptocurrency Terms
The Best Cryptocurrencies for Trading
Cryptocurrencies are considered by many as an exciting and rewarding investment field, and one of the most common ways to invest in them is by trading.
Despite the variety of cryptocurrencies, some attract the attention of traders and investors in particular. Such cryptocurrencies are characterized by their high popularity, well-known trading networks and wallets, and widely used trading platforms.
Some of the well-known cryptocurrencies are:
Bitcoin – BTC
It is regarded as the first cryptocurrency ever to be introduced in the world. Bitcoin is an open-source, decentralized digital currency; this implies that no government agency is controlling it, and deals involving Bitcoin occur directly between the users without an intermediary financial institution.
Some of the many advantages of this cryptocurrency are fast, secure, and efficient transactions.
It can also be easily stored and transferred from one user to another without the interference of any intermediary.
Advantages of trading Bitcoin:
- It is an open-source, decentralized currency; consequently, no powerful authority can directly influence it.
- It is characterized by its speed and transactional security; one can easily store and make transfers to any other user without necessarily needing an intermediary.
- This is because it has a global network and hence can be traded globally.
Disadvantages of Bitcoin Trading:
- Lack of government guarantees and instability in its value. That means, in case of big fluctuations in the cryptocurrency market, investors may suffer great losses.
- It still does have some limits related to the issue of exchange, and in general, using it; it can affect your possibility of getting access to liquidity and reaching a currency’s full value.
- It requires a deep understanding of the technology used in Bitcoin, hence making trading cumbersome for beginners.
Ethereum (ETH)
Ethereum is a cryptocurrency that was launched in 2015. Having been designed to run decentralized applications on the internet, Ethereum utilizes smart contract technology.
Ethereum is the second most popular cryptocurrency after Bitcoin, due to its decentralized applications and cryptocurrency exchanges.
Advantages of Ethereum:
- It shows great flexibility in both smart contract handling and decentralized application handling and can be applied to many fields of interest, such as health, finance, online shopping, and electronic games.
- It provides a robust and trustworthy network using blockchain technology, ensuring the transaction’s speed and security. Storage and the transfer of this currency is quite easy among the users without any intervention from the intermediary.
- It promises greater speed of transfers at a lower cost compared to traditional currencies.
Disadvantages of Ethereum Trading:
- The network has some technical issues with the capacity of processing and availability for computing, which might make a transaction take some more time or result in a lower processing speed sometimes.
- It faces problems with the availability of source code and finding teams for application development based on Ethereum.
- The currency is sometimes very volatile in price, too, and hence investors must be very cautious by taking all care for protection.
Binance Coin (BNB)
Binance Coin, otherwise known as BNB, is a cryptocurrency used on the Binance trading platform. It was launched in 2017 as a means of payment on the trading platform.
Binance Coin is also an independent cryptocurrency, and it utilizes blockchain technology that allows for fast, secure, and cheap transfers.
The most important features of Binance Coin include:
- Fast Transfers: It is possible to perform fast transfers of Binance Coin against other currencies.
- Global Availability: Binance Coin is accepted in many platforms and stores worldwide, which makes it strong enough to be considered a global currency.
- Security and Privacy: Binance Coin relies on decentralized blockchain technology, so users can independently manage access to their accounts and transfers.
The disadvantages of trading Binance Coin can be listed as follows:
- Control Capabilities: The very fact that Binance Coin is an officially unregulated cryptocurrency creates avenues for governments and regulatory bodies to place restrictions or introduce changes in laws that always tend to lower its value.
- Price Volatility: Binance Coin is highly volatile; therefore, it carries huge risks and high losses if market positions change against it.
- Security Risks: Binance Coin is subject to hacking and breach, and it is difficult to trace the fraud or theft once it occurs.
Cardano (ADA)
Cardano is a cryptocurrency and application platform launched in 2017. It uses blockchain technology to secure transactions.
Cardano has several advantages, including:
- High Security: Cardano uses decentralized blockchain technology, meaning it is fully secure and keeps user information safe.
