Crypto assets trading in India: A beginner’s guide

India has shot past other countries to be the fifth-largest economy in the world. Naturally, Indian investors are looking at global trends to bank on. The new and emergent crypto sector is something that is in consideration by many. Officially classified as virtual digital assets (VDAs), it is estimated that India has 25 to 30 million investors who have parked some share of their portfolio in this sector. We believe this will grow multi-fold in the next 3-5 years.

The crypto sector sees massive volatility which even seasoned investors find difficult to navigate. There are however clear-cut ways to find one’s feet in the crypto landscape wherein the projects (coins, tokens associated with them) are assessed based on their usability and viability (explained in their whitepapers). To sum it up, crypto is a lucrative market that can offer significant returns if approached correctly.

Today we enlist the right ways to approach and trade in this high-risk high-returns market.

Understand the basics of cryptocurrency

Before you start trading, it is essential to understand the basics of crypto assets. Cryptocurrencies use encryption techniques to secure and verify transactions. Unlike traditional banking, crypto assets are decentralized and are not controlled by any central authority. Bitcoin and Ethereum are considered the most reliable assets in the market.

Choose a reliable Indian exchange

To start trading, you need to choose a reliable and compliant India crypto exchange. Exchanges help you convert your INR to crypto assets seamlessly. It is crucial to do your research and select an exchange that is secure, has a good reputation, and offers the crypto assets you want to trade. 

Given India’s classification of the sector under PMLA ambit, a compliant exchange is a must. Read up on an exchange’s management team/founders and their vision to understand their capabilities.

Set up your account

Once you have selected the exchange, you need to set up your account. The process typically involves providing your personal information and verifying your identity under advanced KYC norms. You will need to link your bank account to the exchange to deposit or withdraw funds. 

Most exchanges have well-set customer support who can take you through the process like a breeze. Some offer vernacular-based support as well (Hindi, Tamil, Telugu etc).

Two-factor authentication is a must

Centralized exchanges can be your real sentinels as you enter the crypto world. Exchanges offer in-built wallets where you store the assets. Most exchanges have their own cybersecurity personnel working to secure transactions and the business. Exchanges also have two-factor authentication. This is a deterrent to hackers and scammers. Always choose to implement this in your account.

Learn about different trading strategies

There are different trading strategies you can use to make a profit from cryptocurrency trading. Some investors prefer to buy and hold cryptocurrencies for the long term, while others engage in short-term trading to take advantage of price fluctuations. It is crucial to research and understand different trading strategies and find the one that works best for you. We advise you to stick to the long term as a beginner.

Manage your risks well

Crypto trading can be risky, and it is crucial to manage your risk to avoid significant losses. Do not invest borrowed money or your emergency funds in crypto. Ensure that you invest only less than 20 per cent of your total portfolio in crypto. In that 20 per cent, keep a lion’s share in major coins like Bitcoin and Ethereum. Cost averaging via weekly/monthly buys help you enter the market with a good price point.

Crypto is not MLM

Crypto is a futuristic technology. One should not fall prey to MLM like schemes floating around. The best thing to do is to stop and think once again before you hit the ‘go’ button. In case of any doubts, call up the exchange you have registered with and seek a clarification. No professional exchanges promote MLMs. No product or scheme that offers an unrealistic return in the short run is deemed trustworthy in this ecosystem. Also, beware of phishing sites that copy your exchange’s style to take your info.

Stay updated with the market

It is essential to stay updated with the latest news and market trends. Follow crypto based news sites, social media channels and newsletters to stay informed about market developments, regulatory changes, and other factors that may affect the price of crypto assets.

Author: Vikram Subburaj, CEO, Giottus Crypto Platform