Cryptocurrency Trading Guide

•  You can trade cryptocurrency assets on either a cryptocurrency exchange or a brokerage.

•  Make sure that you find the right cryptocurrency exchange or brokerage based on the specific trading habits you have.

•  Having a private cryptocurrency wallet is essential, and a hardware wallet is always recommended.

•  You need to ensure that you have a lot of variety regarding the cryptocurrency assets that can be traded.

When you want to start cryptocurrency trading, you need to be aware of the fact that there is a learning curve associated with trading just about any cryptocurrency token out there. Each of them is backed by a different team and provides a solution to a different problem. They all have certain levels of volatility, which seasoned cryptocurrency traders take advantage of. In this guide, you will learn everything you need to know about getting started with cryptocurrency trading. 

Getting Started with Cryptocurrency Trading

Before you can get started with cryptocurrency trading, you need to learn the difference between cryptocurrency brokerages and exchanges.

A cryptocurrency brokerage is essentially an entity or individual that connects traders with the cryptocurrency market. They fill the role of a middleman, which stands between the trader and a cryptocurrency exchange to facilitate the buying and selling of cryptocurrencies. 

Brokers are mediators in the relationship between traders and the market and are always on the opposite side of any trade, allowing them a lot more flexibility when it comes to the settlement of assets. This is one of their many benefits.

Some other benefits include:

•  The ease in which you can complete a trade

•  Simple and familiar payment methods

•  Brokers allow their customers to buy and sell at the price set by the broker

• Brokerages are usually well audited by some form of authority, providing them with a greater sense of reliability

The process of trading through a broker includes you placing an order through a broker, the broker places an order on the exchange after payment, the exchange delivers the coins to the supplied wallet, and you receive your coins.

Cryptocurrency brokers typically offer the most suitable environment to users that are new to cryptocurrency markets, traders looking to exchange large sums of money, and traders looking to make one-off transactions.

On the other hand, cryptocurrency exchanges allow you to trade directly with other buyers and sellers. In contrast to a crypto broker, an exchange provides an online platform for buyers and sellers to trade cryptocurrencies with one another for other cryptocurrencies or fiat money.

Exchanges only act as intermediaries that enable trades among their users.

Cryptocurrency exchanges are suitable platforms for more advanced holders and traders of cryptocurrencies who want to take advantage of price fluctuations through speculation.

How to Get Started with Cryptocurrency Trading 

Whether you’re trading through an exchange or broker, getting started is made easy with just a few steps. 

This being the case, let us jump into everything you need to do in order to get started with cryptocurrency trading, step by step.

Step 1: Create a Cryptocurrency Wallet

Right away, you need to be aware of the fact that if you trade cryptocurrency tokens, you will need a cryptocurrency wallet that supports these tokens. Typically, a cryptocurrency brokerage will provide you with its own web-based wallet, and exchanges will either provide you with their own wallet or require you to connect to a third-party hot wallet. while this may be convenient, this is not the best option in terms of security, as your wallet can be compromised if any of the platforms it’s connected to is compromised. This is why we always recommend opening up or purchasing your own cold wallet,  so you are in full control of your cryptocurrency assets.

Step 2: Sign up for a Cryptocurrency Brokerage by Opening an Account

The next step that you need to take is to sign up for a cryptocurrency brokerage or exchange (in some cases you’re signed in after connecting your wallet). In order to create an account successfully, you will need to visit the official homepage of the brokerage or exchange and try to find an option to “Sign Up”. Click on it, and you will be redirected to another page asking you for information, or a pop-up will show up on your screen. Here, you will initially enter some generic information, such as your name, surname, username, email, password, country, city, and postcode. Keep in mind that if it is a regulated brokerage, you will also be asked for additional know-your-customer (KYC) documentation, such as an image of you holding your government-issued ID, driver’s license, passport, or even a paper with today’s date.

Step 3: Optionally Download and Install the Mobile Application

Many cryptocurrency brokerages or exchanges will also have an optional application that you can download and install on a variety of different devices, some of which run on the iOS operating system while others run on the Android operating system. 99% of the time, they will have an application for both, so you should be good to go in no time. These applications will essentially provide you with on-the-go trading which is always convenient to have.

