Cryptocurrency Investing For Dummies 2018

Summary:

• Cryptocurrency Investing For Dummies by Kiana Danial is a comprehensive guide to understanding and investing in cryptocurrencies. The book begins with an introduction to the world of cryptocurrency, including its history, technology, and potential applications. It then moves on to discuss the different types of cryptocurrencies available today, as well as their advantages and disadvantages. After this overview, readers are provided with detailed instructions for setting up a wallet and buying their first coins. The book also covers topics such as trading strategies, security measures for protecting investments, tax implications of cryptocurrency transactions, and more.

  The second part of the book focuses on specific investment strategies that can be used when investing in cryptocurrencies. These include long-term holding (HODLing), diversification across multiple currencies or assets classes, day trading techniques using technical analysis tools like candlestick charts or Fibonacci retracements; arbitrage opportunities between exchanges; margin trading; ICOs (Initial Coin Offerings); mining; staking rewards from proof-of-stake networks; lending platforms; derivatives markets such as futures contracts or options contracts; algorithmic trading bots; and more.

  The third section provides advice on how to manage risk when investing in cryptocurrencies. This includes tips on avoiding scams and frauds related to digital currency investments as well as guidance on how best to protect one’s funds from theft or loss due to hacking attacks or other malicious activities.

  Finally, Cryptocurrency Investing For Dummies concludes with a discussion about the future prospects for digital currencies. Here readers will find information about upcoming developments in blockchain technology that could potentially revolutionize finance over the next decade.

Main ideas:

• #1.     Understand the Basics of Cryptocurrency: Cryptocurrency is a digital asset that uses cryptography to secure and verify transactions. It is decentralized, meaning it is not controlled by any government or central bank. Understanding the basics of cryptocurrency is essential for successful investing.
  
  

  Cryptocurrency is a digital asset that uses cryptography to secure and verify transactions. It is decentralized, meaning it is not controlled by any government or central bank. Understanding the basics of cryptocurrency is essential for successful investing.

  The most important concept to understand when it comes to cryptocurrency is blockchain technology. Blockchain technology allows for secure, transparent, and immutable transactions between two parties without the need for a third-party intermediary. This means that all transactions are recorded on an open ledger which can be viewed by anyone with access to the network.

  Another key concept in understanding cryptocurrency is mining. Mining involves using powerful computers to solve complex mathematical equations in order to create new blocks on the blockchain and earn rewards in the form of newly created coins or tokens. Miners also help keep networks secure by verifying each transaction before it’s added onto the blockchain.

  Finally, investors should understand how cryptocurrencies are bought and sold on exchanges. Exchanges allow users to buy and sell different types of cryptocurrencies using fiat currency (e.g., US dollars) or other forms of payment such as credit cards or PayPal accounts.

• #2.     Research Cryptocurrency: Before investing in cryptocurrency, it is important to do thorough research. This includes researching the different types of cryptocurrencies, their features, and the technology behind them. Additionally, researching the market and understanding the risks associated with investing in cryptocurrency is essential.
  
  

  Before investing in cryptocurrency, it is important to do thorough research. This includes researching the different types of cryptocurrencies, their features, and the technology behind them. Cryptocurrencies are digital assets that use cryptography for security and can be used as a medium of exchange or store of value. They are decentralized and not controlled by any government or central bank.

  Additionally, researching the market and understanding the risks associated with investing in cryptocurrency is essential. It’s important to understand how prices move in relation to news events, economic indicators, technical analysis signals, etc., so you can make informed decisions about when to buy or sell your investments. Additionally, it’s important to stay up-to-date on regulatory changes that may affect your investments.

  Finally, it’s also wise to diversify your portfolio across multiple cryptocurrencies so you don’t put all your eggs in one basket. By doing this you can reduce risk while still taking advantage of potential gains from individual coins.

• #3.     Choose a Cryptocurrency Exchange: Cryptocurrency exchanges are platforms that allow users to buy and sell cryptocurrencies. It is important to choose an exchange that is secure, reliable, and has low fees. Additionally, it is important to understand the different types of exchanges and how they work.
  
