Cryptocurrency Trading for Beginners [2023] | complete guide

This guide all uwill tell you everything you need to start trading cryptocurrency. If you have read our guide to the end, you will have all the basic information about buying and selling digital assets. There’s a lot to cover in this guide, so let’s get to it.

If you want to learn how to trade cryptocurrencies, you’ve come to the right place. There is a mountain of information available on the internet that could easily overwhelm anyone, including an experienced trader. To help you out, we have created this detailed guide to trading cryptocurrency for beginners updated for 2022.

What is cryptocurrency?

The difference is that unlike traditional currencies like the US dollar, cryptocurrencies are often not controlled by a single entity. They are also protected using complex cryptography along with a new form of online public ledger called the blockchain. It will be distributed to anyone interested in a copy. Please watch the short video below to understand how blockchain works before proceeding further.

How it all began?

Digital currencies have existed in various experimental forms for several decades, but the first to be successfully implemented was Bitcoin (BTC).

Bitcoin was developed by Satoshi Nakamoto (pseudonym), who published his white paper titled “Bitcoin: A Peer-to-Peer Electronic Cash System” [PDF] in October 2008

Bitcoin has spawned a whole new class of digital currencies that can now be bought and traded on cryptocurrency exchanges around the world.

In addition to Bitcoin, there are other well-known and recognized cryptocurrencies such as Ethereum (ETH), which currently lags behind Bitcoin in terms of network value; and Tether (USDT), the first stablecoin also in terms of network value. There are currently over 20,000 cryptocurrencies listed on CoinMarketCap, one of the leading cryptocurrency market data aggregators.

Cryptocurrency trading vs investing

When learning how to buy and trade cryptocurrency, you need to differentiate between cryptocurrency trading and investing. What is the difference? What is the best? And how do you use this distinction to make your exchanges effective? The two terms are often used interchangeably, but they are different.

They are only similar to the extent that the end goal is the same: to profit from their activities. They differ in that the results of business activities are generally expected in the short or medium term. It can range from a few minutes or hours to a few days or weeks. By investing, the trader does so for the long term. We are talking months to years or even more.

As a beginner, you will probably want to choose a trading strategy that involves medium to long-term trading and investing. He usually requires more time to research and analyze your trades before committing.

Cryptomarket vs stock market

The stock market has been around for a long time and there is a large body of literature on the subject. But how different or similar is it to the emerging cryptocurrency market? That is how.

Similarities Between Crypto and Exchange

Stock trading and investing tools are more or less the same. This is especially true for technical traders who use tools like charts to analyze the market. You can use the same tools to perform TA (technical analysis) on trades in both markets.

Assets denominated in fiat currencies. The crypto market can be innovative and revolutionary, with assets designed to complement the current financial system. However, the denominations on the market still have the same value as those on the exchange against fiat currencies.

Trading and investment strategies are similar. In the stock market, traders can choose between day trades, swing trades, or positions. They may also choose to buy your assets and hold them for the long term. Similarly, traders and investors can do the same in the crypto market.

Similar market products. The stock market has been around for generations, giving rise to innovative products like derivatives and techniques like using leverage to inflate profits (and losses). The same products and techniques have been transferred to the new age cryptocurrency market. Now you can trade Bitcoin Futures, Options and Leveraged Tokens. You can use leverage on most of your trades on most major cryptocurrency exchanges, such as Binance, Bitfinex, or BitMEX. The full list of digital asset exchanges with Leverage-Handel can be found here.

Differences between stock and crypto markets takemarkets

Market volatility. Due to his advanced age, the stock market is more stable and less volatile. The cryptocurrency market, on the other hand, is used to wild price swings. It is quite normal to see double-digit percentage fluctuations in a matter of hours.

market maturity. Age is a key factor in trading. The exchange has been around for a long time, while the crypto market is only a decade old. This means that the market value and trading volume are much higher in the former than in the latter. Young age also contributes to the wild volatility of the crypto market.

market assets. In the stock market, you invest in shares of publicly traded companies by buying their shares. In the crypto market, you invest in the idea, technology, or coin (or token), but not in the company (if any) behind the coin.

Regulations Because the stock market has been around for a long time, regulators have had plenty of time to develop and implement rules and regulations that govern market behavior. This contributes to the already mentioned minimal volatility. This is not the case in the cryptocurrency market. Regulators are still struggling to understand the emerging asset class, and this lack of (proper) regulation partly explains the wild nature of the market. However, this is changing according to the Internal Revenue Service (IRS), starting in 2022 merchants will have to pay a tax on cryptocurrencies.

Why trade cryptocurrencies?

Since cryptocurrencies seem to have more negatives compared to the stock market, but not enough positives, why trade digital assets? Well here are some of the benefits below.

Benefits of trading cryptocurrencies

24 hour trading. Unlike the stock market, which opens and closes at specific times, there is no closing of the cryptocurrency market. You can trade cryptocurrency 24/7 or even use trading bots and keep your trades running all the time.

