I remember when I started crypto trading seven years ago I had only $20.
Some people think you need to start trading with a lot of money, which is not true.
If you refuse to learn the basics of crypto trading, such as risk management and technical analysis, you will lose all your funds, no matter the amount.
If you have the right trading skills, you can grow any account, no matter how small.
In this article, I will show you how to start crypto trading with small capital and become profitable.
If you’re ready, let’s dive in
How To Start Crypto Trading With Little Capital
1. Master Technical Analysis
If you want to trade crypto successfully with little capital, you need to master technical analysis.
Technical analysis is the process of predicting future price movements based on historical price performance.
It involves studying charts and using indicators to identify patterns and trends in the crypto markets.
The best book I would recommend is “Technical Analysis of Financial Markets by John Murphy.”
The book gives you a solid foundation, although to become good at chart reading requires practice.
2. Master Fundamental Analysis
You must understand the intrinsic value of the crypto you intend to trade.
While you can use technical analysis to understand price movements, fundamental analysis will help you determine if the crypto will increase in price based on its real-world use case.
If you buy a crypto with terrible fundamentals, you will likely lose money.
When it comes to crypto fundamental analysis, you have to conduct thorough research to avoid buying scam tokens.
Research the founders of the crypto along with their team to ensure they have integrity.
You also need to master tokenomics
What Is Tokenomics?
Tokenomics refers to the study and design of the economic and incentive structure of a cryptocurrency or token.
It includes aspects such as the token’s creation, distribution, supply and demand, incentives for holders, and the economic principles that underpin the token’s ecosystem.
The key tokenomics metrics you should take into consideration before buying any crypto are:
Circulating supply, maximum supply, total supply, token allocation, and use case.
A higher number of tokens in circulation is more likely to push the price down.
Cryptocurrencies with good tokenomics and a solid use case increase in value very fast.
3. Master Risk Management
Risk management is the backbone of trading.
In fact trading is 10% skill 90% risk management.
If you can master risk management, you will become successful even if you’re not good with technical analysis.
On the other hand, even if you’re a wizard of technical analysis but lack risk management skills, you will never become a profitable crypto trader.
Before you enter a trade, you have to decide the maximum amount you’re willing to lose.
Ideally, your maximum risk should be 2% of the amount you want to use for that trade.
For instance, if your trading capital is $100, your maximum loss should be $2.
The more risk you take the more likely you would lose your money and be out of the market.
If you’re starting with limited capital, it’s crucial to focus all your energy on protecting your funds.
Let me demonstrate why risk management is the backbone of trading
If you’re starting your crypto trading journey with $100 and you’re risking 2% of your capital per trade, you would have to lose 456 times before your capital is wiped out.
But if you risk 50% of your capital per trade, you only need to lose 13 times before your money is wiped out.
Do you see the difference?
No matter how bad you are, you can’t lose 456 trades without winning at least one.
4. Understand Trading Psychology
The biggest challenge you would ever encounter as a trader is controlling your emotions,
That’s why understanding trading psychology is a crucial requirement to avoid losing your capital.
Trading psychology refers to the emotional and mental state that influences a trader’s decisions.
To be a profitable crypto trader, you have to master emotions such as fear, greed and impatience.
My biggest challenge as a trader has been impatience, and I’m still working on it.
5. Learn How To Research Crypto Gems
A critical skill you need to make insane profits is knowing how to find crypto gems early before they take off.
New cryptocurrencies launch on a daily basis, and if you’re able to get into one with great potential, you can 100x your investment.
Imagine you bought a crypto gem early with $50, and you sell when the price goes 50x. Your return would be $2500.
One of the key ways to grow a small account is to focus on researching crypto gems and buying them early.
In trading, timing is everything.
To master crypto gems research, you must understand tokenomics, sentiment analysis and how to avoid crypto scams.
Most of the newly created crypto tokens are scams you would need to learn how to navigate your way to avoid losing your funds.
6. Focus On Continuous Education
If you must become a profitable crypto trader, you have to focus on continuous learning and education.
If you have the budget, you can buy a technical analysis book or learn it for free on YouTube.
You also need to keep up with the latest news and trends in the crypto world. With such info, you can spot a crypto gem that would give you good profits.
Twitter, coinmarketcal, cryptopanic are the best places to get crypto news.
7. Trade On Exchanges With Low Fees
When you’re starting your trading journey with little capital it’s important you choose a crypto exchange with low fees.
If the fees are too high it will eat into your capital.
Each crypto trade requires a transaction fee, and if you trade often, your capital will get wiped out very fast.
I recommend you use Binance, kucoin or bybit.
8. Choose Your Trading Style
You have to choose between two popular trading styles, which are swing or day trading.
Day trading is when you open a position and close it that same day,
While swing trading can take days or weeks
If you’re just starting, I recommend swing trading because it gives you enough time to understand the markets.
You can transition to day trading when you’ve got enough experience in the crypto markets.
9. Join A Trading Community
Trading can be frustrating if you’re doing it alone. That’s why you need a community where you can get guidance from experienced traders who have been trading for years and have lessons to share.
Ensure you have someone you can share your analysis with for a fresh perspective.
You can join crypto trading communities on Facebook and Reddit.
Frequently Asked Questions
What Is The Minimum Amount To Start Trading In Crypto?
There’s no universal minimum amount required to start trading in crypto.
However, many exchanges allow you to start with as little as $10-$50. The minimum amount can depend on the exchange you use and the specific cryptocurrency you want to trade.
It’s important to consider trading fees, as they can significantly impact your profit if you start with a very low amount.
Can You Trade Crypto With $10?
Yes, you can trade crypto with $10.
Many exchanges allow small trades, and some cryptocurrencies have low prices, enabling you to buy fractions of a coin.
However, with such a small amount, be mindful of transaction fees and the fact that it may take longer to see significant gains.
How Long Does It Take To Learn Crypto Trading?
The time it takes to learn crypto trading varies depending on your background and how much time you dedicate to it.
For someone new to trading, it could take several months to grasp the basics and develop a strategy.
Continuous learning and practice are essential since the crypto market is volatile and constantly evolving.
With consistent effort, you could start making informed trades within 3-6 months.