- Speed and Efficiency: Cardano relies on PoS (Proof of Stake) technology, making it faster in handling transactions and more efficient than other platforms.
- Development Capability: Cardano allows developers to create multiple applications and tools using blockchain technology, providing significant opportunities for innovation and development.
However, there are some potential disadvantages to trading Cardano, including:
- Limited Partnerships: Although Cardano is considered a promising new platform, it lacks partnerships and collaborations with diverse companies and institutions that could support its growth and development.
- Transition to PoS: It was recently announced that Cardano will transition from PoW (Proof of Work) to PoS technology, which may affect the currency’s value and lead to price fluctuations.
- Lack of Trust in Technology: Some investors do not trust PoS technology and prefer to use the traditional PoW technology, which can affect Cardano’s popularity and reduce demand.
Read More: Cryptocurrencies and 10 Common Cryptocurrency Terms
Cryptocurrency Trading Tips for Beginners
If you are a beginner in the field of cryptocurrency trading, it is important to follow some vital tips to avoid risks and increase your chances of success in the market.
Here are some tips you should consider:
- Thorough Research: You must understand the market well before starting to trade. Read, study, and consult with experts in the field.
- Chart Analysis: Before entering any trade, you should check the technical analysis and charts to make sure the market is moving in the direction you want.
- Define Your Goal: You must define your goal and stick to it. This means you must determine the points at which you will exit the trade with a profit and the points at which you will exit with a loss.
- Risk Management: You must determine your risk percentage before entering any trade and should not enter any trade without a risk management plan.
- Learn from Mistakes: You should keep an accurate record of all the trades you have made, including the mistakes you have made. You should learn from these mistakes and avoid them in the future.
- Avoid Impulsivity: You should wait for the right moment and not rush into putting money into the market.
- Stay Away from Emotions: You should stay away from emotions, make decisions independently and rationally, and not enter tempting trades due to emotional reactions.
In short, cryptocurrency trading requires analysis, study, and continuous monitoring.
Defining Investment and Trading Goals
The establishment of investment and trading goals is actually a preliminary step a beginner must make upon deciding to engage in cryptocurrencies.
Investors and traders need to identify their investment and trading goals, and these should further be categorized into short-term or long-term objectives.
From an investment perspective, the goals of investing in cryptocurrencies could be long-term growth of wealth, high returns from investments in high-value and stable currencies, and protection of the portfolio against large fluctuations in values and potential losses.
From a trading perspective, defining your trading goals means you will be able to identify the best strategy that will yield these goals, whether short-term or long-term. Examples include a trader who may want to make profits quickly, say, through day trading based on fluctuations in prices daily. Trading could be for continuous long-term profits.
Ultimately, defining investment and trading goals is crucial to success in cryptocurrencies because it helps determine the best strategy and manage risks better to achieve the best possible financial results. While most cryptocurrency trading-focused platforms have made it possible for users to buy and sell currencies directly against other currencies, exchanging between cryptocurrencies is an essential part of cryptocurrency trading.
Best Platform for Cryptocurrency Exchange
Many platforms and applications provide cryptocurrency conversion services, but it is important to choose the right platform that meets your needs and provides security and ease of trading.
Here, we can mention Swapforless, a leading cryptocurrency exchange platform.
This platform is considered one of the safest, fastest, and most reliable platforms for currency conversion. Its functions are not limited to this; it also provides various conversion methods, including e-wallets, cryptocurrencies, and bank accounts.
Read More: 3 Steps to Exchange between Electronic Banks via swapforless
Conclusion
That’s it for today’s article about the best cryptocurrencies to trade and a beginner’s guide. We introduced what cryptocurrencies are and why they matter, then gave an overview of some of the most popular cryptocurrencies that you can trade, including a number of advantages and disadvantages of each currency.
Lastly, we should not forget that cryptocurrency trading is a high-risk investment and people should invest in it only after understanding the risks and benefits associated with it.
It is worth learning more about such currencies and reading the news and analyses before one starts trading.
