How to Trade Cryptocurrency in Australia
Cryptocurrency trading can be extremely overwhelming for beginners, especially when you don’t know where to start. There are so many complex terms to understand, lots of platforms to choose from and more than 4000 cryptocurrencies to trade with.
Australians are very active crypto traders, and it’s no surprise that you want to join them. In fact, 13% of all Australians hold bitcoin, which is quite impressive. If you’re not sure where to get started, this comprehensive guide will take you through all you need to know to start trading cryptocurrency in Australia.
How to Get Started With Cryptocurrency Trading in Australia
There are 2 main things you need to start trading digital coins in Australia;
I. A cryptocurrency Wallet: this is the medium that holds the private or public keys to all your cryptocurrency transactions. Once you start acquiring digital coins such as bitcoin, you can store them in the wallet to keep them safe from hackers. The 3 main types of cryptocurrency wallets are software wallets, hardware wallets (most secure), and paper wallets. Some exchange sites also offer their users wallets.
II. A reputable exchange platform: there are 2 main ways that you can trade cryptocurrency; through peer-to-peer exchange sites and exchange platforms. Peer-to-peer sites connect cryptocurrency buyers and sellers directly, but they are very risky. Chances of frauds are high, and if you’re not careful, you may end up being scammed.
Exchange sites, on the other hand, are safer and have a wide variety of digital coins for you to trade with. Most Australian platforms are also regulated and have to comply with strict Know Your Customer and AntiMoney Laundering rules. This ensures that all transactions are monitored for suspicious activities, significantly reducing the chances of fraud.
Step by Step Guide to Cryptocurrency Trading in Australia
To trade crypto in Australia,
Step 1: Choose a Reliable Exchange Platform
There are more than 50 exchange platforms in Australia, and you need to choose one that suits your needs best. Every investor has short-term & long-term goals, and this often
determines the site that they sign up for. Some people prefer sites with a wide selection of cryptocurrencies, while others prioritize their user experience.
Conduct extensive research and settle on the platform that you are most comfortable with. If you’re having a hard time reviewing all the exchange sites, don’t fret. Simply sign up on Swyftx and get a free sign-up bonus of $10 worth of bitcoin.
Step 2: Sign up for an Account and Complete the Verification Process
Most exchange platforms in Australia are registered and regulated by AUSTRAC. This is why you’ll have to verify your identity before you can start actively trading. Most of the time, the sign-up process is usually straightforward, and you only have to fill in your full name, email address, country of residence, and mobile phone number.
A verification email is then sent to your registered email address, and you can then access your trading dashboard. Don’t forget to set up 2FA to keep your account secure. Verification can take anywhere between a couple of hours to 3 days, depending on how busy the network is.
To speed up this process, make sure the formation you provide coincides with the one that’s on the ID documents that you upload.
Step 3: Deposit Funds Into Your Account
As soon as your account is verified, deposit funds into your account so that you can start trading.
Some Australian sites allow you to deposit AUDs into your account, but there are others that only accept USD deposits. For such sites, you’ll have to incur a conversion fee.
Step 4: Start Trading!
Now that your account is fully funded, you’re free to make fiat to crypto or crypto to crypto trades. Go to the trade/buy section of your dashboard and select among the multiple cryptocurrencies to trade with.
Crypto trading may seem straightforward, but before you go all in, take some time and invest in crypto resources. It’s vital that you get the lay of the land and understand the various coins before you start trading.
What Is the Best Cryptocurrency Exchange Site in Australia?
If you’re unsure of the site to sign up on, our top recommendation is Swyftx. This platform was only launched in 2017, but it has grown to become one of the most reliable exchange sites in Australia. Some of the reasons why we prefer this platform includes;
- Ease of use: the Swyftx platform is easy to navigate, and its dashboard is beginner-friendly. They also have a mobile app that allows you to conveniently trade on the go.
- High-security protocols: exchange sites are a hot target for hackers, and Swyftx has never been hacked. They’ve also implemented bank-like security features to keep your account safe, including 2FA, data encryption, and regular penetration testing.
- Low fees: all the trades on Swyftx are executed at market value which is why the charges are low. They also have low spreads and do not impose trading limits.
- A high number of supported crypto assets: you can trade with over 260 cryptocurrencies on Swyftx, including the most popular digital coins like Bitcoin, Ethereum, and Litecoin.