  

  When choosing a cryptocurrency exchange, it is important to consider the security of the platform. Look for exchanges that have strong encryption protocols and use two-factor authentication. Additionally, make sure that the exchange has been around for some time and has a good reputation in the industry.

  It is also important to look at fees associated with trading on an exchange. Some exchanges charge high fees while others offer lower rates or even no fees at all. Make sure you understand what type of fee structure each exchange offers before making your decision.

  Finally, it is important to understand how different types of exchanges work. There are centralized exchanges where users can buy and sell cryptocurrencies directly from one another as well as decentralized exchanges which allow users to trade without relying on a third party intermediary.

• #4.     Create a Cryptocurrency Wallet: A cryptocurrency wallet is a digital wallet that stores cryptocurrency. It is important to choose a wallet that is secure and has features that meet the user’s needs. Additionally, it is important to understand the different types of wallets and how they work.
  
  

  A cryptocurrency wallet is a digital wallet that stores, sends and receives cryptocurrencies. It is important to choose a secure wallet with features that meet the user’s needs. There are several types of wallets available, including hot wallets (online) and cold wallets (offline). Hot wallets are connected to the internet and allow users to access their funds quickly. Cold wallets are not connected to the internet and provide an extra layer of security for storing large amounts of cryptocurrency.

  When choosing a wallet, it is important to consider factors such as ease-of-use, security measures, fees associated with transactions, customer support options and compatibility with different devices. Additionally, some wallets offer additional features such as multi-signature authentication or integration with decentralized applications (dApps).

  It is also important to understand how private keys work in order to securely store your cryptocurrency. Private keys are unique codes used by blockchain networks for authentication purposes; they should never be shared or stored online.

• #5.     Understand the Different Types of Cryptocurrency: There are many different types of cryptocurrencies, each with its own features and technology. It is important to understand the different types of cryptocurrencies and how they work in order to make informed investment decisions.
  
  

  The most popular type of cryptocurrency is Bitcoin, which was created in 2009. Bitcoin is a decentralized digital currency that can be used to purchase goods and services online. It operates on a peer-to-peer network, meaning it does not require any central authority or bank to process transactions. Transactions are verified by miners who use powerful computers to solve complex mathematical problems.

  Another type of cryptocurrency is Ethereum, which was launched in 2015. Ethereum uses blockchain technology to enable developers to create smart contracts and decentralized applications (dApps). Smart contracts are self-executing agreements between two parties that do not require third party verification or enforcement.

  Ripple is another type of cryptocurrency that has been gaining popularity since its launch in 2012. Ripple works differently than other cryptocurrencies because it does not rely on the blockchain for transaction processing; instead, it uses an open source protocol called the Ripple Protocol Consensus Algorithm (RPCA) for verifying transactions.

  Litecoin is also a popular form of cryptocurrency that was released in 2011 as an alternative to Bitcoin. Litecoin offers faster transaction times than Bitcoin and lower fees due to its different consensus algorithm called Scrypt.

  Finally, there are many other types of cryptocurrencies such as Dash, Monero, Zcash and Dogecoin among others. Each one has its own unique features and technology so it’s important for investors to understand how each one works before investing their money into them.

• #6.     Understand the Risks of Investing in Cryptocurrency: Investing in cryptocurrency is risky and there are many potential risks. It is important to understand the risks associated with investing in cryptocurrency and to take steps to mitigate them.
  
  

  Investing in cryptocurrency is a high-risk endeavor. Cryptocurrency markets are highly volatile and can be subject to extreme price swings, making them difficult to predict. Additionally, the technology behind cryptocurrencies is still relatively new and untested, meaning that there could be unforeseen risks associated with investing in them.

  It is important for investors to understand the potential risks of investing in cryptocurrency before they commit any funds. Some of these risks include:

  • Price volatility – The prices of cryptocurrencies can fluctuate wildly due to market forces or news events. This means that an investor’s holdings may suddenly become worth much less than when they were purchased.
  • Lack of regulation – Cryptocurrencies are not regulated by any government or central bank, which makes it difficult for investors to protect their investments if something goes wrong.
  • Security threats – As cryptocurrencies exist on decentralized networks, they are vulnerable to hacking attempts and other security threats. If an investor’s wallet or exchange account is hacked, their funds could be lost forever.

