Many people are interested in cryptocurrencies in a speculative way. Indeed, the volatility may provide you best returns than trading on the traditional stocks market or forex. However, you may know that cryptocurrencies are not yet regulated markets.
In this chapter, we will have a quick approach to the notion of trading without entering in details. We have been writing a complete guide for novice cryptocurrency traders. For example, we will use the most accessible exchange, Binance.
Binance offers a large number of pairs to trade, has an excellent support service, and is quite good at everything they offer. The volume and liquidity present on their platform makes trading less risky.
First, you will have to sign-up on Binance. Unless you are a corporation or trading with large amounts, you will not have to verify your identity. We will be grateful if you could use our link to register because you will get a lifetime reduction of the exchange fees with us. Since the guide is entirely free, this support is crucial for our sustainability.
After registering, please activate the first security layer with the Google 2FA Activation Code. We will dedicate a chapter for the security of all your accounts, but this is important, and this step should not be skipped.
You can find a full guide written by Binance to help you set up the 2FA security here.
Please ensure you save the Back-up key, which can be used to re-bind your account in case you no longer have access to your previous Google Authenticator. Losing access to your 2FA can prevent you from accessing your account before Binance manually verify your claim, and this process can take up to 7 days.
Now that you have set up your security code, every time you will log in on Binance, you will need to have this code next to you. This process can be boring; sometimes, we agree on this point, but having all the security layers will considerably decrease the risks of having your funds stolen.
The last thing you will need before starting trading is to transfer your funds to the exchange. If you read the steps from the previous chapter, you will just need to execute them and send your funds to your Binance Bitcoin Address.
To generate an Address on Binance, you need to login to your Binance account. Then click on [Wallet] and then [Spot Wallet].
Then, enter the ticker of the Cryptocurrency or select the coin/token to be credited.
Using BTC as an example, you can “Copy the BTC deposit address”, and paste it into the corresponding address section of the platform where you make your withdrawal.
You can also click on “View QR code”, and use the mobile application of the corresponding platform to scan the Q.R. code to complete your deposit at Binance.
You can consult any blockchain explorer to check the status of a specific deposit by clicking on the Transaction ID (TxID).
You can then track your deposits & withdrawals in the « Deposit & Withdrawal History » Tab.
Guide to trade Bitcoin & other Cryptocurrencies:
Now that you have some Bitcoins on Binance, we can start teaching you how to trade Bitcoin & other cryptocurrencies. As this guide is designed for the novice in cryptocurrencies, we recommend you to start trading only with money you can afford to lose. Indeed, trading is a risky activity, and the fact that you are trading cryptocurrencies is increasing the risk. Although your money will not disappear, it is quite frequent to see investors holding an investment, which may lose 95% of more of its value in a few years.
Back to the Exchange Main Page, you will see that there is a vast choice of pairs to trade. One of the first things you should notice is that there are codes for each Cryptocurrency. This code is the ticker and is often composed of 3 letters, but it can also be 2 or even 5. The most used ticker, and therefore, that you should start to recognize, are :
- Bitcoin (BTC)
- Ether (ETH)
- Ripple (XRP)
- Tether (USDT)
The last one is not common. USDT is a cryptocurrency backed by the U.S. Dollar, at a 1:1 Ratio. 1 USDT is equivalent to 1 Dollar. This Cryptocurrency has been created because most of the exchanges can not trade fiat money versus most of the cryptocurrencies.
Regarding if you want to accumulate more Bitcoins, Ether, or USDT, you will choose to trade only the pairs associated with this coin. On Binance, as per the majority of the exchange, you can filter the pairs you are willing to buy and sell.
Trading now consists of buying a cryptocurrency, and wait to see its value increase, and then sell it to earn profits. However, as you may monitor on Chart History, the value is hard to predict.
Let us use an example in real life. If you are buying a beer for $5, and a friend of yours wants it and offers to buy it for $5.5, you just won 50 cents. Congratulations, you are a trader!
Making $0.5 profits on an initial purchase of $5 means you earned 10% of what you “risked” into your trade. However, if nobody wants your beer for $5 and you see people buying them for $4.5, you can decide to sell it for the same price than the “market price” and then lose 50 cents, or 10% of the initial risk.
Cryptocurrency trading is resumed to buying cryptocurrencies [the beer] at a specific price [$5]. Then you decide to sell them for a higher price [$5.5], thus generating profits [$0.5]. However, it implies risks of losing your money in some bad trades if the price does not go as you expected.
We designed a guide for you if you are curious to learn more about how to trade bitcoin & other cryptocurrencies and become a professional trader in a few months.