Step 4: Make Your First Deposit

Next, you will need to make your initial deposit in order to get started with cryptocurrency trading. Typically, a brokerage will have a minimum deposit you need to fulfill in order to get started with it, think along the lines of having to deposit at least $50 or at least $200. Exchanges do not require a minimum deposit. Furthermore, you will be provided with a variety of different options through which you can deposit your currencies. in the case that you use a broker, if you decide to deposit FIAT currencies, you can deposit through the usage of credit cards, debit cards, direct bank transfers, and PayPal. Keep in mind that you are essentially filling up the brokerage account with funds, and later on, those funds can be used to purchase or trade cryptocurrencies. If you are using an exchange you will select the cryptocurrency that you wish to deposit to begin trading.

Step 5: Start Trading the Cryptocurrency Token or Tokens You Intend to Trade

At this point, you will essentially be prepared to start buying or trading cryptocurrencies.

Now, this is a process that will vary slightly based on the user interface and design of the brokerage or exchange. However, you are basically looking for the list of cryptocurrencies available. This can either be in the navigational bar or can be manually typed on a search bar.

So, for example, if you want to trade Bitcoin, you can type the ticker BTC and select the buy option. In any case, all you really need to do is just click on the token that you’re interested in, and find the “Buy” or “Trade” button, confirm your choice, and you will be done.

Now, once you have placed your trade for a specific cryptocurrency token, you should see it on your account balance; the rest is up to you.

Types of Trades 

When you have selected the market as well as the cryptocurrency tokens that you want to trade, you will need to actually place your trade. When it comes to trading orders, there are many types of orders out there.

Here are the primary orders that you need to know as a beginner, but you will learn and master a lot more the deeper you get into the world of cryptocurrency trading.

Buy Order 

This is the type of order you make when you purchase a number of cryptocurrency assets.

Sell Order 

As the name implies, this is a type of order you make when you close your trade by cashing in your position with a profit or cutting it off before you end up losing too much.

Put Order or Call Order 

When you have chosen to trade with options, you can bet on the price of a specific cryptocurrency token going up in value or going down in value. When you bet on the price to go up, this is a call order; when you bet on the price going down, this is a put order. 

Market Order 

A market order is an order that you make when you want to buy a cryptocurrency asset instantly. You will buy it at the market rate based on the exchange or brokerage you’re using.

Limit Order 

A limit order is essentially an order you place when you want to buy a specific cryptocurrency asset. However, you are only willing to pay a specific price for it. So what you are essentially doing is setting a price and ensuring that you do not buy any cryptocurrency tokens above that specific price point that you are willing to spend.

Stop-Loss Order 

The Stop-Loss order is an order when you buy a cryptocurrency token, then tell the brokerage or exchange to sell the token if the value falls below a specific amount. So, imagine that you buy a cryptocurrency token at $100, and you set the stop-loss order at 15%. If the value of the token falls $15, the brokerage or exchange automatically sells the token in question and limits your loss.

Picking the Perfect Brokerage or Exchange

When you decide to find the best brokerage or exchange to trade cryptocurrency tokens on, you need to look out for a few things.

User-Interface

You will be using the cryptocurrency brokerage and exchange on a regular basis, so ensure that you find one that is simple and easy to navigate through. It should provide you with access to the information you require, when you require it, with ease, so you do not battle with the website or app trying to access some specific menu.

Fees and Commissions

Each exchange and brokerage will have its own fees and commissions, typically based on a tier program where the higher your monthly circulation is, the lower the fees become. Analyze each option you have and pick one that offers you fair fees.

Age and Reputation

Typically, you want to pick an option that is well-established and has a history without any hacks. You will be trading cryptocurrency assets on the platform, so ensuring that it has a high level of security and is reputable is essential.

Cryptocurrency Availability and Trading Pairs 

You do not want to be stuck with a limited amount of cryptocurrencies and trading pairs, so ensure that the option you pick has a varied selection.

The Bottom Line

Hopefully, now you have a better perspective when it comes to trading cryptocurrency tokens. Keep in mind that trading takes a lot of research and analytical data to get right. It takes time, dedication, and potentially years of research. The cryptocurrency market is highly speculative, and many of the largest cryptocurrency tokens have an extremely high level of volatility.

There are numerous brokerages, exchanges, and other alternative methods through which you can engage in cryptocurrency trading, so do your research and select a platform that meets all of your needs.