First, you need to choose the right exchange for crypto currency trading. A trader or investor evaluates exchanges and their management companies as well as other organizations to which he trusts his funds. For example, like banks. Interested in: How long does the trading platform work? Market hours and reputation. Who controls it?
Examine the founders’ biography and the exchange’s history for dark spots. What is the reputation of the exchange? The most important parameter. If you come across information about fraud and problems with the withdrawal of funds, then avoid working with this exchange. Is there any insurance during the process of selling and buying? Hacking is a typical problem of all exchanges, and it is only a matter of time.
Useful recommendations for the starters
It’s recommended to work with large exchanges. They are better suited for both traders and investors. Large platforms process a significant number of orders daily, easily linking sellers and buyers. On popular trading platforms, the commission is lower. A massive amount of customers offsets low fees.
The choice of exchange
Avoid working with trading sites of dubious jurisdiction. It is safest to work with companies registered in America and Europe. Some laws protect consumer rights. In the event of a dispute, users may prove right and return deposits. Some exchanges are suitable for large investors. They use simplified algorithms for placing limits and stop-limit orders.
Others, on the contrary, are aimed at working with ordinary users for whom market orders are relevant. On some trading floors, there are restrictions on the size of the deposit for beginners. If a trader wants to increase the limit, he sends a request to the administration and waits for approval for this operation.
The qualities of a good exchange platform
A good exchange platform for investing is characterized by high liquidity (the presence of a large number of sellers and buyers, due to which transactions are completed quickly). Consider the nuances associated with the convenience of the interface and security. When choosing a trading platform, you’re to find out will the platform freeze if a sharp increase in trading volumes occurs.
Professionals from Binance recommend that users well study specialized forums on the Internet and the exchange page for the occurrence and frequency of system failures. For example, John Quinn, who is the profit director of Strorj Labs, an active developer of blockchain, said that “Reddit and Twitter are the best and only source of information about exchanges.” Do not forget about the risks of hacker attacks. According to the founder and director of HashChain Technology, this danger is critical. Conclusion: do not use the exchange to store assets, use an electronic wallet.
It is very popular with novice traders because:
- Allows you to trade without risks and to stay confident;
- Has a visually understandable interface;
- Works without technical failures;
- Has a robust customer support system
Trading regulation on crypto exchanges
Some countries in the world are already planning to introduce measures aimed at regulating the operation of cryptocurrency exchanges. It is about South Korea and China. The latter threatens to add a set of restrictive rules. South Korea plans to protect traders from trading on non-certified sites and introduce a profit tax for traders.
The service of clients’ support
It is essential for beginners to get a clear answer to their question or to solve a problem using different methods. On sites with this problem. Typically, a user is redirected to:
- FAQ page;
- one of the sections of the site;
- another cryptocurrency trading website.
Even popular trading platforms are known for disgusting technical support. Therefore, this factor is not vital when choosing an exchange. Be patient. You will likely have to look for answers to questions of interest to you.
Margin trading for beginners or dealing with the leverage
If you are a beginner planning to use a small amount to bid, you can forget about margin trading, and it won’t bring any profit. You must learn that the option is available on some cryptocurrency exchanges and only for traders with a significant deposit. As an alternative movement, try working with forex brokers who provide leverage to their clients.The exchange platform allows you to make transactions with the most popular digital coins.
The fee on the exchange platform
The person who trades as a starter sometimes doesn’t know about the necessary payments. Be sure to find out information about exchange rates. At most top-end trading platforms, the size of the commission varies from 0.05% to 0.26% per transaction. Additional fees may be charged on depositing and withdrawing funds from the bitcoin cash. Good exchanges.
The use of new technologies
Be sure to make sure that the selected site meets modern technological standards. This point also affects the level of user spending. The main advantages of this software:
- Transaction happens faster;
- reduced user costs in operations by 20%;
- It is easy for beginners to understand the complicated trading process.
This software must run smoothly.
Hacker attacks often steal a lot of user funds from trading platforms. Attackers are always looking for loopholes. It is recommended to choose a trading platform with two-factor authentication. You will have to enter the password, and a one-time code sent to the user on the mobile application.
