What You Should Know Before Investing in Cryptocurrency - For Beginner

What You Should Know Before Investing in Cryptocurrency - For Beginner

You’ve finally decided to start your cryptocurrency trading career, and you’re already thinking about how you’re going to spend your millions. For those of you who are interested in learning about cryptocurrency trading, I’m here to help you get started. This beginners guide is going to show you everything you need to know. In this post, we'll discuss What You Should Know Before Investing in Cryptocurrency - For Beginner

You’ve finally decided to start your cryptocurrency trading career, and you’re already thinking about how you’re going to spend your millions. There’s no doubt that cryptocurrency is an exciting market for investors, but unfortunately, success doesn’t happen as easy as that.

Many investors like to trade cryptocurrency because it’s an extremely volatile asset. If you can time the market right, trading crypto can give you much higher returns than traditional investments.

In all seriousness, cryptocurrency trading can be risky business. Yes, it’s true — some people have made lots of money. However, some people have lost lots of money too.

For those of you who are interested in learning about cryptocurrency trading, I’m here to help you get started. This beginners guide is going to show you everything you need to know.

First, I am going to give you some background information on when cryptocurrency trading began. Next, I will help you understand the difference between short-term and long-term cryptocurrency trading, and both of their advantages and disadvantages.

After that, we will tell you the important things that you need to be careful of before you start trading.

Finally, I will show you how to trade! This will include a step-by-step guide with some useful images.

By the end of reading this beginner guide, you will have all the information need to go and trade on your own. So, what are you waiting for, let’s go and learn about the early days of crypto trading!

What is Cryptocurrency?

Although there are many different types of cryptocurrencies, they all have one thing in common: they operate on blockchain technology, making them decentralized. Decentralization of financial operations through cryptocurrencies has several efficiencies over the traditional financial system, including:

  • Cuts out almost all the overhead costs associated with banks
  • Less expensive transactions that can be sent and received internationally
  • Inflation or finite supply that’s written into code — no need to trust the Federal Reserve
  • Financial derivatives like trading strategies and loans can be coded directly onto certain cryptocurrency blockchains, replacing the need for financial intermediaries.

What is Cryptocurrency? A Simple Explanation - YouTube

The largest cryptocurrency is Bitcoin and it’s used as a “digital gold.” Essentially, Bitcoin is a commodity used as a store of value. Ethereum is the 2nd-largest cryptocurrency with a market cap of $170 billion. Developers can develop smart contracts on Ethereum’s blockchain to create decentralized alternatives to traditional banking functions, like lending and trading.

How Does Cryptocurrency Work?

Cryptocurrencies are digital assets that are powered on the blockchain. Blockchain technology stores a ledger of every transaction of the cryptocurrency on every node powering the blockchain. Nodes are computers that are connected to Bitcoin’s network to  mine Bitcoin. If one of these miners tries to enter false transactions, it will be nullified by the correct ledger.

The correct ledger is determined by the majority of miners’ records. In theory, you could hack a blockchain by controlling 51% of the cryptocurrency’s network in a process called a  51% attack. However, this process is economically infeasible and would require an extremely choreographed hack with billions, if not trillions, of dollars worth of computer hardware.

To transact with a cryptocurrency, you need to have a set of public and private keys. These keys are like passwords generated by your cryptocurrency wallet. Your public key is connected to your wallet’s address and allows people to send you cryptocurrency. Your private key is used to approve transactions being sent from your wallet –– only you have access to your private keys. 

Do you know how cryptocurrency works? | by Cryptocurrency | Medium

Contrary to popular belief, many cryptocurrencies don’t have a finite supply. Bitcoin’s total supply is capped at 21 million coins, but many altcoins have a set inflation rate with no cap on total supply, like Ethereum. 

Cryptocurrency Trading

As you must already know, Bitcoin became the first ever cryptocurrency when it was released in 2009 by Satoshi Nakamoto. Given that the maximum possible number of bitcoins generated is 21 million.

The persona Satoshi Nakamoto was involved in the early days of bitcoin, working on the first version of the software in 2009. Communication to and from Nakamoto was conducted electronically, and the lack of personal and background details meant that it was impossible to find out the actual identity behind the name.

Nakamoto’s involvement with bitcoin ended in 2010. The last correspondence anyone had with Nakamoto was in an email to another bitcoin developer saying that they had "moved on to other things." The inability to put a face to the name has led to significant speculation as to Nakamoto’s identity, especially as cryptocurrencies increased in number, popularity, and notoriety.

Who is Satoshi Nakamoto? | Bit2Me Academy

However, with only one coin available, you couldn’t trade it with any other cryptocurrency.

