How to safely trade cryptocurrency without giving your bitcoin away

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Generally there are two ways of doing this:. It does however have many hidden risks which you should be aware of, this guide will explain some of these. This guide will focus on risks, see this guide for a tutorial on using eToro. We encourage you to read this entire guide before trying eToro to understand the potential risks; but if after reading this you still want to try it out, here's a link we'll get some money if you sign up via this.

When you first use an exchange, you'll find lots of guides and tutorials on how you should be storing your Bitcoin. The general consensus is that once you buy it, you shouldn't keep it on the exchange - it should be moved to a wallet. The how to safely trade cryptocurrency without giving your bitcoin away common reason is that the exchange might run away with your money, but there's a second less dramatic one; that by moving your Bitcoin to a wallet, it makes it harder to sell it.

This might seem counter-intuitive, but context is important here. The user interface on eToro is much more user-friendly than most exchanges or CFD brokers, and there are many online reviews stating this causing beginner traders to see eToro as a good platform to try out.

When these beginners first trade they're inevitably going to open positions that don't go well and lose them money. In cryptocurrencies they are not. For this to happen to a beginner, the fear of losing more money will often give them a very strong urge to sell. On eToro it's possible to do this in just a few seconds, to close your position and walk away.

But a beginner trader would then experience the fear of missing out, and so buy back in again - often at a higher price. This statement is highly speculative, but next time this happens, if you look at the eToro Bitcoin user feed, you'll see many people in this scenario.

If you'd stored your Bitcoin on a wallet, the time between moving it back to the exchange would have given you a better time frame to make your decision off. That said, if you're a more experienced trader you'll likely be aware of this scenario so it won't be an issue for you. If you were to go on an exchange right now to buy Bitcoin, the how to safely trade cryptocurrency without giving your bitcoin away would be determined by the person willing to sell their Bitcoin for the lowest amount.

On this exchange you'd normally pay a fee of around 0. How to safely trade cryptocurrency without giving your bitcoin away eToro you pay a fixed fee of 0. This is only 0. This problem by itself makes profitable trades harder, but given the extra functionality how to safely trade cryptocurrency without giving your bitcoin away get, some justify this as an acceptable cost.

Where this isn't ok is how their system for opening orders works. We'll explain a situation we experienced ourselves. Regardless; the trade we just made should not have been possible.

Allowing a trade to be opened with a difference between the opening value and stop loss of such a low amount is an incredibly dangerous feature. But if you're dealing with small amounts of a few hundred dollars this will both eat away at your profits and encourage you to deposit and withdraw larger amounts of money to increase profit margins. This is something that we find very concerning as this encourages new traders to invest larger amounts of money than they should given the associated risks of trading cryptocurrencies.

With all the above said, you might think that we don't like eToro, that you should avoid it. But this isn't the case. Being aware of all the above issues, we're able to avoid the issues caused by them; we tend to avoid Bitcoin Cash trades for example! Cryptocurrency trading is still very new to platforms which previously only dealt with CFDs, so quirks like this are expected.

Our hope is that over time eToro will decrease their spreads for cryptocurrencies and add functionality to avoid the pitfalls we've described above. If you want to try out eToro and help us out, here's a link we'll get some money if you sign up via this.

This site cannot substitute for professional investment or financial advice, or independent factual verification. This guide is provided for general informational purposes only. The group of individuals writing these guides are cryptocurrency enthusiasts and investors, not financial advisors.

Trading or mining any form of cryptocurrency is very high risk, so never invest money you can't afford to lose - you should be prepared to sustain a total loss of all invested money. This website is monetised through affiliate links. Where used, we will disclose this and make no attempt to hide it. We don't endorse any affiliate services we use how to safely trade cryptocurrency without giving your bitcoin away and will not be liable for any damage, expense or other loss you may suffer from using any of these.

Don't rush into anything, do your own research. As we write new content, we will update this disclaimer to encompass it. We first discovered Bitcoin in lateand wanted to get everyone around us involved. But no one seemed to know what it was! We made this website to try and fix this, to get everyone up-to-speed! Click here for more information on these. All information on this website is for general informational purposes only, it is not intended to provide legal or financial advice.