Important factors that influence the work of the exchange platform
You should pay attention to the number of currency pairs. Some trading platforms allow trading only popular coins. Others bid on hundreds of different altcoins, which gives more opportunities for trading. The withdrawal of cryptocurrencies is also of great importance. Some exchanges allow users to withdraw only BTC and several other popular coins.
However, some platforms and communities provide the ability to display a vast selection of digital coins and several fiat options. The ability to enter fiat is essential for beginners. It is necessary to find out whether it is possible to replenish an account with fiat money. Also, you should know the price of bitcoin.
Parameters that help to estimate the efficiency of exchange
User data in bitcoin trading should be well protected. To register on sites, enter your e-mail address. But sometimes a complicated verification procedure is required, involving the provision of scanned copies of the passport and other documents, for example:
- Income statements;
- Inquiries from the place of work;
- Account details.
The offers for withdrawing/depositing money can be different. Each exchange has its own set of options for replenishing an account or withdrawing funds from it: bank transfer, debiting/crediting to a card, or transfer from a cryptocurrency wallet. Daily trading volume (liquidity). The higher the rate, the better. Work on the site with top cash allows you to make a deal with the purchase/sale of the asset of interest to you at any time and receive profits.
Useful tools of crypto trading
Convenient trading tools are of great importance. There must be the ability to conduct technical analysis conveniently. Trading tools include:
- the ability to view graphs on various timeframes (periods);
- building Fibonacci levels;
- stock indicators;
- global analysis of statistics in graphical form.
Interest on the deposit
Some exchanges charge it. They seek to convince their users to keep coinbase in the account. We recommend that you immediately withdraw funds from the trading platform after the transaction. Referral programs enable customers to earn money by attracting new users. Mobile applications can be used both for two-step authentication and for bidding.
The registration on the crypto exchange
The online registration procedure includes several stages an is carried out in short terms. Going through them is easy. In most cases, the registration scheme is as follows: first, find the official website of the trading platform you are interested in. This item, at first glance, looks strange. However, the network has many fraudulent phishing sites that copy the design of well-known exchanges and have a similar email address. Such resources are aimed at stealing personal information with the subsequent theft of user funds. Therefore, make sure that you have the real website of the exchange of interest.
Practical guidance step by step
To complete the registration, you will need an e-mail address. You must have access to it. For such purposes, it is recommended that you create a new e-mail address that is not highlighted in the probable spam databases. On the cryptocurrency exchange website, select the “Registration” section. It can be called in different ways.
The page with registration data will open. It opens immediately, or you will have to hold on a little. Fill in all available fields. Choose a secure password. Upon completion, an email will be sent to your email. You must open it and go to the specified link. On the page that opens, you need to enter the remaining registration data.
They also need to be filled out. Enter exclusively truthful information. Otherwise, you may have problems with the withdrawal of funds in the future. Some trading platforms require the provision of scanned copies of the passport and some other documents.
You may also need a photo of the user along with an identification card in their hands, for confirmation. Russian users can not register on all existing cryptocurrency exchanges. For example, Japanese trading floors allow only Japanese citizens to bid. But there are European, American, and Asian exchanges where Russians can register and work.
How to start working with the deposit
You can replenish the first deposit on the crypto currency trading platform in various ways. It is advisable to begin cooperation with an exchange that accepts fiat. Otherwise, you will first have to purchase cryptocurrency in one of the exchange services and then transfer funds to your exchange account. A significant drawback: exchange services, as a rule, offer the exchange of fiat for cryptocurrency at an unprofitable rate.
There are several ways to fund your account with fiat funds to trade bitcoin:
- Bank transfer;
- Write-off from the card. Webmoney;
- Yandex Money.
Bank transfer is not the most convenient way to replenish a deposit. The duration of the transfer may take several banking days, and the service is expensive. If you transfer a small amount of money to your account, this option will not be the most profitable.
Transfer from Mastercard or Visa cards is quite convenient. The procedure is simple, and it includes just several movements. You must enter the card number, its expiration date, and CVV2 code. After that, an SMS message will be sent to your phone with a code that must be entered to confirm the operation. Crediting funds to the account can take place instantly or take some time. In any case, the deposit replenishment method is more convenient and more straightforward than the previous one.