It wasn’t until a few years later when more and more cryptocurrencies were created that people started trading them. The idea is really simple. You trade one cryptocurrency for another, with the hope that the coin you buy increases in value.

This concept is the same as the real-world stock exchange.

When people trade, they need to use a cryptocurrency exchange. This is so buyers and sellers can be matched. For example, if you are holding Bitcoin and want to sell it for Ethereum, an exchange will help you find an Ethereum seller to trade with.

Exchanges will charge you a fee for doing this, which normally costs around 0.1% for each trade. Cryptocurrency trading is now really popular, with billions of dollar’s worth of coins being bought and sold every day.

The “lucky” ones have made a serious amount of money doing this, and there are lots of people that are now trading cryptocurrency as a full-time job.

However, experienced traders use lots of different tools to help them pick the right coins at the right time. This can include software that helps investors analyze previous pricing trends etc.

Nevertheless, everyone must start somewhere! As long as you are not trading more than you can afford to lose, there is no harm in giving it a try.

Now, I will now explain what short-term trading is, along with its advantages and disadvantages.

Short-Term Trading

Short-term trading is where you buy a cryptocurrency but only plan to hold on to it for a short amount of time. This can be anything from minutes, hours, days, weeks or even a few months!

You might buy a certain cryptocurrency because you think it will rise in price in the short term. In which case, you would then sell it for a quick profit if you thought the price was going to drop again!

Let’s look at some of the advantages of short-term trading.

Advantages

The main advantage of short-term cryptocurrency trading is that it offers a really good opportunity to make high percentage gains. Unlike fiat currency markets, where prices usually don’t move by more than 1% each day, cryptocurrency prices can almost double overnight!

Now that cryptocurrencies have become so popular, there are now more than 8,000 different cryptocurrencies to trade. Which means one thing — more opportunities to make huge profits. Not only that, though, but there are large trading volumes for lots of coins.

Large trading volumes are important as it means you will always find a buyer or seller! It simply means that a high amount of currency is flowing in and out of that cryptocurrency.

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Disadvantages

As the cryptocurrency markets are so volatile, the prices can change very quickly. This means that if you want to perform short-term crypto trading, you will need to spend a lot of time analyzing the markets.

It’s super important to keep in control of your emotions — one thing you will learn when short-term trading is that you don’t always win. It can be very stressful when prices move differently to how you had hoped.

So, learning to accept losses is a big part of cryptocurrency trading. Nobody makes profits 100% of the time!

Short term cryptocurrency traders look for small gains in small price movements, so you will need to have quite a good analysis ability. This means being able to read trading charts and graphs. Which, if you are a beginner, can take a little while to learn.

Another disadvantage of short-term trading is that, for you to see good returns, you must make quite a large investment. Which is something that most of you beginners might not feel comfortable with.

Long-term trading

Have you ever heard the word “HODL”? Well, if not, then we’ll assume you’re completely new to the crypto space! No, it’s not a word you’ll find in the dictionary, but you’ll certainly find it in crypto forums and community chat groups!

“HODL” is a slang word meaning to hold a cryptocurrency long term rather than selling it. Its actual meaning is “Hold On for Dear Life”. Usually, long-term crypto trading means to hold a coin for one year or more.

The idea is that, although there will always be volatility, the price should increase in a large amount over the long term.

A great example of this would be the lucky investors who bought Bitcoin in 2011 when it was just $0.35. If they held on to it early 2021, they could have sold their coins for almost $50,000 each! That’s over 143,000X your initial investment!

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Advantages

One of the main advantages of long-term cryptocurrency trading is that it’s easy and requires a little amount of time. You don’t need to understand complex trading charts or graphs as you’re simply looking to hold your coin for the long term.

Unlike short-term trading, where you need to constantly spend time checking the prices of cryptocurrencies, you can do it in your spare time. It’s simple, once you have bought your coin, you don’t need to do anything other than wait!

Another good advantage of long-term cryptocurrency trading is that you don’t need lots of money to get started. You can buy small amounts whenever you have some spare money, and let it grow over a long period of time.

This also allows you to avoid the stresses of market volatility, as you don’t need to worry about short-term movements in price.

Disadvantages

One disadvantage of long-term cryptocurrency trading is that you might miss a good opportunity to make quick short-term gains.

Sometimes coins rise in value really quickly, only to fall straight back down. Short term traders will notice this and can make a quick profit.

Another disadvantage is that because you aren’t spending time analyzing the market (as much as a short-term trader), you could miss some bad news. If there is bad news released that could affect the price of your cryptocurrency (such as regulations), the price could fall and never rise again.

So, just make sure you are keeping on top of cryptocurrency news to avoid this from happening.

