You’ve probably heard stories of people making life-changing profits through crypto, and others warning about its volatility.

Diving into these markets can be both exhilarating and overwhelming. But your first trades don’t have to be a shot in the dark. Follow our tips before making your first few moves.

Understand the cryptocurrency markets

First, it’s best to get to grips with the market dynamics. Unlike traditional stocks or forex, cryptocurrency trading operates 24/7, which means prices can fluctuate at any time.

Take note of how news, regulations and even social media trends influence prices. For example, an online post from a major figure can send a coin’s value soaring or crashing.

Focus on researching a few well-established cryptocurrencies to begin with. Bitcoin and Ethereum are less volatile compared to newer, smaller coins, which makes them ideal for beginners.

Use the right tools and platforms

Choosing the right crypto trading exchange is essential. Look for platforms with a good reputation, strong security measures and user-friendly interfaces. Make sure the exchange supports your local currency and complies with regulations in your region.

It’s always worth equipping yourself with tools that enhance your decision-making. A reliable portfolio tracker can help you monitor prices and market trends in real-time. Charting tools allow you to analyse price movements and patterns.

If you prefer trading on the go, platforms with mobile apps seamlessly integrate with your exchange account.

Find the right strategy for you

Crypto trading isn’t one-size-fits-all. Your strategy should reflect your goals, risk tolerance and available time.

If you’re not keen on constantly monitoring the market, consider a long-term “HODL” approach. Many interpret this as “holding on for dear life”, where you buy and hold cryptocurrencies for months or years, banking on general growth.

If you enjoy shorter-term trades, explore swing or day trading. These strategies do require more time, technical knowledge and discipline. You’ll need to learn how to read charts, understand candlestick patterns and recognise key market indicators like RSI (Relative Strength Index) and moving averages.

Start small and test your strategies with modest amounts before scaling up.

Learn how to manage risk

Every trader experiences losses, but effective risk management ensures you stay in the game. The fundamental rule is: never invest more than you’re willing to lose.

Crypto’s volatility means prices can drop dramatically, so it’s crucial to avoid risking your essential funds. Don’t allocate all of your investment portfolio to cryptocurrency when starting out.

Set clear stop-loss orders to limit potential losses on individual trades. For example, if you buy a coin at £100, you might set a stop-loss at £90 to exit the trade if the price falls. This prevents emotions from clouding your judgment during sudden price drops.

Diversify your portfolio across a few cryptocurrencies instead of putting all your funds into one. This balance reduces your exposure to the failure of a single project.