Trading crypto can be quite a lucrative investment. However, many people lack a solid understanding of how these digital assets work regardless of their increased popularity. Cryptocurrencies are intangible assets that only exist in your computer or smartphone and not your wallet or purse. However, you should not think about them as being imaginary. 

Cryptocurrencies are real and can be used to pay for tangible goods and services. A cryptocurrency is a medium of exchange that applies cryptographic protocols to ensure safety and legitimacy. The only troublesome aspect of digital assets is the price since it is very hard to determine their actual price. 

Fiat currencies such as the United States dollar, sterling pound undergo price fluctuations, but not as extreme as cryptocurrencies. This massive volatility may cool off in the future as cryptocurrencies develop into more mature and established assets. Cryptocurrencies can be perplexing to the unversed. Here, we will explore the three biggest myths to help separate fact from fiction:

You have to own cryptocurrencies to profit

There is a huge contrast between trading cryptocurrencies and holding a cryptocurrency unit, and just like in the traditional financial sector, investing money has a huge distinction to trading them on the forex market. 

Buying and selling crypto can be one of the quickest and simplest ways of making profits. With prices of cryptocurrencies fluctuating wildly during the day, it is a dream for any seasoned trader or investor. We have heard stories of early adopters who invested in Bitcoin during its early days, and they are now millionaires. However, investing in cryptocurrencies needs a lot of tolerance and persistence. 

Having a basic understanding of the distinction between trading cryptocurrencies and investing is essential when selecting how you want to profit from the crypto market. The reason being that to the newcomers, the crypto market might seem to be like a money mint, where one can profit with just the click of a mouse from the comfort of your home. 

The stark truth is that it involves a high risk, high reward venture in which the price of crypto can drastically rise or collapse devastatingly within a few hours. Investing in crypto like Bitcoin can begin with a small amount, which can keep appreciating as time and experience increases. Investing is a longer-term endeavor, which might ultimately result in a stockpile of money. Bitcoin investors are not bothered by the price fluctuations in the market as they are prepared to wait. 

On the contrary, crypto trading is a shorter-term undertaking by traders looking to profit from price fluctuations. The continuous price fluctuations in the crypto market can be a refreshing experience for any elite trader. However, the scary volatility could easily frighten newcomers who are not conversant with how the crypto market works.

Traders do not need to own cryptocurrencies to profit from the crypto market. The wild price fluctuations present traders with opportunities to benefit from. Some cryptocurrencies also face liquidity challenges; hence, trading them eliminates this challenge. 

All cryptocurrencies are the same

There are over 1,500 cryptocurrencies listed by Coinmarketcap.com. Back in 2010, there was just Bitcoin in the market. All these cryptocurrencies aim to exploit blockchain technology to diverse sectors such as finance, health, education, payments, social media, logistic, data storage and many other areas. 

Cryptocurrencies have been developed for different purposes. For instance, Bitcoin was created to act as a currency to pay for goods and services. Ripple XRP was created to facilitate fast international settlements and transfers, and BAT was created to expedite online advertising. Blockchain technology is the reason why there are very many crypto assets in the market. It provides developers with a platform to create different currencies to solve different problems. 

Again, no single entity controls blockchain technology. Anyone with knowledge hoe blockchain works can create their cryptocurrency. Satoshi was the first to exploit the technology to develop now the world's largest cryptocurrency, Bitcoin. Soon afterward, other developers became aware they could also use the technology to come up with other cryptocurrencies better than the original. 

Another good reason why so many cryptos exist is the success that Bitcoin has enjoyed over the years. Not many people paid attention to Bitcoin back in the day when it was first created. The crypto had little, or no value and investors disregarded it. Not many people were bothered to find out more about Bitcoin. 

Regardless, its value started rising steadily over the years. Besides, Ethereum also held no value until August 2017, despite the huge gains received by those who had earlier invested in the ETH token. 

Fast forward to late 2017, Bitcoin price and that of altcoins went over the moon. Those who had in Bitcoin earlier became millionaires overnight, with the cryptocurrency hitting $20,000. All of a sudden, everyone was astonished, and people became curious about what Bitcoin is. Now there's a ton of information regarding cryptocurrencies online. 

Complex crypto trading strategies are better than simple ones

There is a massive distinction between simple unresearched and simple researched strategies. This sadly tricks many traders. Many crypto trading strategies are shared out there without them being tested for their productivity of benefits. A simple crypto trading strategy can be good but only when utilized under certain market conditions or at a specific time. Doing extensive research and practice may exhibit that a simple strategy might be better than a complex strategy. 

A sophisticated strategy might appear to be better, but if it prevents you from entering and closing positions, it's too complicated. The cryptocurrency market is extremely volatile and time-sensitive, especially for day traders; you need a trading strategy that allows quick decision making. Regardless of the strategy you choose to employ, research and practice are highly recommended. 

Bottomline

There are very many cryptocurrency trading myths out there, and the ones mentioned above are just some of the main ones. Understanding some of the myths that revolve around crypto trading will save you a lot of time in your endeavor to become a successful cryptocurrency trader. Although trading takes time to master, it is not inconceivable. Cryptocurrency trading can be luxurious, and anybody can become a trader. Experts from Bitcoin Loophole advise that trading is more than just selecting an entry, and you should spend your time sharpening your exit and risk management skills well.