  In order to mitigate these risks, investors should take steps such as diversifying their portfolio across different types of assets and researching each investment thoroughly before committing any funds.

• #7.     Develop a Cryptocurrency Investment Strategy: Developing an investment strategy is essential for successful investing. This includes setting goals, understanding the different types of investments, and understanding the risks associated with investing in cryptocurrency.
  
  

  Developing an effective cryptocurrency investment strategy is essential for successful investing. This includes setting clear goals, understanding the different types of investments available, and being aware of the risks associated with investing in cryptocurrency.

  When it comes to setting goals, investors should consider their risk tolerance level and time horizon when deciding how much to invest in cryptocurrency. Investors should also be sure to diversify their portfolio by including other asset classes such as stocks, bonds, real estate or commodities. Additionally, investors should research the various cryptocurrencies available on exchanges and understand which ones are most likely to appreciate over time.

  It’s important for investors to understand that there are different types of investments within the crypto space. These include buying coins directly from exchanges or through Initial Coin Offerings (ICOs). There are also options such as trading derivatives like futures contracts or margin trading where traders can leverage their positions with borrowed funds.

  Finally, it’s important for investors to be aware of the risks associated with investing in cryptocurrency. Cryptocurrency markets are highly volatile and prices can fluctuate significantly over short periods of time due to market sentiment or news events. Additionally, there is a risk that hackers may steal funds from wallets or exchanges if proper security measures arent taken.

• #8.     Diversify Your Cryptocurrency Portfolio: Diversifying a cryptocurrency portfolio is important for reducing risk. This includes investing in different types of cryptocurrencies, different exchanges, and different wallets. Additionally, it is important to understand the different types of investments and how they work.
  
  

  Diversifying a cryptocurrency portfolio is an important step in reducing risk and maximizing returns. By investing in different types of cryptocurrencies, exchanges, and wallets, investors can spread their risk across multiple assets. Additionally, it is important to understand the different types of investments available and how they work. For example, some investments may be more volatile than others or have higher fees associated with them.

  Investors should also consider diversifying their holdings by investing in both short-term and long-term strategies. Short-term strategies involve buying low and selling high quickly while long-term strategies involve holding onto coins for extended periods of time to benefit from price appreciation over time. Furthermore, investors should research the various trading platforms available as well as any additional fees that may apply when making trades.

  Finally, it is essential to keep track of your portfolio’s performance on a regular basis so you can make informed decisions about when to buy or sell certain coins. This will help ensure that your portfolio remains balanced and profitable over time.

• #9.     Understand Tax Implications: Investing in cryptocurrency can have tax implications. It is important to understand the tax implications of investing in cryptocurrency and to take steps to minimize them.
  
  

  Investing in cryptocurrency can have tax implications, and it is important to understand them before making any investments. Cryptocurrency transactions are subject to capital gains taxes, which means that when you sell or trade your cryptocurrency for a profit, you may be liable for paying taxes on the profits. Additionally, if you receive payments in cryptocurrency as income from mining or other activities related to cryptocurrencies, those payments may also be taxable.

  It is important to keep track of all of your crypto-related transactions so that you can accurately report them on your tax return. You should also consult with a qualified accountant or financial advisor who has experience dealing with cryptocurrency taxation issues. They will be able to provide advice about how best to minimize the amount of taxes owed and ensure compliance with applicable laws.

  Finally, it is important to remember that different countries have different regulations regarding taxation of cryptocurrencies. It is essential that investors research their local laws and regulations before investing in order to avoid any potential penalties or fines associated with non-compliance.

• #10.     Monitor the Market: Monitoring the cryptocurrency market is essential for successful investing. This includes understanding the different types of market analysis, understanding the different types of market indicators, and understanding the different types of market news.
  
  

  Monitoring the cryptocurrency market is essential for successful investing. This includes understanding the different types of market analysis, such as technical analysis and fundamental analysis. Technical analysis involves studying past price movements to identify patterns that can be used to predict future prices. Fundamental analysis looks at factors such as a coin’s underlying technology, its team, and its use case in order to determine its potential value.

