Understanding how to buy crypto is an essential skill for the modern investor. This is not investment advice, merely a guide to teach you how to start buying crypto and walk you through the ins and outs of securely managing cryptocurrency. If you do decide to buy cryptocurrency, please do your own research.
How Do You Buy Crypto?
Buying crypto may seem difficult, but it doesn't have to be. Here is a simple, step-by-step process to demystify the world of digital currencies.
Choosing your exchange: The first step is to select a cryptocurrency exchange platform. Choose one of the largest exchanges for enhanced security. Popular choices include Coinbase, Binance or Bitfinex. Ensure your chosen platform supports the crypto you wish to purchase, but if you are buying Bitcoin, all exchanges will be able to help you.
Creating an exchange account: Sign up on your selected exchange and complete the necessary identity verification procedures. To prevent identity theft, fraud, and money laundering, and to comply with legal and regulatory requirements, exchanges will ask for identification documents, a verified address and may conduct background checks in the process of creating an account. Make sure to use strong passwords and enable two-factor authentication and be cautious of phishing scams and always double-check URLs.
Depositing funds: Link your bank account if you would like to use traditional bank transfer methods or use other payment methods to deposit fiat currency (like USD, EUR) into your exchange account. You can use credit/debit cards or other cryptocurrencies to buy cryptocurrency, and please note that all transactions involve a fee.
Placing an order: Select the cryptocurrency you wish to buy, specify the amount, and place your order. There are multiple ways to purchase cryptocurrencies and trading tools on each exchange. It’s possible to choose between market orders (buying at the current market price) or limit orders (buying at a specific price).
Storing your crypto securely: After the purchase, transfer your cryptocurrency to your own personal wallet for added security. It is recommended to choose a non-custodial wallet. Hardware wallets and software wallets offer varying degrees of security, so choose one that suits your needs. Recommended wallets may be Exodus, SafePal, Ledger or Tangem. Make sure you purchase or download the wallet from the official website and follow their instructions for setting up your wallet. Do not purchase wallets from alternative websites or venders to avoid them being tampered with. Setting up your wallet is like setting up an account at an exchange but may also require you to store important passwords and your private key. Please, ensure that you keep passwords or private key words safe and away from others to see.
How To Trade Crypto
Once you've bought cryptocurrencies, it's time to learn the basics of trading. Here's a brief overview of how to buy and sell crypto:
Understanding trading pairs: When learning how to buy cryptocurrency it’s necessary to understand that cryptocurrencies are often traded in pairs (e.g., BTC/USD). You’ll need to choose the pair you want to trade. The first currency is the one you´re buying or selling, and the second the currency you´re using to make the trade. For example, you may be buying Bitcoin for US dollars or Ethereum for US dollars. Traders use trading pairs to value cryptocurrencies in different ways and learning more about it may be valuable to become a successful trader.
Market orders and limit orders: You can set a specific price when you want to buy or sell. Market orders buy or sell at the current market price, while limit orders specify the price at which you want to buy or sell. Beginners in crypto commonly use market orders when placing the order as it ensures immediate execution of the trade, but they come with a higher risk of executing at less favorable prices due to market fluctuations.
Selling cryptocurrencies: To sell cryptocurrencies, simply specify the amount you want to sell and review your order details for accuracy. After confirming your sale, the exchange executes your chosen order type, whether it’s a market order or a limit order. You’ll find the proceeds of your sale in your exchange account.
Risk management: Set limits on the amount you’re willing to invest and lose and please consider that cryptocurrency investing is considered high-risk. Cryptocurrency markets can be volatile and when learning how to buy crypto it’s important to have a sound management strategy in place to protect your investments. To avoid making faulty transactions you may consider using a demo account at the preferred exchange before using real money.
Profit or loss: Monitor market trends closely, establish clear profit and loss goals, and decide whether you prefer a short-term or long-term investment strategy. Experienced traders use technical and fundamental analysis to make informed decisions. There is potential for profit in trading cryptocurrency, but being successful in trading is very difficult, and it’s recommended not to invest more than you are prepared to lose. And no! I am not an financial advisor.