- Filecoin is a distributed cloud storage network for data.
- Filecoin enables anyone to monetize their open hard drive space and become a storage provider.
- The Filecoin token was developed to allow users to distribute and store data on the network without transacting in fiat currency.
Ready to buy Filecoin? Here's a step-by-step guide covering where and how you can buy Filecoin today from the USA.
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Step 1: Pick an exchange
To purchase Filecoin, you need market access. A crypto exchange offers you a platform for trading and practicing your strategy. However, there are a lot of crypto exchanges, and all of them provide different trading platform interfaces with varying terms and conditions.
To trade Filecoin, you need to open an account with a crypto exchange where it is listed. A crypto exchange is similar to the Robinhood trading app or opening an account with a stock brokerage like TD Ameritrade. The exchange acts as a middleman between the market, processing your trades while charging you fees for its service.
However, each exchange operates differently, and it pays to shop around for the best fees and features offered by exchanges.
Step 2: Fund your account
You can fund your account with the exchange using direct transfers, debit cards, and crypto deposits. Many unregulated exchanges won't accept debit cards or fiat currency as deposits. As a result, you'll have to buy crypto on an exchange like Localbitcoins.com and transfer it to your wallet at the exchange.
Regulated exchanges give you more deposit options, including debit cards, wire transfers, and crypto. However, it's important to note that crypto exchanges don't have federal deposit insurance, even regulated ones like Binance US and Coinbase. Therefore, your entire balance is at risk until you realize it as profits in your cold wallet or bank account. Exchanges get hacked all the time, so make sure you're using cold wallets for storing the bulk of your crypto assets and only leave what you want to trade in your hot wallet on the platform.
Step 3: Decide how much you want to invest
After the funds reflect in your trading account, it's time to think about your risk tolerance. Risk tolerance defines how much you feel comfortable losing in a single trade. Some people will freak out if they lose more than 5% of their balance on a trade, while others are fine "YOLOing" their entire account balance in a bet against the odds.
Risk tolerance is different for everyone, but a good rule of thumb is never to risk more than you can afford to lose. Traders also need to beware of using margin. Margin can make you rich quickly, but losses can pile up fast, leaving you owing the exchange money to cover your margin loan. Professional traders recommend never allocating more than 5% of your holdings to any single trade.
Step 4: Set up your order
After deciding how much money you want to invest in Filecoin, it's time to open your trading platform and use one of the following order types to place your trade.
The market order lets you purchase Filecoin at the next price quote. However, the quote could be above the price when you hit the buy button, filling you at a higher price point, known as "slippage." As cryptocurrencies are more volatile and less liquid than stocks, prices can jump around and you could end up paying a lot more than you planned for your Filecoin purchase.
The limit order prevents slippage on your trades. You enter the maximum you're willing to pay for Filecoin and click the buy button when you want to enter. The exchange will not fill you above this price, limiting your slippage.
This order helps you manage risk. You set the stop at 10% below your entry price. If the price action dips below that level, the exchange automatically liquidates your position to prevent further loss.
The stop-limit helps you take profit automatically. You set your price target, and the exchange liquidates your position when the price rises to this level.
Step 5: Place the order
After selecting your order types, use the buy button to enter Filecoin and make your purchase. When you reach your price target, hit the sell button, and the exchange exits you from the position.
Step 6: Monitor performance
Keep your eye on crypto developments that could shift the price of Filecoin. Filecoin, like the rest of the crypto universe, revolves around the price action and sentiment in major crypto assets, particularly bitcoin. A dip in the price of bitcoin can affect the value of Filecoin.
Regulatory action can also affect the price of crypto. Regulators and even banks are still learning about crypto technology and pricing and actions. In addition, crypto supporters and influencers such as Elon Musk and Mark Cuban can create sentiment changes in the market, causing price volatility.