Swyftx also comes with a demo account that’s a hail Mary for beginners. This account allows you to practice with virtual money and emulate actual trades before you start actively trading. Once you’ve used up all your virtual money, you can reset your trades and start again until you’re certain that you’re ready to invest your hard-earned cash.
Is Cryptocurrency Trading Legal in Australia?
Australia has been very progressive when it comes to digital assets, and the RBA legalized crypto in December 2017. Their legalization made them subject to Australia Anti-Money Laundering and Counter-Terrorism Financing Act 2006, and all cryptocurrency exchange sites had to be registered under AUSTRAC.
The legislator also highlighted that all digital coins, including bitcoin, would be treated as property and therefore subject to the capital gains tax. While this ensures that you can easily trade cryptocurrency in Australia, it also means that all trades trigger a taxable event.
Top Cryptocurrency to Start Trading Within Australia
When the first cryptocurrency was launched, it was mainly aimed at providing people with an alternate form of currency that was free from government regulations. It worked on a decentralized structure, which ensured that its value and supply wasn’t impacted by any regulatory body.
Over time, however, few people acquire cryptocurrencies for their transaction value; most of them buy digital coins as an investment commodity.
Here’s a quick overview of the top 5 cryptocurrencies you can get started with.
1. Bitcoin (BTC)
Bitcoin was the first cryptocurrency to be launched and is currently the gold standard for all digital coins. It was released in 2009 by Satoshi Nakamoto and promised lower transaction fees compared to traditional payment systems. There was a lot of controversy around this coin at first, and few people invested in it.
The future of bitcoin was also in question, but over time, it has become a trendsetter for all cryptocurrencies. It has a market limit of 21 million BTC.
Currently, 1 BTC is priced at $34,734.70, which is quite high if you’re just starting out. The good news is that you can buy small amounts of the coin at a fraction of the actual value.
2. Ethereum (ETH)
Unlike most cryptocurrencies, Ethereum runs on a smart contract network. It was launched in 2015 and is the second-largest digital coin after bitcoin when it comes to market capitalization. This digital asset allows people to access financial products freely regardless of their nationality and runs without interference from third parties.
The current price of ETH is $2,296.88.
3. Litecoin (LTC)
Litecoin was among the first cryptocurrencies to be released after bitcoin, and it was launched in 2011. It was developed by a former Google engineer, Charlie Lee, who was trying to create a lighter version of bitcoin.
LTC is often considered as the silver to bitcoin’s gold, and it’s not hard to see why. Initially, you could only use bitcoin for large transactions. This made it difficult for the small-scale investors to access this coin, so Charlie developed a coin that could be used for small transactions.
Litecoin and bitcoin are similar in more ways than one, and that’s because LTC was built off Bitcoin’s source code. The traction confirmation time of LTC is, however, faster, and the coin has a market limit of 84 million.
Currently, 1 Litecoin is trading at $165.23.
4. Polkadot (DOT)
Polkadot is unique in that it solves the main problem that blockchain faces; interoperability. For a long time, different networks could not communicate with each other, which made it difficult for the systems to work together.
There are hundreds of blockchains in existence, but they all live in isolation. Polkadot is designed to support multiple chains through a concept known as sharding. This ensures that transactions are processed swiftly and accurately.
The current price of Polkadot is $20.20.
5. Tether (USDT)
This was one of the first digital assets known as stablecoins. These types of cryptocurrencies peg their market value on fiat currency, and the USDT is pegged on the American dollar at a 1:1 ratio.
One of the major reasons why the tethers are popular is that they don’t experience frequent pierce volatility, and you can convert them to fiat currency easily. The USDT is the 3rd largest cryptocurrency in terms of market capitalization and has a total market cap of 61.772B.
Many more cryptocurrencies have been launched since bitcoin was released, some of which still haven’t hit the $1 trading mark. You should be cautious before investing in new coins because they are very risky. Their prices are highly volatile, and you can quickly lose your investment.
What Is the Difference Between Bitcoin and Altcoins?
Bitcoin is undoubtedly the king of all digital currencies, but over time, many more coins have been launched. These new cryptocurrencies are known as altcoins, and even though they still work on the same decentralization structure as bitcoin, they also have unique features.
For instance, Ethereum isn’t just a digital coin; it facilitates smart contracts and gives investors access to financial instruments. This has opened up the crypto sphere to many developments and lots of applications.
Due to their unique features, altcoins have enhanced the overall functionality of the cryptocurrency industry and have a low transaction confirmation time. The market for altcoins is, however, rapidly increasing, and investors are wondering whether this will impact Bitcoin’s lead in the market.
