If you're reading this, you’re likely intrigued by cryptocurrency and want to be part of that world. As with any new digital technology, safety is an important aspect of crypto, but before diving in, let’s establish some fundamentals:
● Cryptocurrency is digital or electronic money that operates without backing from a government or bank.
● To secure your assets, store them in a digital wallet, ideally offline on a computer, flash drive, or mobile device.
● Cryptocurrencies are volatile, risky, and prone to manipulation.
Still ready to explore trading them? Let’s discuss how to do so safely.
1. Open an Account on a Trusted Platform
Choose a reputable and licensed trading platform. While popular international exchanges like Bybit and Coinbase are well-known, they may not be licensed by local regulators, such as the South African Finacial Sector Conduct Authority (FSCA). Opt for trusted local brokers like BROKSTOCK, which provide user-friendly interfaces[1] to buy and sell crypto CFDs, low fees, and partnerships with major financial institutions like Standard Bank and Binance.
Avoid unlicensed or dubious platforms, as many are fraudulent. Conduct thorough research and verify any financial services provider with the FSCA before transferring money. Test the broker’s customer service by calling or emailing.
2. Stick to Popular and Liquid Cryptocurrencies
There are thousands of cryptocurrencies, but not all are legitimate or reliable. Start with Bitcoin, the most established and liquid cryptocurrency. Once you’re comfortable, consider exploring others like Ethereum, Solana, etc.
3. Begin with Small Investments
Cryptocurrency’s volatility means prices can swing dramatically in a single day. For beginners, start small – perhaps R1 000 instead of R10 000. If the market moves in your favour, gradually increase your investment.
4. Trade at Extreme Prices
It’s essential to take profits regularly in a volatile market. If prices soar, sell part of your holdings to lock in gains. Avoid the "fear of missing out" (FOMO), which can lead to poor decisions.
5. Make Small Trades
Focus on modest profits initially. Stories of individuals becoming millionaires overnight are rare; for every success, there are many more losses. Approach cryptocurrency trading with measured expectations.
6. Avoid Buying on Margin
Margin trading – using borrowed funds – can amplify both gains and losses. For beginners, it’s best to avoid this risky practice. Brokers like BROKSTOCK limit leverage to protect customers.
7. Set Mental Stop Losses
Stop-loss orders limit potential losses by triggering a sale when prices fall below a certain level. Given cryptocurrency’s volatility, hard stop-losses may not always work. Instead, use mental stop losses or set a time-based rule (e.g., sell by Friday).
8. Don’t Hold Losing Positions
If your cryptocurrency loses value, consider selling part or all of it to prevent further losses. While FOMO may tempt you to hold out for a rebound, it’s often better to cut your losses early.
9. Develop a Trading Plan
A clear trading plan helps you decide when to buy or sell and prevents impulsive decisions. Stick to your plan and maintain discipline.
10. Use Technical Analysis
Technical analysis tools, like moving averages and the relative strength index (RSI), can help identify entry and exit points. These indicators are straightforward and effective for beginners. However, don’t rely solely on the RSI when timing your trades.
Bonus: Diversify Your Investments
Never put all your funds into one asset class. While cryptocurrencies can be lucrative, they’re also highly speculative. Experts recommend limiting cryptocurrency investments to 25% of your portfolio.
Practice Makes Perfect
Before trading with real money, practise on a demo account if available. Simulated trading allows you to learn without risking actual funds. If this isn’t an option, start with small trades and follow the rules above.
Cryptocurrency trading is not for the faint-hearted, but with discipline, caution, and education, it can be safely navigated. Platforms like BROKSTOCK offer a wide selection of crypto CFDs to help you diversify, low fees to maximise your profit, and a superior human support team to help you navigate this new market. Get ready to start investing in crypto on South Africa’s leading investment app.
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Disclaimer: Investing in cryptocurrencies involves substantial risks including high volatility, lack of regulation, security threats, technological vulnerabilities, market manipulation, liquidity concerns, legal uncertainty, absence of guarantees, limited recourse, and unpredictable future developments. Investors must conduct thorough research and seek professional advice before engaging in cryptocurrency transactions. These instruments are available exclusively as CFDs (Contracts for Difference). BROKSTOCK SA (Pty) Ltd. Trading as BROKSTOCK. An authorised Financial Services Provider - FSP 51404, T&Cs and Disclaimers are applicable: https://brokstock.co.za/
