Nowadays, saving your money in a bank that only pays a generous 1% interest annually is not a wise idea. Many financial experts say saving is obsolete. If it does, where can we put our money and maximize its returns? One of the trending financial markets today is cryptocurrency. For newbies to this kind of investment and in the financial market, some wonder how to start a cryptocurrency exchange. How can we maximize my capital with cryptocurrency? Read on to find out.
What Is Cryptocurrency?
Before knowing how to start a cryptocurrency exchange, first is to learn more about the kind of investment you will engage in. Let’s define first what a currency is. Like the cash we have in our wallets, paper money is backed up with real money, gold or silver, deposited in each state’s central banks or country. The cash we have is a currency that carries an amount equivalent to real money deposited as back up. That cash is only a gold and silver representative and is legal tender, meaning it can be accepted at any financial institution and business establishment within the central bank’s jurisdiction.
So now, what is cryptocurrency? This hot cryptocurrency is a digital currency that you could exchange or trade with other currencies globally. The amount of crypto you can exchange with is equivalent to the amount you funded your account with your real cash.
Before You Trade
Because you are reading this article on how to start a cryptocurrency exchange, I am sure you are a newbie to the financial market. Cryptocurrency is a volatile market of prices. Before entrusting your money to a broker (a sales agent to the market, you pay commission in every sale and purchase), you must have a thorough understanding of the market. Investing is not just a “buy, hold, and pray” cycle or a “buy now, sell later” like other scalper traders in the market. You must not think that investing is just like gambling.
If you want to stay in the game of prices and charts in the market, you should know how the market works. You must be your broker. It would be best to consider the risk before getting the reward out of your money. There is no investment without risk. There should be a risk/reward ratio (RRR). The minimum RRR should be 1:2, meaning if you invest 100,000 in the market and consider having a 100% return, assume that you can lose 50% of your money.
The best thinking you could bring in the market is that you must anticipate that your every trade is a loss until the market proves you wrong. It takes many things, terms, exercises, discipline, experience, and burnt money before you can be an expert in this field. If you are prepared to lose, you are ready to be a cryptocurrency trader.
Steps in Putting Capital to the Cryptocurrency Exchange
Entering into an investment scheme is easy. But the decision of putting your money into a highly speculative cryptocurrency requires a lot of knowledge. Ensure that the amount you funded your account is the amount you are willing to lose. Being consistently profitable in this market requires longer time experiences, which could mean losing so much money and not giving up on this investment. So, if you’re ready then, here’s the step on how to start a cryptocurrency exchange:
- There are a lot of cryptocurrency platforms in different countries. The first thing you should have to do is check and verify if that platform is legit. How? Each country has a Securities and Exchange Commission; this is a government institution protecting the public from financial fraud and scams. Thus, you have to ensure that the platform you will entrust your money is a registered institution with a primary purpose for such investment.
- You need to have a bank account. The money you have at the bank will fund your cryptocurrency account.
- The platform you chose requires your legal documents to validate your identity and a bank account for your capitalization.
- After you can comply with your broker’s requirements, you are now ready to trade or exchange your digital coins.
Things to keep in mind:
- Never invest if you plan to maximize your money but not understanding the market deeply.
- You have to identify your goal. Are you investing for capital gains? Or it could be investing in cash flow? The two are different. The first one is that capital gain is when you buy a cryptocurrency now and sell it later for gains (if you have). The second one is investing in the long term, meaning you buy the digital currency today and anticipate that it goes up in value in the future.
- Cryptocurrency is a highly volatile financial market. Its price can go up and down, even gaps up and down tremendously.
- If you engaged yourself with any investment, consider it as a business. You can never put your money in one place and leave it there and wait for it to grow.
You can make a lot of money in any financial market globally, especially in cryptocurrency. The thing is, no investment has no risk. First, you must learn how to manage the risk to minimize losses before jumping and knowing how to start cryptocurrency exchange. Learning the fundamentals of investing in managing your hard-earned money before entrusting it to your broker is highly significant.
As we know, crypto is not just a trending investment; it is also said to be the currency’s future. That could also mean that it has a potential value in the future, and investing in it is an excellent investment. But we don’t know how long that time could be. The market has ups and downs, and it requires a solid knowledge foundation to stay in it. Want more awesome tips on how to start a cryptocurrency exchange? Go here!