The Risks of Trading Bitcoin on eToro. Generally there are two ways of doing this: Cryptocurrency exchanges allow you to buy and sell real coins e. See this guide for some examples. Most brokers don't allow you to buy Bitcoin directly. Instead how to safely trade cryptocurrency without giving your bitcoin away allow you to invest in it via CFD Contract for Differencewhich means you're not buying the coin itself - the exchange buys it on your behalf, and you have to pay a daily fee to hold it.

Some brokers like eToro and IQ Option are starting to take the middle ground, where you can invest in Bitcoin and not pay a daily holding fee. Conclusion With all the above said, you might think that we don't like eToro, that you should avoid it. April 24th, Best Coinbase Alternative? Written by the Anything Crypto team We first discovered Bitcoin in lateand wanted to get everyone around us involved.

Never invest money you can't afford to lose.

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If you've seen the incredible upward momentum of Bitcoin, Ethereum, and other cryptocurrencies, you've maybe also considered getting in on the action. Now, you're gonna learn how. But first, a disclaimer: Bitcoin, Ethereum, and so many of the other cryptocurrencies out there can be a way to pay for stuff online, sure. And they can also be if they aren't already more popular as investments. And investments, you might know, can go up and down. You can gain money on them, or lose it.

And those values can fluctuate wildly, as you might've also seen lately. To put it simply: We're not here to tell you whether or not you should buy it, just to show you how you can pull it off. That said, the rise of cryptocurrencies are an exciting moment for technology, and even if you don't want to actually buy any, it's worth knowing how it all works.

Just like depositing money in the bank or buying a stock, you keep your cryptocoins in a digital account known as a wallet , which lets you store, receive, and send them. But it's a bit more complicated than that, and there's some serious notes of precaution to be aware of with a wallet.

Cryptocurrency won't just magically appear in your wallet out of thin air. You've gotta buy it, first. There are several ways to do that, but the easiest is to exchange a fiat currency—dollars, euros, pounds, etc—for some cryptocurrency. And the easiest place to do that is at an exchange. Think of a cryptocurrency exchange as a stock market for crypto. You register for it, deposit your fiat currency of choice, and then, you can buy yourself some crypto.

But the cryptocurrency market is still fairly new—and it's not bound by the same laws and regulations as the stock market. So before you do anything else, remember this: The cryptocurrency markets have matured in recent years, but there's still a lot that can go wrong.

There are scammers out there, aiming to separate you from your money. Software errors could theoretically wipe out your store of bitcoin. And there's always the possibility of user error i. Hackers can also break in and steal it. One of the largest bitcoin exchanges, Mt.

Gox, has had some of its bitcoin stolen, and it went bankrupt in Many users who had their bitcoin in Mt. Gox are still waiting to get it back. It eventually recovered and reached new heights, but it took a while to get there. And yes—things have changed since Mt.

There are well-funded exchanges out there, backed by well-known VC funds, overseen by regulatory bodies like the New York State Department of Financial Services. None of this guarantees your money as totally safe, though. Same with the new, decentralized exchanges that are coming—exchanges which promise to keep your money safe, by means of technology instead of authority.

We'll come to see how well they work. If you're looking for your first exchange , you could do a lot worse than Coinbase , a U. Coinbase lets you deposit fiat money from a bank account, and trade Bitcoin, Ether, and Litecoin.

And while there are hundreds of cryptocurrencies, these three are a very good, core trio. Each shows a lot of promise, each in its own different way. Coinbase is pretty simple. You're never going to see stuff like cryptographic keys or QR codes, which may be intimidating to beginners. But Coinbase isn't without its drawbacks. For one thing, you don't have access to your private cryptographic keys—in other words, you don't actually control the cryptocurrency you have on Coinbase so much as you give it to Coinbase for safekeeping.

Coinbase also charges some fairly big fees on transactions. Finally, there's a pretty long list of complaints on various crypto-related forums about Coinbase freezing customers' funds for dubious reasons.