Factors to Consider Before You Start Trading Cryptocurrency
1. Trading Fees:
It’s advisable that you sign up on a platform with low trading fees because this is the difference between generating profits and making losses on your crypto investments. High trading fees tend to take away a huge chunk of your profit because exchange sites charge you every time you buy, sell and withdraw from your account.
For small trades, this may seem like a small price to pay, but over time the money accumulates into a sizable amount. This is especially true if you’re planning on trading cryptocurrency as a long-term investment.
2. Reputation and Reliability:
The cryptocurrency industry is still relatively new and highly vulnerable to cases of fraud. In contrast, traditional payment systems are still heavily monitored and regulated. This laxity in regulations has resulted in multiple fraud cases, a high rate of scams, and security breaches for some platforms.
Before you sign up on an exchange site, conduct due diligence by going through their online reviews. To identify the number of scams associated with the platform, Google the site and add + “SCAM”.
3. Customer Support:
When it comes to crypto trading, every second counts; it could be the difference between making a killer profit and losing all your investment. This is why you need a site that you could reach easily in case of any mishaps.
Some cryptocurrency sites like Swyftx have stellar customer support structures, and you can contact them via live support on their site, telegram, and email.
There are some platforms, however, that only have email support, which tends to be slow. Make sure you also go through a site’s Trustpilot reviews to gauge how reliable their customer support is.
4. Supported Cryptocurrencies:
Even if you’re just starting out, it’s wise to sign up on an exchange with multiple cryptocurrencies for you to trade with. Most Australian platforms will allow you to buy, sell and trade the major coins like Bitcoin and Ethereum, but there’s more to crypto trading than that.
Find out whether the site also has lesser-known altcoins, as this will enable you to diversify your Portfolio and spread out your risk exposure.
5. Security Features:
Due to the amount of funds that are traded on exchange platforms, they are always a target for malicious hackers. Make sure you go for an exchange site with stringent security protocols to ensure that your investment is safe. Some of the security features you should look out for include;
- 2-factor authentication
- Storage of funds in cold wallets.
- Insurance for the funds stored in hot wallets.
- SSL Site Security Certificate
6. Availability in Your Country:
Australia is home to many crypto exchange sites, but due to its heavy financial rules and regulations, some international exchanges are not available.
Make sure you limit your choices to platforms that operate within the country, as this will make it easier for you to deposit and withdraw funds.
7. The complexity of Trading Platform:
Cryptocurrency trading is already challenging enough, and if you’re just getting started, you’ll need a platform that’s easy to navigate and trade with. It shouldn’t have a lot of jargon as you could end up making costly mistakes.
Interact with the user interface for a while before signing up to determine how comfortable you are trading on the site.
Types of Cryptocurrency Trading
There are 2 types of cryptocurrency trading;
1. Short-term trading: this is all about benefiting from the short-term price swings of digital assets by executing your training strategy when there’s price volatility. Short-term trading is highly risky, but it promises larger and quicker returns if you do it right.
2. Long-term trading: with this type of trading, you hold your digital coins for a long period of time with the intention of selling them when it’s value increases for a profit. Long-term trading is perfect for investors that want to make profits without the stress that comes with actively trading.
Before you engage in this type of trading, learn how to safely hold digital assets.
How to Create an Effective Trading Strategy
The main difference between cryptocurrency trading and gambling is the execution of a plan. To minimize your risk of making a loss, here’s how you can create an effective trading strategy.
1. Identify Patterns
The foundation of all reading chats and trading strategies is looking at the previous price movements and identifying patterns. You should then use those patterns to make future predictions. There are instances where patterns are so regular in multiple markets that they are named, e.g. support and resistance. Some patterns are, however, obscure, and you may have to look harder for them.
Some of the patterns you should look out for include the price change of bitcoin when Ethereum experiences a price drop or the impact of the US dollar price increase on bitcoin.
2. Create a Plan and Follow It
If you find a plan that works for you, stick to it! There are 2 major aspects that you should include in your plan;
- Where to take your profits
- When to cut your losses
Ensure that every loss or gain you make is within sensible boundaries irrespective of the current market trends. As you gain experience, you’ll be in a position to create sophisticated trading strategies that incorporate more market indicators.
3. Try Out Various Theories
Experiment with various strategies before investing a lot of money in them. You could either use backtesting or paper trading.
