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An Ultimate Guide To Cryptocurrency Trading For Beginners

An Ultimate Guide to Cryptocurrency Trading for Beginners
Author: Rakshita Jain
26-Aug-2022

Cryptocurrencies are emerging as the gold mine for investors. They have made many millionaires and even billionaires in less than a decade. People are even choosing crypto trading as a full-time profession while others are doing it to generate passive side income.

All these trends indicate that this is the high time for you to know crypto trading inside out.

Let’s start with understanding what exactly crypto trading means.

What is Crypto Trading?

Crypto trading means selling and buying cryptocurrencies to make a profit.

For example, assume that you own Ether (ETH), the token of the Ethereum network. Now, you thought its price was about to fall, so you sell your Ether against the US dollar-pegged USD coin, which is comparatively more stable than Ether in value.

It can be done on crypto exchanges like Flitpay anytime and anywhere, given that you have a computer or phone and a stable internet connection. It is because crypto exchanges stay open 24 hours every day.

Before we get deeper into crypto trading for beginners, let’s understand some commonly used terminologies associated with it.

ORDER BOOK

An order book is an electronic list displayed on the trading page of crypto exchanges containing different bids from other buyers and sellers on a cryptocurrency. It demonstrates the prices at which other traders are ready to buy and sell an asset.

TRADING PAIR 

A trading pair consists of two cryptocurrencies you can trade directly with each other. For example, BTC/USDT means you can sell your Bitcoin to buy USDT. The first crypto mentioned in the pair is called the base currency, and the second crypto is called the quote currency. Before starting trading, traders must know which crypto pairs are best to trade.

TRADE HISTORY

Trade history is a table displayed on crypto exchanges that shows the latest trades executed in a cryptocurrency by other traders. Whenever a customer of a crypto exchange completes a trade in a crypto trading pair, the trade will get forecasted on the trade history.

ALTCOINS

Any crypto coin other than Bitcoin is called an altcoin. Examples are- Ether (ETH) and Dogecoin (DOGE).

PORTFOLIO

A crypto portfolio is the database of all your crypto investments done on a crypto exchange. It helps you to track your profits and losses. You get a portfolio once you create an account on a crypto exchange platform like Flitpay and complete your first investment.

LIMIT ORDER

A limit order is a facility provided by crypto exchanges to set your own buying or selling price for a cryptocurrency. If the price of crypto reaches your limit order price, your order will get executed. For example, assume that the current price of BTC/USDT is 5000 USD, and you place a buy limit order for 4500 USD. Then your order will be executed only if the BTC/USDT price reaches 4500 USD or lower.

SUPPORT LEVEL

It is a price level where the downtrend of a cryptocurrency is expected to stop for a while. When the price of crypto starts falling, its demand increases and makes a support level for it. This term is used widely in the technical analysis of cryptocurrencies.

RESISTANCE LEVEL

The resistance level is the opposite of the support level. It is the price level beyond which crypto will stop moving upward. It comes when the demand for crypto decreases due to its increase in its price.

Once any crypto breaks its support or resistance level, the market starts moving in a particular direction for some time and sets new resistance and support levels.

LONG POSITION

Taking a long position means purchasing a crypto asset with the expectation that its price will increase in the future. It is also known as going “bullish” for an asset.

SHORT POSITION

Taking a short position means selling the cryptocurrency with an expectation that it will fall in value and you will buy it again at a lower price. It is also known as going “bearish” on an asset.

How to start Crypto trading?

Here is the step-by-step guide for starting crypto trading.

STEP 1: Sign up on a crypto exchange like Flitpay and make your account by quickly completing KYC and other verification rounds. You can do it by either downloading Flitpay from the play store or visiting its website https://www.flitpay.com.

STEP 2: Add funds to your account by linking your bank account with the exchange. You can do it easily through UPI, net banking, or other payment methods. The exchange provides bank details where you can make the money transfer and submit the transfer ID.

STEP 3: Choose the crypto pair you would like to start trading in and buy it. It is always better to start trading with less risky cryptocurrencies like stablecoins or bitcoin.

STEP 4: Now, you can trade it to any other pair available on the exchange where you expect a profit. There is also a facility of limit orders available on Flitpay. Hence, you don’t have to keep an eye on the crypto prices every second.

How does crypto trading work?

Though you have learned how to perform crypto trading, you can make mistakes if you don’t understand how it works.

As you have learned so far, any crypto trade consists of a buyer and a seller. When both agree to a price, the transaction gets executed.

When there are more buy orders for a cryptocurrency than sell orders, its price generally rises. In the same fashion, if the sell orders are higher than the buy orders, the price generally falls. It works exactly like demand and supply derivatives, where price increases if the demand is more than the supply and vice versa.

Crypto trading is a tricky yet worthy practice for passive income. There exist various types of crypto trading from which you can choose whichever suits you. We have posted a blog on types of crypto trading that you can read to know more about trading types.

How to decide your move in crypto trading?

Here are a few factors that traders usually consider to decide on their trading strategies:

Stay up to date

Many times the prices of cryptocurrencies affect hugely by related news, updates, upgrades, and sometimes tweets too. Thus, a trader must know what is happening in the crypto space and the upcoming launches and events. The recent hike in the price of ETH and ETC is due to the forthcoming upgrade of Ethereum called “The Merge”. Some other activities, like crypto burning and crypto forking, also play a significant role in deciding the price trajectory of cryptocurrencies.

Keep an eye on whales

Since crypto whales own a huge part of a cryptocurrency, their moves can easily change market conditions. Sometimes, whales purposely pump the market by placing big buy orders so that they can later dump the assets in bulk. Therefore, consider whale activities before falling for any market pump. Many telegram groups and Twitter accounts keep updating about whale activities.

Understand the market emotions

The psychology and emotions of investors are key contributors in deciding the next move of a cryptocurrency. For example, the Terra LUNA crash started, and many investors of LUNA and other coins started panic selling, causing the market to fall steeply.

Conclusion

Trading cryptocurrencies for beginners can be a tough row to hoe initially. However, constantly moving in the right direction can make you a pro at it and open a door for passive income. Always choose a legit and reliable crypto trading platform to avoid future issues. Take a calculated risk only because trading can easily go wrong.

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