Now that you know some of the advantages and disadvantages of both short and long term cryptocurrency trading, let’s have a look at some of the things you need to be careful of before you start.

What to be Careful of?

The most important thing to remember before you start trading is that there is a chance you could lose your entire investment.

The cryptocurrency markets are very volatile, and although some people have made lots of money, lots of people have lost money too. You should never trade with any amount that you can’t afford to lose.

How you deal with your losses will determine your success as a trader. Here’s some important advice — never try to earn your losses back by investing larger amounts. This is investing with emotions, and often causes people to lose a lot of money.

FUD

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A popular term that is used in both real-world and crypto trading is FUD. This stands for Fear Uncertainty and Disinformation.

FUD is when people or organizations try to get people to not invest in an asset by telling them they will lose all their money (or something similar). They normally say things like “It’s a scam” _or it’s “_Going to crash”.

You should always do your own research before jumping to any conclusions. Use Google to find out if the information you hear is correct.

Persuasion

One final thing to consider before you start trading is that you should never be influenced by other people’s opinions. Remember, you aren’t the only person who wants to profit from cryptocurrency trading.

Be wary of the Youtubers you watch and listen to. They will often be paid by cryptocurrency projects to promote their coin. This could increase the price in the short term but could end up decreasing in the long term. So, always do your own research first.

If you have read our guide so far, you should now have a good understanding of what cryptocurrency trading is, the difference between short-term and long-term trading, and the things you need to be careful of.

Guess what? It’s now time to learn how to trade crypto!

How to Start Trading

As you are looking to trade cryptocurrencies, the first thing we need to do is get you some coins! The easiest way to do this is with Bitcoin (BTC), Ethereum (ETH) and Tehter (USDT) as almost every exchange accepts it.

The quickest way to buyBitcoin (BTC), Ethereum (ETH) and Tehter (USDT) is to use your debit, credit card or use a bank transfer with Binance. Binanceare an exchange broker and will sell you Bitcoin at a really good rate, it is worth it as you get your coins straight away.

Binance is popular for its crypto to crypto exchange services. Binance exploded onto the scene in the mania of 2017 and has since gone on to become the top crypto exchange in the world. 

Open an account at Binance Exchange

Go to the Binance website by clicking this link. You will need to choose a username and a strong password. You will also need to confirm your email address and mobile number.

Verify your account at Binance

Please refer to the following GIF to get a better idea about how to register on Binance.

_.gif

1. Please visit Binance’s official website (https://www.binance.com) and click the [Register] button on the top right-hand side.

1.png

2. On the registration page, please follow the on-screen instructions and insert the email address and password that you’ll use for your account. After reading the TOU carefully, click on [Create account].

Note:

  • The password must be a combination of numbers and letters which contain at least 8 characters, one UPPER CASE letter, and one number.
  • If you’ve been referred to register on Binance by a friend, make sure to fill in the right Referral ID ( 28551372 ).

2.png

3. After clicking register, please choose the option according to your circumstance.

4. After clicking, the system will send a verification code to your email that will be valid for 30 minutes. Please login to your email box to check and enter the verification code in time.

5. After entering the verification code, the following page will appear to show that you have successfully registered.

Note:

For your own account security, make sure to enable two-factor authentication (2FA) after your first login. Both Google 2FA and SMS 2FA are available.

6. Visit the Binance website and Login to your account, then click [User Center]-[Identification].

In the Identity Verification area, click [Verify].

After choosing the nationality, click [Start].

*Please ensure that all the information entered is consistent with your ID documents. You won’t be able to change it once confirmed.

7. Next, enter your personal information, then click [Continue].

After finishing the Basic Verification, click [Go to Advanced Verification] to continue.

Next, you will need to upload pictures of your ID documents. Please choose a valid ID type, according to the country your documents were issued. For most users, choose a passport, ID card, or driver’s license.

*After choosing an ID file, there will be two ways to verify your ID verification:

  1. Take pictures
  2. Upload files

For example, if you are using an ID card, you have to take photos of the front page and back page of your ID card. You can do it with your webcam or upload the document picture from your computer.

After uploading the document photos, the system will ask to take a new photo to verify. Click the picture area to take the picture, then click [Submit & Continue]

After clicking, the system will ask you to finish facial verification. Click [Begin Verification] to finish facial verification on the computer.

Alternatively, you can move your mouse to [Use mobile phone] to get the QR code. Scan the QR code via your Binance app to finish the facial verification.

After completing the process, please wait with patience. Once your application has been verified, Binace will send you an email notification.

Please be sure to complete the basic info and photo verification process within 15 minutes, and do not refresh the browser during the process.

  • You may attempt to complete the Identity Verification process up to 10 times per day. If your application has been denied 10 times within 24 hours, you will need to wait 24 hours to try again.