Backtesting involves executing trading strategies based on historical market movements to identify whether it would have performed well. Paper trading, on the other hand, is all about using virtual money on real trades and under current market positions to gauge its effectiveness.
What to Watch Out for When Trading With Cryptocurrencies
Cryptocurrency trading can be risky, and you may end up facing some challenges.
Be on the lookout for;
- Inaccurate patterns: most of the time, markets tend to follow historical patterns, but there are some times that they don’t. This is one of the major risks that come with crypto trading, and you need to learn how to identify inaccurate patterns.
- Volatility: the cryptocurrency sphere is very dynamic, and this is one of the aspects that makes it highly attractive to traders. It’s also what makes trading very risky. Drastic market and price shifts can happen at any moment, ultimately impacting your profits.
- Using excessive leverage: most exchange sites offer up to 100 times leverage, and this magnifies your potential risks. Keep in mind that cryptocurrency is highly volatile, and if you combine this with high leverage, liquidity will increase.
- Not knowing when to cut your losses: you need to know when to fold and close a position; otherwise, you’ll end up making more losses.
- Unregulated manipulated markets: compared to traditional financial markets, the cryptocurrency industry is highly regulated, which is why market manipulation is common. Liquidity is also low, and this contributes to the high market volatility.
- Being over-exposed: only invest what you’re comfortable losing. Ensure you set up stop orders to limit over-exposure in case of drastic price swings.
Effective Tips for Cryptocurrency Trading in Australia
Cryptocurrency reading can be highly profitable, but you need to get into it with a clear strategy.
Here are some useful tips to get you started.
1. Secure your accounts: if your trading account gets hacked or you lose your private key, you lose all your investment. In most cases, when this happens, chances of recovering your account are very low. Ensure your account is well secured with a strong password and that you’ve enabled 2 factors authentication. Avoid signing into
your account on public networks and limit the devices you use to access it. Don’t forget to familiarize yourself with the most common scams.
2. Understand order types: if you plan on trading on an exchange, this is very important. Know the difference between a market order and a limit order and understand how they work. Keep in mind that crypto markets have low liquidity so refrain from placing very big market orders.
3. Use technical analysis on trades: crypto trading can be very profitable, but you can also lose all your investment as fast as you made it. Technical analysis will help you mitigate your risks. If you only plan on trading the big coins like Bitcoin, the chances of losing your investment overnight are low. The lesser-known coins, on the other hand, are riskier, but they also tend to offer a great reward.
4. Understand the tax implications of crypto trading: cryptocurrency trading is a taxable event so familiarize yourself with the tax implications of every trade.
5. Manage your risks: don’t rush to invest in coins that you consider massively profitable. You’ll most likely end up losing all your investment. Focus on regular trades that give you small but sure gains and invest in low liquidity markets. This strategy will require patience, but they are safer for beginners.
6. Don’t buy coins just because their prices are low: the decision to invest in a coin should have a lot to do with its market cap instead of its affordability. Think of it in terms of conventional stock; they’re evaluated using their current market price multiplied by the total number of outstanding shares. For instance, there’s no difference between investing in a cryptocurrency that’s priced at $100 per coin and has 100,000 shares and a coin priced at $10 with 1,000,000 shares.
7. Don’t hold on to altcoins for very long: altcoins tend to lose their value over short periods of time so sell them as soon as they are profitable. If you’re considering long-term cryptocurrency investments, go for coins with a high daily trading volume. Make sure you look at the market patterns to identify the best times to buy or sell a coin.
8. Diversify your Portfolio: don’t put all your eggs in one basket. The cryptocurrency market is unpredictable, and as much as you can make thousands in a day, you can also lose all your money. Invest in different coins so that even if you make a loss on one coin, you’ll likely make a profit on another one.
Start Trading Bitcoin in Australia Today!
Cryptocurrency trading has a variety of benefits such as;
- Total decentralization: digital assets aren’t tied to any regulatory body, so their prices are rarely impacted by economic crises and government laws.
- High security: most of the transactions are usually anonymous, and you rarely have to provide exchanges with extremely sensitive information such as your bank details.
- Borderless trading: cryptocurrencies turn the world into a global village where you can make international transactions using digital coins and without having to convert them into fiat currency.
Now that you already know how cryptocurrency trading works, the first thing you need to do is sign up for an exchange site. Swyftx has a demo account feature that’s particularly beneficial to beginner traders. You can use it to sharpen your trading skills before you start investing with real money.