With India having evolved into the world’s fifth-largest economy, Indian investors have shown a gradual yet significant and increasing interest in wealth creation and investment.
While the stock market has been the traditional and popular avenue for investors and traders, the short history of crypto investment in India has also been nothing but impressive. Classified officially as VDAs (virtual digital assets), it’s estimated that India now has more than 2 crore crypto investors, a number that’s only expected to increase in the next half a decade. That being said, the massive volatility in the crypto industry is something even seasoned investors find challenging to navigate. We did a deep dive into the Indian crypto industry to come up with this simplified but comprehensive guide.
What Is Cryptocurrency Trading?
Crypto trading is the process of buying and selling various cryptocurrencies on an exchange, where traders speculate on their price movements in hopes of making a profit. Unlike traditional investing strategies that focus on long-term growth, crypto trading centers on leveraging current market trends and volatility to maximize returns quickly. Traders may execute transactions within minutes or hours, capitalizing on minute-to-minute fluctuations in price, making it imperative for them to stay attuned to the ongoing market sentiments.
Trading In Crypto In India
When it comes to trading cryptocurrencies in India, two distinct avenues stand out: cryptocurrency exchanges and CFDs (Contracts for Differences). Each offers unique advantages and caters to different trading styles.
CFDs
If you’re intrigued by the prospect of speculating on price movements without the need to hold the underlying assets, CFDs might be the route for you. These allow traders to bet on whether the price of a cryptocurrency will rise or fall. Trading CFDs involves entering contracts with a provider, which means you’re not buying the cryptocurrency itself. To succeed with CFDs, however, you’ll need a solid understanding of market fundamentals and the dynamics of price changes. Many traders appreciate CFDs for their potential for high returns, but they come with a corresponding increase in risk.
Exchanges
Crypto exchanges function as platforms where investors can buy, sell, or hold various cryptocurrencies, ranging from well-known options like Bitcoin and Ethereum to lesser-known altcoins. The procedure for trading on an exchange is straightforward, albeit subject to regulatory requirements.
- Sign up on a crypto exchange: Begin by selecting a reputable exchange and creating an account. Most platforms will require you to complete KYC (Know Your Customer) regulations, which involve submitting personal identification to ensure compliance with legal standards.
- Adding funds: After activating your account, you can link it to your bank for easy transactions, or opt for manual transfers to fund your trading activities.
- Picking a crypto: Select the cryptocurrency you wish to trade. Research is key here, as established cryptocurrencies might offer stability while emerging coins could yield higher returns.
- Trade: Once you’ve chosen your cryptocurrency, you can place a buy order. Depending on market conditions, decide when to sell for the maximum gains or choose to hold the asset.
- Store your crypto: Holding your crypto securely is crucial, whether it’s for the short or long term. Utilize a cryptocurrency wallet for safe storage, which can range from online wallets to more secure hardware options.
Purchasing Your First Cryptocurrency
Regardless of which platform you choose, the fundamental steps for purchasing cryptocurrency remain consistent across the board.
- Begin by downloading the respective app or visiting the website of your chosen exchange, where you will embark on the sign-up process, designed to be user-friendly—comparable to any standard banking application.
- KYC verification is your next step. Trusted exchanges require comprehensive personal details, including your name, address, and contact information, alongside a government ID (most commonly the Aadhar in India). This process may seem cumbersome, but it plays a vital role in protecting users against potential fraud. Expect verification to take anywhere from a few hours to a couple of days.
- Once verified, you can proceed to deposit funds into your account. While the majority of platforms primarily accept bank transfers, some may also facilitate deposits via Google Pay. Once your account reflects the deposited funds, you are ready to purchase your cryptocurrency.
The world of cryptocurrency trading can seem daunting, but it’s fundamentally about following structured, methodical steps to engage in a growing and dynamic market. Stay tuned for the next part of this series, where we will delve deeper into selecting the right exchange, choosing the right cryptocurrency, and developing effective trading strategies.
