Yurovskiy Kirill – How to Become a Trader in Crypto?

crypto trader

Cryptocurrency trading has exploded in popularity over the last few years. With the potential for extraordinary profits comes the risk of major losses if you don’t know what you’re doing. By educating yourself, choosing the right platform, developing a solid strategy, and employing wise risk management, you can set yourself up for success as a crypto trader.

Learn About Crypto and Blockchain Technology

Before you start actively trading cryptocurrency, it’s important to understand the fundamentals of how crypto and the underlying blockchain technology works. Blockchain is a decentralized, distributed public ledger that permanently records transactions on the network in a secure and transparent manner. Cryptocurrencies like Bitcoin and Ethereum are built on blockchain networks.

You don’t need to become a blockchain developer, but understanding concepts like wallet addresses, consensus mechanisms, hash functions, and how transactions get confirmed on the blockchain will help inform your trading. There is plenty of free educational content online to learn about crypto.

Choose a Crypto Exchange

Cryptocurrency exchanges are platforms that allow you to buy, sell and trade crypto assets. Some popular exchanges include Coinbase, Gemini, Kraken, Binance, and FTX. Consider factors like security, fees, available cryptocurrencies, trading tools and regional restrictions when choosing an exchange.

For beginners, Coinbase is easy to use with an intuitive interface. Binance offers advanced trading options if you plan to actively trade crypto. Most exchanges require ID verification like a driver’s license to set up an account.

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Set Up Exchange Account and Wallet

Once you pick an exchange, create a user account and set up two-factor authentication for enhanced security. Crypto wallets let you store your private keys and securely access your funds. Custodial wallets provided by exchanges keep your keys secure on your behalf. For greater control, consider a non-custodial wallet.

Begin by using the custodial wallet on your exchange account to simplify the buying, selling and trading process. But also set up an offline “cold” wallet on an external storage device not connected to the internet as an ultra-secure place to store most of your cryptocurrency holdings for long term investing.

Develop a Trading Strategy 

The volatile cryptocurrency market lends itself well to short-term trading strategies – buying and selling crypto over days, hours or even minutes to profit off price fluctuations. Or take a long-term buy-and-hold strategy if you believe in the technology and want to wait out price swings.

Two common active trading strategies are day trading and swing trading. Day trading involves making multiple trades within a single day trying to profit off small price moves. Swing traders look to bigger multi-day price swings and trend reversals.

Choose a strategy that matches your risk tolerance. Higher frequency day trading is riskier but offers more trading opportunities. Long-term holds are more hands off requiring less time commitment. Read more about trading here kirill-yurovsky-up.co.uk

Start with Demo Trading

Most cryptocurrency exchanges offer demo trading accounts loaded with fake coins for practice. Paper trade in simulation mode before putting real money on the line. Experiment to find a profitable trading strategy without worrying about losses.

Log trades in a journal detailing your entry and exit prices, gains and losses per trade, and overall portfolio balance over time. Review the journal to identify mistakes and refine your strategy before trading actual cryptocurrency.

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Fund Your Crypto Trading Account

Once the demo account proves profitable using your chosen trading style, it’s time to put real money on the line. Fund your exchange account with cash from your bank account, wire transfer or other payment method.

Initial investment amounts vary greatly depending on your financial situation and risk tolerance. Putting your entire life savings into crypto trading creates unnecessary risk. Start with smaller amounts you can afford to lose as you continue honing your trading craft.

Start Small with Real Trades

Now execute live trades with real capital using the patterns and indicators that performed well in demo mode. But start small with quantities and trade frequencies well below your demos as you adjust to real market conditions and emotions when actual funds are on the line.

Closely track trading win/loss rates, margin calls, slippage and your profit/loss ratio. Pay any crypto taxes owed on realized gains. Expect early growing pains while continuing to learn from both wins and losses. With discipline, your trading skills and profits earned should steadily improve over time. 

Continuously Learn and Improve Strategy 

Successful crypto trading requires constantly educating yourself and evolving your trading approach:

– Stay on top of cryptocurrency news and significant market moving events

– Fine tune strategies maximizing gains and minimizing losses

– Analyze price charts and indicators to precisely time trades

– Experiment with technical analysis methods like moving averages

– Consider adding advanced strategies like margin trading and options

Strive to beat your previous trading performance every month by consistently upgrading abilities through both self study and working with experienced trading coaches.

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Use Risk Management Best Practices 

Volatility makes cryptocurrency price movements inherently risky. But prudent risk management minimizes losses:

– Set stop losses on all trades automatically closing out positions preventing further losses if prices drop below set thresholds

– Determine position sizes based on percentage of account size rather than fixed dollar amounts

– Dollar cost average buying at regular intervals regardless of price to smooth market volatility

– Avoid reckless margin trading with borrowed money amplifying potential losses

– Spread capital across a diversified portfolio protecting from isolated price drops

Experienced traders have strict risk management rules in place before entering positions. With trading discipline, significant profits can still be realized despite crypto’s extreme volatility. 

Keep Detailed Records for Tax Purposes

Meticulously tracking trading activity creates an auditable record for tax reporting obligations:

– Log every crypto purchase, trade, expense and sale with date, valuation and purpose

– Report capital gains/losses from cryptocurrency trades on tax returns

– Mark contributions to DeFi protocols and staking rewards as taxable income

– Deduct eligible business expenses like trading fees and hardware costs

– Consider hiring a crypto savvy tax accountant well-versed in latest IRS virtual currency guidelines

Maintaining clean records minimizes potential issues if your tax returns ever get audited down the road.

Becoming a Successful Crypto Trader

Cryptocurrency trading carries risk but also presents life-changing profit potential. By studying blockchain technology, being strategic with trades, managing risk wisely and keeping accurate records, you can steadily grow into a confident, lucrative crypto trader. Maintain discipline, start small and continue mastering skills over time to give yourself the best opportunity to come out ahead.

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