  In addition to understanding different types of market analyses, it is also important to understand the various indicators that are used by traders when making decisions about their investments. These include volume indicators like trading volume and liquidity; momentum indicators like relative strength index (RSI) or moving average convergence divergence (MACD); trend-following indicators like Bollinger Bands; oscillators like stochastic oscillator; and volatility measures like Average True Range (ATR).

  Finally, it is important to stay up-to-date on news related to cryptocurrencies in order to make informed investment decisions. This includes staying abreast of new developments within the industry, regulatory changes affecting certain coins or exchanges, announcements from major players in the space such as governments or large companies entering into partnerships with blockchain projects.

• #11.     Understand Technical Analysis: Technical analysis is a method of analyzing the cryptocurrency market. It is important to understand the different types of technical analysis and how they work in order to make informed investment decisions.
  
  

  Technical analysis is a method of analyzing the cryptocurrency market that involves studying past price movements and trading patterns in order to identify potential trends. It is based on the idea that prices move in predictable patterns, which can be used to forecast future price movements. Technical analysts use various tools such as charts, trend lines, moving averages, oscillators and other indicators to analyze the data and make predictions about where prices are headed.

  The goal of technical analysis is to help investors identify buying or selling opportunities by looking for signs of reversals or breakouts from established trends. By understanding how these signals work together with other factors such as news events or economic reports, traders can gain insight into when it may be time to buy or sell a particular asset.

  It’s important for investors to understand the different types of technical analysis available so they can choose the one that best suits their needs. For example, some traders prefer chart-based strategies while others rely more heavily on fundamental analysis. Additionally, there are many different indicators and techniques available for technical analysis including support/resistance levels, Fibonacci retracements and Bollinger bands.

  By taking advantage of technical analysis tools and techniques, investors can gain an edge over other market participants by being able to anticipate changes in price before they occur. This knowledge allows them to make informed decisions about when it may be time to enter or exit positions in order maximize profits.

• #12.     Understand Fundamental Analysis: Fundamental analysis is a method of analyzing the cryptocurrency market. It is important to understand the different types of fundamental analysis and how they work in order to make informed investment decisions.
  
  

  Fundamental analysis is a method of analyzing the cryptocurrency market that focuses on the underlying factors that affect its value. This type of analysis looks at economic, political, and social factors to determine how they may influence the price of a particular asset. It also takes into account supply and demand dynamics as well as other macroeconomic indicators such as inflation rates or GDP growth.

  The goal of fundamental analysis is to identify undervalued assets in order to make informed investment decisions. By understanding the fundamentals behind an asset’s price movements, investors can better predict future trends and capitalize on them accordingly. Fundamental analysts use various tools such as financial statements, news reports, industry data, and technical indicators to gain insight into an asset’s potential performance.

  It is important for investors to understand fundamental analysis before investing in cryptocurrencies because it provides valuable information about the underlying forces driving prices up or down. By taking into account these external influences when making investment decisions, investors can increase their chances of success by minimizing risk while maximizing returns.

• #13.     Understand the Different Types of Trading Strategies: There are many different types of trading strategies, each with its own advantages and disadvantages. It is important to understand the different types of trading strategies and how they work in order to make informed investment decisions.
  
  

  The most common types of trading strategies are technical analysis, fundamental analysis, and algorithmic trading. Technical analysis involves analyzing past price movements to identify patterns that can be used to predict future prices. Fundamental analysis looks at the underlying economic factors that influence a security’s price. Algorithmic trading uses computer algorithms to make decisions about when and how much to buy or sell a security.

  Technical traders use charting tools such as moving averages, trend lines, support/resistance levels, and oscillators to identify potential entry and exit points for trades. Fundamental traders look at macroeconomic data such as GDP growth rates, inflation rates, unemployment figures, interest rate changes, etc., in order to determine whether a security is undervalued or overvalued relative to its intrinsic value.

  Algorithmic traders rely on complex mathematical models and sophisticated software programs that analyze large amounts of data quickly in order to generate profitable trade signals. These systems often employ artificial intelligence techniques such as machine learning in order to improve their accuracy over time.

  No matter which type of strategy you choose it is important that you understand the risks associated with each one before investing your money. It is also important that you have realistic expectations about what kind of returns you can expect from any given strategy.