Coinbase also lacks advanced options such as stop-loss orders or margin trading. If that's what you're looking for, take a look at also U. Another alternative is the Luxembourg-based Bitstamp , which has been around for more than five years and has successfully navigated through many dark periods in Bitcoin's history. Bitfinex is another large exchange, although it was subpoenaed by the U. First, you register with a username and a password, as you would with any other online services.

Then, you'll probably be required to send some proof that you are who you say you are—an ID scan, for example.

You don't want to trade at an exchange that accepts just anyone, as that'd likely indicate that the exchange isn't audited to a high standard. Once you've done that, you'll need to send some funds. On Coinbase and Kraken, the easiest way to do that is to follow the instructions on how to transfer the money from your bank account.

In most cases, it'll just be a standard wire transfer, and you can probably get help at your bank if you're unsure what to do. In this example, I'm about to buy a euros worth of Ethereum. This will cost me an additional 2. Then, you put in a buy order. You choose how much money you want to spend, and which cryptocurrency you want to buy. Congrats, you just became the owner of some digital money. Selling is similar, and both buy and sell orders will cost you a little, so don't do it just for fun.

The exchange might have fees of its own, too, and exchange rates vary considerably from exchange to exchange. Before you open an account and buy your first cryptocurrency, you need to think long and hard why you need it in the first place.

If you're here to trade, then just leave it on the exchange or leave just enough so you can trade at volumes you're interested in. All cryptocurrencies are extremely volatile, and you should be prepared to lose a large percentage of value in a flash. However, the volatility is a risk you need to take if you're interested in trading.

Day traders, who typically buy and sell many times during one day, have various way of mitigating risk, including never leaving an open position and using stop-loss orders. It's very much not recommended to try to guess the market's sentiment in very short time frames, as it's extremely hard to do unless you're an expert.

Again, you can just leave your money in the exchange, but that increases the risk of getting swindled by the exchange itself, or a hacker breaking through its security. This risk gets smaller by the day, but it's real. There's a couple of things you can do to minimize that risk, most of which are obvious for example: Also, some exchanges such as Coinbase offer the service of a "vault," which lets you store your bitcoin in such a way that it takes a longer period of time and multiple checks for anyone, including you, to access it.

Alternatively, you can send your crypto to a wallet that you control. There are many software wallets, and some, like the mobile wallet Coinomi , support a large number of cryptocurrencies. For Bitcoin, some popular choices include Electrum and Xapo , which has the added benefit of issuing you a pre-paid card which can be used to spend BTC in stores and ATMs.

A small fee will be deducted and you're now in control of your funds. Again, this comes with certain risks. You could forget your password. You could get hacked.

You could lose your smartphone which is why you should always generate and keep a backup phrase somewhere if you have a mobile wallet. You can also offload your funds to cold storage. This could either be a paper wallet—literally a piece of paper with an address, keys, and a QR code—or a hardware wallet, such as Trezor or Ledger , both of which work with multiple cryptocurrencies.

Hardware wallets come with their own set of instructions, and creating a paper wallet goes beyond the scope of this text, but you'll find excellent tutorials online.

Keeping your funds offline makes them safe from hackers. But that doesn't mean they're impervious to real world threats. For example, a house fire could burn your paper wallet and its associated data, or a flood might destroy your hardware wallet.

The main, crucial lesson is: Perhaps you're not interested in saving or trading cryptocurrencies; you want to be an active part of the ecosystem. Things get a bit complicated here, as each cryptocurrency is different.

With Bitcoin, you can buy stuff at numerous online and even some offline stores. Overstock, Steam , and Microsoft all accept Bitcoin in some capacity. Cryptocurrency is also increasingly appearing as an option on real estate listings. Trulia had 80 listings with prices in crypto in January while Redfin numbered some For newcomers, this sort of approach is impractical, as most retailers that accept BTC also accept regular old cash, so converting your money to BTC just to buy something doesn't make much sense.

But there are use cases for spending BTC in stores. Say you bought bitcoin a few years ago—you could be a millionaire right now, and you might want to spent some of that money. Ethereum, currently the second largest cryptocurrency in terms of market value, is different.

Since Ethereum is more of a platform for decentralized applications and less of a payment system it works as both, though , you'll need ETH to participate in token sales , and to build your own apps on the platform.