How to start the trade
Cryptocurrencies are traded around the clock seven days a week. The principal turnover falls on the Asian session. Focus on UTC + 8. Residents of the Russian Federation is convenient. Do not forget about the American session. It starts at 16:00 Moscow time. Activity in the American session is lower than in Asian, but it should be paid attention to. The following countries are called primary news providers and market drivers:
- South Korea;
- The USA.
News from these countries deserves special attention while trading bitcoin.
The frequency of transactions for the starters
Conditions of bitcoin trading for beginners on many cryptocurrency exchanges are not ideal. In times of intense trading, the sites are often buggy and late. At the same time, as we said above, to wait for the reaction of technical support is almost impossible. For active trading, you should count on several transactions a week. This is quite enough.
Beginners obsessively want to buy or sell something. Restrain yourself. You need to buy and sell any digital assets based on a sober analysis, and not on intuition or the desire to earn all the money in the world in one fell swoop. Otherwise, the beginner will face only losses.
The most popular trading strategies
There are different trading strategies for selling and buying bitcoins. You can try some of the most effective strategies and then stop on one of them. The choice depends on the individual preferences of the trader.
The most popular and effective crypto trading strategy is to buy breakouts. The bottom line is to buy coins at the time they exit the course from a narrow price range. Naturally, you need to buy currency in the direction of the price movements, and not against it.
Experienced traders use a counter-trending strategy: buying coins against the movement of the course, in the hope of a price reversal and the beginning of a correction. On average, traders earn from 15% to 35% on one operation. Do not forget about commission fees. From each transaction, the exchange deducts part of the funds in its favor. Stupid purchases and sales are doubly unprofitable: you can lose money on commissions, and then on the transaction itself, which included emotions.
Earn not only on the growth of cryptocurrency but also on its fall. Lower deals are called short positions. Applying them to new altcoins is not recommended. As new digital coins can be completely nullified in their price, and you will lose all your investments. It is also not recommended to use short positions in long-term trading. On a fall in the currency, you can earn a maximum of 100%. At the same time, buying a cryptocurrency in the long term can bring profit several times more.
The tools and money diversification
According to Google, the most popular cryptocurrencies among Russian people are Ethereum and Bitcoin. They account for the most significant volume of capitalization. It is not recommended to trade immediately with new altcoins and outsiders of the market. These tools are the riskiest. It is advisable to use them in trading only for experienced users.
Currently, the market has more than a thousand different cryptocurrencies. As a rule, they move in risk-on/risk-off mode. This means that digital coins are almost simultaneously falling or growing. In such circumstances, it is difficult to achieve serious diversification. However, it is still recommended to have a portfolio of different cryptocurrencies: 40% of the deposit in BTC, and 20% in ETH.
After making transactions, immediately withdraw money to an electronic wallet in order to avoid bankruptcy or hacking of the exchange. About 20% of the portfolio can be kept in altcoins. At the same time, each coin should not account for more than 1% of your funds. The remaining funds in bitcoin trading for beginners should be kept in fiat or TUSD.
Four golden rules
Four golden rules can serve as a guide for cryptocurrency trading:
- Money management. Do not trade with all available funds. Engage in no more than 20% of your deposit in one transaction;
- Risk control. Consider the risks involved. Be sure to use the Stop Loss order in the trade;
- Security. Keep fixed capital off-exchange. Only cooperate with sites that are well-proven and well protected from hacker attacks;
- Diversification. Do not keep funds in any one cryptocurrency.
The basic principles of diversification we have already considered above.
Basic trading orders for the starters
To make a deal at bitcoin exchanges, the trader uses trading orders. This is an instruction for the exchange. There are a relatively large number of trading orders. Moreover, the set of the latter differs from the platform. Let us consider the main ones.
The market is used for one hundred percent fulfillment. The fastest and most reliable order, an easy way to open or close a position. The market should be used in cases where order execution is more important than the value of cryptocurrency. It is intended for the purchase/sale of an asset at the current market price. The market is the leading order in the work of any trader, especially a beginner.