Market volatility. In the previous section, we focused on the negatives, but let’s talk about the positives. Traders (not investors) thrive on market volatility. The cryptocurrency market has this in abundance and it means that as a trader you get better trading opportunities with the cryptocurrency market rather than the stock market.

privacy and anonymity. Cryptocurrency trading gives you access to decentralized cryptocurrency exchanges. These allow you to trade assets in escrow for free (when only you are in possession of your digital money) without having to submit your identity online. Of course, there are centralized trading platforms if you don’t mind sharing your data and another party stores your digital assets.

The multitude of assets. Despite its relatively young age, the crypto market has grown so rapidly that traders now have access to similar exchange products, including futures, options, leveraged tokens, swaps, CFDs (contracts for difference). Whether you want to go long or short, call or put, look no further. All derivative products currently available on the stock exchange have already been ported. If not, it will arrive soon.

Easy account opening. Crypto has a flat barrier to entry. He is also fast on board.

Cryptocurrency trading techniques

There are two main techniques for analyzing and evaluating cryptocurrencies. The techniques have been around for generations and have been successfully implemented for traditional financial investments.. They are often used in a complementary way, but it is possible to use both independently.

Fundamental Analysis (or FA)

FA is the art of a trader using economic and financial factors affecting a particular asset to determine his or hers for an asset. FA allows you to determine if this asset is overvalued or undervalued at the current valuation. If you can answer this question, you can decide whether or not to invest, when, and for how long to hold the investment.

On-chain metrics include network hash rate, wallet addresses (active and inactive), network applications, token/coin A production rate (inflation/deflation), the network and transactions.

Fortunately, when it comes to cryptocurrency, most networks like Bitcoin and Ethereum are public, making it easy to access these on-chain factors. To track Bitcoin and Ethereum on-chain metrics, you can use Bitinfocharts.com. This website contains a large amount of crypto-related data and is extremely easy to use and navigate.

Off-chain metrics basically include community engagement, stock market listings, government regulations, and more.

Technical Analysis (or TA)

Technical analysis is a trading discipline based on the idea that a trader can predict the future price movements of an asset based on its historical price movement. TA uses a variety of technical indicators to accomplish this, including trading volume, moving averages, trend lines, Japanese candlesticks, chart patterns, and more. By the end of a technical analysis, a trader should have identified trading opportunities and a potential entry point.

Cryptocurrency technical analysis can work for any trading period, from speculation and day trading to long-term investment.

cryptocurrency markets

Like traditional financial instrument markets, the available cryptocurrency markets fall into two categories: spot and derivatives.

Cryptocurrency Spot Market

As the name suggests, assets in a cryptocurrency spot market are bought or sold locally, which means that delivery is “local”. When you buy bitcoins, the coins are delivered instantly and the payment is processed immediately as well.

Manufacturers: these are the starters of a trade. As a manufacturer, you include a potential transaction on an exchange. For example, if you want to sell your Ethereum coins, open a transaction at a certain price and invite a potential buyer to complete their order.

Takers – On the other side of the equation is the merchant who fills the order and these are called takers. As the name suggests, these merchants “take” existing orders and fill them.

Manufacturers bring liquidity to the market. There are makers and buyers on both sides of the coin. There are buy and sell order creators and therefore there are buy and sell order receivers. An order book is the register that records available orders that have not been filled.

For example, if you are a buyer, you can browse the order book and choose to fill (accept) an existing order or place an order. The platform automatically associates your purchase order with an existing sales order.

crypto derivatives market

. These derivatives can be based on the value of other derivatives and form several levels, a house of cards, if you will. cryptocurrency trading strategy

What is it? A trading strategy is simply a plan that you follow to execute your trades. It includes the type of assets you want to invest in, the frequency of your transactions, and the size of your investments.

In this section, we will take a look at some of the most common cryptocurrency trading strategies. However, remember that you can always create your personal strategy that works for you. It could be based on these general strategies or something completely new.

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Why do you need a business plan?

Here’s why a cryptocurrency trading strategy is essential to your success:

is a card Having and maintaining a trading strategy is similar to having a chart. It guides your trading and helps you know when to trade, how and why you should take a particular trade.

Keep emotions at bay. One of the biggest challenges for Traders is the interference of feelings and emotions. These become a hindrance when the price of an asset starts to move in the opposite direction of the bet. With cryptocurrencies, this happens so often that it can easily lead to an emotional roller coaster. Successful traders have learned to continue to trade without emotion by sticking to their trading plans.

Risk management. Risk management.

Here are some of the most popular strategies used by successful traders and investors:

Crypto day trading and scalping

A cryptocurrency day trading strategy allows the trader to take full advantage of the price volatility of cryptocurrency assets. As mentioned, virtual assets are extremely volatile right now. omentum, which is ideal for a day trader.

The crypto day trading strategy is a numbers game strategy. A day trader makes several trades in a day, buying low and selling high with small profits that add up to large sums at the end of the day. Usually, it is sometimes difficult to do it manually. To trade cryptocurrency on a daily basis and be successful with this strategy, you should consider automating your trading using cryptocurrency trading apps or cryptocurrency trading bots like Coinrule.