• #14.     Understand the Different Types of Trading Platforms: There are many different types of trading platforms, each with its own features and advantages. It is important to understand the different types of trading platforms and how they work in order to make informed investment decisions.
  
  

  The most common type of trading platform is the online broker. Online brokers provide access to a wide range of financial instruments, including stocks, bonds, mutual funds, ETFs and options. They also offer research tools such as charts and news feeds to help investors make informed decisions. Most online brokers charge commissions for trades executed on their platforms.

  Another popular type of trading platform is the automated or algorithmic trading system. These systems use computer algorithms to analyze market data and execute trades automatically based on predetermined criteria. Automated systems can be used by both individual traders and institutional investors who want to take advantage of high-frequency trading strategies.

  Finally, there are social trading platforms that allow users to copy the trades made by other successful traders in real time. This allows novice traders to benefit from the experience of more experienced ones without having to do all the work themselves.

• #15.     Understand the Different Types of Trading Orders: There are many different types of trading orders, each with its own advantages and disadvantages. It is important to understand the different types of trading orders and how they work in order to make informed investment decisions.
  
  

  The most common types of trading orders are market orders, limit orders, stop-loss orders, and trailing stops. Market orders are the simplest type of order and involve buying or selling a security at the current market price. Limit orders allow traders to specify a maximum purchase price or minimum sale price for their trades. Stop-loss orders help protect investors from large losses by automatically closing out positions when they reach a certain predetermined level. Trailing stops follow the stock’s movements up or down and adjust accordingly.

  Other types of trading orders include fill-or-kill (FOK) and all-or-none (AON). FOK requires that an entire order be filled immediately at the specified price; if it cannot be filled in its entirety, then none of it is executed. AON requires that either all parts of an order must be filled simultaneously or none at all.

  Finally, there are also advanced options such as one cancels other (OCO), which allows two separate pending instructions to be placed on a single asset with only one being executed; bracketed buy/sell limits which set both upper and lower bounds for entry into a trade; midpoint peg which sets prices halfway between bid/ask spreads; icebergs which break up larger trades into smaller pieces so as not to move markets too drastically; reserve size limits which restrict how much can be bought/sold in any given period; time in force restrictions which determine how long an order will remain active before expiring; post only limit instructions where no execution occurs unless better than expected prices can be achieved.

• #16.     Understand the Different Types of Trading Tools: There are many different types of trading tools, each with its own advantages and disadvantages. It is important to understand the different types of trading tools and how they work in order to make informed investment decisions.
  
  

  The most common types of trading tools are technical analysis, fundamental analysis, and algorithmic trading. Technical analysis involves analyzing past price movements to identify patterns that can be used to predict future prices. Fundamental analysis looks at the underlying economic factors that influence a security’s value. Algorithmic trading uses computer programs to execute trades based on predetermined criteria.

  Technical analysis is often used by traders who want to take advantage of short-term market movements or trends in order to make profits quickly. Fundamental analysts look for long-term investments with potential for growth over time. Algorithmic traders use complex algorithms and mathematical models in order to automate their trades.

  It is important for investors to understand the different types of trading tools available so they can choose the one that best suits their investment goals and risk tolerance level. Different strategies may work better in different markets, so it is important for investors to do their research before making any decisions.

• #17.     Understand the Different Types of Trading Strategies: There are many different types of trading strategies, each with its own advantages and disadvantages. It is important to understand the different types of trading strategies and how they work in order to make informed investment decisions.
  
  

  The most common types of trading strategies are technical analysis, fundamental analysis, and algorithmic trading. Technical analysis involves analyzing past price movements to identify patterns that can be used to predict future prices. Fundamental analysis looks at the underlying economic factors that influence a security’s price. Algorithmic trading uses computer algorithms to make decisions about when and how much to buy or sell a security.

  Technical traders use charting tools such as moving averages, trend lines, support/resistance levels, and oscillators to identify potential entry and exit points for trades. Fundamental traders look at macroeconomic data such as GDP growth rates, inflation rates, unemployment figures, interest rate changes, etc., in order to determine whether an asset is undervalued or overvalued relative to its intrinsic value.

  Algorithmic traders rely on complex mathematical models and sophisticated software programs that analyze large amounts of data quickly in order to generate profitable trade signals. These systems often employ artificial intelligence techniques such as machine learning in order to improve their accuracy over time.