How to Buy Cryptocurrency on Binance P2P (web)?

You can now buy cryptocurrencies using multiple fiat currencies with 0 transaction fees on Binance P2P!

See a guide below to buy crypto on Binance P2P, and start your trade.

Guide Video

Step 1:

Go to the Binance P2P page, and

  • If you already have a Binance account, click "Log In" and go to Step 4
  • If you do not have a Binance account yet, click "Register"

Step 2:

Enter your email on the registration page and set your login password. Read and check the Binance Terms and click "Register".

Step 3:

Complete Level 2 identity verification, enable SMS Verification, and then set your preferred payment method.

Step 4:

Select (1) “Buy Crypto” then click (2) “P2P Trading” on the top navigation.

Step 5:

Click (1) "Buy" and select the currency you want to buy (BTC is shown as an example). Filter the price and the (2) “Payment” in the drop-down, select an ad, then click (3) "Buy".

Step 6:

  1. Enter the amount (in your fiat currency) or quantity (in crypto) you want to buy and click (2) "Buy".

Step 7:

Confirm the payment method and amount (total price) on the Order Details page.

Complete the fiat transaction within the payment time limit. Then click "Transferred, next" and “Confirm”.

Note: You need to transfer the payment directly to the seller through bank transfer, Alipay, WeChat, or another third-party payment platform based on the seller's payment information provided. If you have already transferred payment to the seller, you must not click "Cancel" unless you have already received a refund from the seller in your payment account. If you do not make an actual payment, please do not click "Confirm" to confirm the payment. This is not permitted according to the rules of the transaction. If you encounter any issues during the transaction, you can contact the seller using the chat window.

Step 8:

Once the seller has released the cryptocurrency, the transaction is completed. You can click (2) "Transfer to Spot Wallet” to transfer the digital assets to your Spot Wallet.

You can also click (1) "Check my account" above the button to view the digital asset you just bought.

Note:If you do not receive the cryptocurrency 15 minutes after clicking "Transferred, next”, you can click "Appeal" and Customer Service will assist you in processing the order.

How to Trade Spot on Binance Website

Video Tutorial:Click this video to learn how to spot trade on Binance

Visit Binance website (www.binance.com), click on [Log in] at the top right of the page to log into your Binance account.

Then click on any cryptocurrency on the home page, and go directly to the corresponding spot trading page.

Here is the trading page interface.

  1. Binance Announcements
  2. Trading volume of trading pair in 24 hours
  3. Sell order book
  4. Buy order book
  5. Candlestick chart and Market Depth
  6. Trading Type: Spot/Cross Margin/Isolated Margin
  7. Type of order: Limit/Market/Stop-limit/OCO(One-Cancels-the-Other)
  8. Buy Cryptocurrency
  9. Sell Cryptocurrency
  10. Market and Trading pairs.
  11. Your latest completed transaction
  12. Market Activities: large fluctuation/activities in market trading
  13. Open orders
  14. Your 24h order history
  15. Binance customer service

Let’s take an example to buy BNB. On the top of the Binance home page, click on the [Trade] option and select [Classic] or [Advanced]. Go to the buying section to buy BNB and fill in the price and the amount for your order, then click on [Buy BNB] to complete the transaction.

You can follow the same steps to sell BNB.

  • The default order type is called a limit order. But if traders want to place an order as soon as possible, they may switch to [Market] Order. By choosing a market order, traders could make a transaction instantly at the current market price.
  • If the market price of BNB/BTC is at 0.002, but you want to buy at a specific price, for example, 0.001, then you can place a [limit] order. When the market price reaches your set price, your placed order will be executed.
  • The percentage shown below the BNB Amount box refers to the amount of BTC you wish to use to buy BNB.Put the amount and buy crypto.

You can register and trading on top exchanges:

  1. Binance Exchange
  2. Bittrex Exchange
  3. Poloniex Exchange
  4. Bitfinex Exchange
  5. Huobi Exchange
  6. MXC Exchange
  7. ProBIT Exchange
  8. Gate.io Exchange
  9. Coinbase Exchange

Conclusion

And this is the end to our Cryptocurrency trading for beginner’s guide — we hope that you enjoyed it!

If you have read this article from start to finish, you should now have a good understanding of what crypto trading is, the difference between short and long-term trading, and some important things to consider before you get started.

Not only that, but you now know how to make your first crypto purchase and how to trade between different cryptocurrencies! Just remember, you should always speak to a financial advisor before placing any investments and always do your own research.

(I want you to stay safe!)

So, how did you find the guide? Have you purchased your first cryptocurrency? Do you have any ideas of which cryptocurrency you’re going to start trading?..

Let me know in comment!

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