The limit is relevant when you need performance at a guaranteed rate. Using a limit order, you can specify the exact number. The limit is applied when receiving a planned profit is more important than triggering an order. Limit orders work according to the following algorithm: On acquisition – at a set cost or lower; For sale – at a given rate or higher.
Stop orders are used to establish market or limit orders when a trader reaches a particular bitcoin price. Using Stop is convenient when you need to perform market analysis before opening a position. Stop orders are of the following types:
- Stop-Market – opening a position at a market price;
- Stop-Limit – purchase/sale of cryptocurrency at a fixed price;
- The most popular way to apply a Stop order is Stop Loss.
This order indicates the price at which the user refuses to continue the game due to the risk of significant losses. Be sure to use this order in your trading strategy. It is an important risk management tool.
Arbitration on the crypto market
A unique way to earn money on the cryptocurrency exchange is arbitration. It is based on the price difference between digital assets. The essence of earnings is elementary. A trader buys cryptocurrency on the exchange, where its price is minimal, and then sells it on the trading platform, where the asset rate is maximum.
Use for work is simple. For the implementation, it is not necessary to possess dangerous knowledge in technical analysis. This is precisely the appeal of arbitration. To date, the use of arbitration trading in the cryptocurrency market has so far been justified. Since the difference in prices on different exchanges is associated with technical shortcomings, slow transaction speed, etc. Over time, the profitability of arbitration will naturally decrease, as has already happened in traditional markets.
It is much more promising to master the traditional tools of the trader. It is technical analysis. You can read about its basics before you start trading. This tool is universal since it is used on all trading floors without exception, including traditional ones.
The notion of volatility
The main factor attracting traders to cryptocurrency markets is volatility. By this indicator, volatile digital assets surpass traditional financial instruments hundreds and thousands of times. For example, the rate of Bitcoin in 2013 alone grew by 5500%. You will not find such changes in price either on the stock, or on the commodity, or the traditional currency exchange. With low volatility, significant start-up capital is required to earn.
How to become successful
Having a small capital on the cryptocurrency exchange, an experienced trader will be able to increase it at times. It is crucial to be able to correctly predict the course change and perform a technical, fundamental market analysis. The trader should carefully monitor the release of news related to the world of cryptocurrencies, be able to analyze the data of the chart and the volumes.
The importance of technical analysis
It is believed that in cryptocurrency trading, technical analysis is secondary, unlike other markets. Since the situation with the exchange rate of any asset in the digital currency market is not difficult. There is no such massive level of capitalization. Therefore, significant changes in prices can be affected not only by large players.
Most cryptocurrency traders still use technical analysis in decision making. The most simple, easily interpreted approaches are used. Trading based on news is risky enough. The cryptocurrency world is full of gossip. Unverified or false information appears, which has a significant impact on the change in the exchange rate of a particular currency.
The role of experienced traders in crypto trading
It is essential to understand that significant players play a crucial role in the market. With a small capital of several hundred dollars, a trader will not be able to adjust the rate of any digital asset. In this case, joining the already outlined price movement is considered the primary strategy. It is essential to timely detect the beginning of a correction or a new trend. Unpleasant surprises can wait for a beginner.
For example, some market participants deliberately trigger passive orders of other users to stimulate price movement in the direction they need. And such a strategy is often successful. Players involved in the game begin to support the intended action with all their strength, which leads to a significant change in price.
Three main rules for the starters
There are three rules for a beginner in the cryptocurrency market:
- The main enemy of success is greed. Act strictly within the intended trading strategy. It is essential to stop and close the position in time, taking profit or loss. Otherwise, the potential income can turn into losses, and small costs can turn into a sharp blow to your deposit;
- Patience is a trader’s best friend. This property applies to work with open positions and waiting for entry points to the market. If you do not see the prerequisites for a profitable purchase of cryptocurrency, do not try to play at random or get involved in a risky game for the sake of a meager benefit;
- Impulsivity is the main enemy of the trader. Capitalization and volume are factors that show the mood of other traders.
Without this data, it is impossible to conduct a qualitative analysis of the situation in the digital asset market.