  No matter which type of strategy you choose it is important that you understand the risks associated with each one before investing your money. It is also important that you have realistic expectations about what kind of returns you can expect from any given strategy.

• #18.     Understand the Different Types of Trading Indicators: There are many different types of trading indicators, each with its own advantages and disadvantages. It is important to understand the different types of trading indicators and how they work in order to make informed investment decisions.
  
  

  The most common types of trading indicators are trend-following, momentum, and oscillators. Trend-following indicators measure the direction of a price trend over time. Momentum indicators measure the rate at which prices change over time. Oscillators measure how far away from an average price level a security is trading.

  Trend-following indicators include moving averages, Bollinger Bands®, and Ichimoku clouds. Moving averages smooth out short-term fluctuations in prices to show longer term trends. Bollinger Bands® use two standard deviations above and below a simple moving average to indicate when prices have become too high or too low relative to their recent history. Ichimoku clouds combine several different elements into one indicator that can be used for both long-term trend identification as well as shorter term signals.

  Momentum indicators include Relative Strength Index (RSI), Stochastics, and Average Directional Movement Index (ADX). RSI measures the speed and magnitude of changes in price movements while Stochastics compare closing prices with highs/lows over a given period of time. ADX measures the strength of a current trend by comparing it with past trends.

  Oscillator type indicators include MACD (Moving Average Convergence Divergence) and Parabolic SAR (Stop And Reverse). MACD uses three exponential moving averages to identify potential buy/sell points based on crossovers between them while Parabolic SAR plots dots above or below an asset’s price depending on its directionality.

• #19.     Understand the Different Types of Trading Strategies: There are many different types of trading strategies, each with its own advantages and disadvantages. It is important to understand the different types of trading strategies and how they work in order to make informed investment decisions.
  
  

  The most common types of trading strategies are technical analysis, fundamental analysis, and algorithmic trading. Technical analysis involves analyzing past price movements to identify patterns that can be used to predict future prices. Fundamental analysis looks at the underlying economic factors that influence a security’s price. Algorithmic trading uses computer algorithms to make decisions about when and how much to buy or sell a security.

  Technical traders use charting tools such as moving averages, trend lines, support/resistance levels, and oscillators to identify potential entry and exit points for trades. Fundamental traders look at macroeconomic data such as GDP growth rates, inflation rates, unemployment figures, interest rate changes, etc., in order to determine whether an asset is undervalued or overvalued relative to its intrinsic value.

  Algorithmic traders rely on complex mathematical models and sophisticated software programs that analyze large amounts of data quickly in order to generate profitable trade signals. These systems often employ artificial intelligence techniques such as machine learning in order to improve their accuracy over time.

  No matter which type of strategy you choose it is important that you understand the risks associated with each one before investing your money. It is also important that you have realistic expectations about what kind of returns you can expect from any given strategy.

• #20.     Understand the Different Types of Trading Strategies: There are many different types of trading strategies, each with its own advantages and disadvantages. It is important to understand the different types of trading strategies and how they work in order to make informed investment decisions.
  
  

  The most common types of trading strategies are technical analysis, fundamental analysis, and algorithmic trading. Technical analysis involves analyzing past price movements to identify patterns that can be used to predict future prices. Fundamental analysis looks at the underlying economic factors that influence a security’s price. Algorithmic trading uses computer algorithms to make decisions about when and how much to buy or sell a security.

  Technical traders use charting tools such as moving averages, trend lines, support/resistance levels, and oscillators to identify potential entry and exit points for trades. Fundamental traders look at macroeconomic data such as GDP growth rates, inflation rates, unemployment figures, interest rate changes, etc., in order to determine whether an asset is undervalued or overvalued relative to its intrinsic value.

  Algorithmic traders rely on complex mathematical models and sophisticated software programs that analyze large amounts of data quickly in order to generate profitable trade signals. These systems often employ artificial intelligence techniques such as machine learning in order to improve their accuracy over time.

  No matter which type of strategy you choose it is important that you understand the risks associated with each one before investing your money. It is also important that you have realistic expectations about what kind of returns you can expect from any given strategy.