How to trade crypto – Comprehensive Beginner’s Guide

Embarking on the journey through the intricate universe of cryptocurrencies can be overwhelming for those new to the domain. Whether you’re a novice venturing into the vast world of crypto or an experienced trader keen on sharpening your techniques, our streamlined guide is crafted to furnish you with indispensable knowledge and insights!

Part 1: Getting Started with Cryptocurrency Trading

First things first, let’s cover the basics about crypto trading, how does it work, the top tips on how to choose the right crypto exchanges, setting up your brokerage account, and the fundamental of crypto markets.

What is crypto trading?

Cryptocurrency trading simply means buying and selling cryptocurrency to profit from its price fluctuations. Depending on the level of knowledge you possess and the risk you are willing to take, you can either trade spot – purchasing crypto assets with immediate or ‘on the spot’ delivery – or derivatives – speculating on the price of different crypto assets.

How Does Cryptocurrency Trading Work?

The simplest way to start cryptocurrency trading is by purchasing digital assets directly from an exchange like Bitget. Alternatively, investing in stocks or funds related to cryptocurrencies is also an option.

Choosing the Right Exchange for Trading

There are several criteria when trying to find the best cryptocurrency exchange for trading:

• Security: scammers are everywhere, but that doesn’t mean you should stop every move for them. Several exchanges have already set up their protection funds to safeguard their traders.
• Trading volume: exchanges with large trading volumes are less susceptible to price manipulations and offer a more dynamic market.
• Ease of use: how does it feel to navigate their website? What’s it like if you’re not very experienced in crypto or trading?

As the world’s largest crypto copy trading platform and top 5 crypto derivatives exchange by trading volume, Bitget has been the go-to option for over 20 million users worldwide. With our $300 million protection fund, all our users’ assets will be in safe hands. Register now and enjoy our top-notch trading experience at Bitget!

Setting Up Your Trading Account

Here’s how to set up your trading account on Bitget:

1. Step 1. Create a new account or log in to your existing one. Then, verify KYC to access all Bitget products without restrictions.
2. Step 2. From the main asset page, you can choose to Deposit or Transfer funds to your account.
3. Step 3. Enter our Markets and select your preferred trading pair.
4. Step 4. Customize your order details.
5. Step 5. Click ‘Buy’ or ‘ Sell’ to submit your order.

Check out our Beginner’s Guide to learn the fundamental first steps of your Bitget journey!

Part 2: Essential Concepts in Cryptocurrency Trading

Let’s cover the essential concepts in cryptocurrency trading, from how to perform fundamental analysis to technical analysis, risk management strategies, types of crypto trading, fundamental factors affecting cryptocurrency prices, and much more!

Cryptocurrency Market Analysis

What moves cryptocurrency markets?

Cryptocurrency markets can be influenced by several factors, from sector news and events to regulatory developments, inflation announcements, government policies, social media, other markets, etc.

Fundamental Analysis (FA)

Fundamental analysis (FA) incorporates financial and project metrics to give traders a thorough and more accurate picture of each investment. Therefore, FA is more applicable for the multi-faceted crypto markets, obviously alongside the help from technical analysis.

 Technical Chart Analysis (TA)

Technical Analysis (TA) relies solely on historical price data of an asset to forecast future price movements,

The key difference between these two strategies is the scope of the evaluation. FA takes into account everything that affects the asset’s intrinsic value, while TA relies mostly on charts, patterns, and trends to predict its future performance. In short, FA is made up of qualitative and quantitative research, but everything TA needs is the latter.

Risk Management Strategies

Setting Clear Trading Goals and Risk Tolerance

Risk management is defined as the framework developed to protect a firm’s capital base and earnings against possible threats while ensuring its continuous growth. A comprehensive risk management system will help reduce costly expenses (in case an unwanted scenario manifests itself) and efficiently affect the strategic choices needed. Acknowledging risk and finding a way to curb it are the basic steps of risk management practiced by many of us, who are not even aware of these technical terms.

The Importance of Diversification

One of the most common ways to manage risk is to diversify your portfolio across segement, risk profile, sectors, assets, and more. In crypto, you can achieve diversification based on the type of coin, from the main digital assets to Layer 2s, NFTs, Web3 tokens, etc.

Types of Cryptocurrency Trading

There are various crypto trading strategies based on the trader’s preferences, knowledge, time commitment, and risk tolerance. Some of the most well-known ones are as follows:

Day Trading

Day Trading: buying and selling cryptos within the same trading day to profit from short-term price changes

Swing Trading

Swing Trading: profiting from price swings in the market over a period of days to weeks.

Long-Term Investing

Long-Term Investing (Hodl): buying and holding cryptos for a long period, irrespective of market fluctuations.

Fundamental Factors Affecting Cryptocurrency Prices

News and Events Impacting the Market

Macroeconomic news and events such as new cryptocurrencies launching, new market segments (e.g., AI), CPI announcements, inflation changes, or bankruptcy filings can lead to an adjustment in crypto markets.

Regulatory Developments and Government Policies

Crypto is becoming more regulated across countries, with the US introducing more control mechanisms over this emerging asset class, with the EU launching the new MiCA regulations.

The changes in crypto laws, including taxes, influence investors and your portfolio.

Market Sentiment and Social Media Influence

Market sentiment refers to the attitude that investors have towards a certain asset or market category. It reflects the feelings, moods, thoughts, and biases that investors generally have on which direction the market might be heading next.

To get a broad overview of what people think about the markets or a specific project, you might want to investigate the social media channels of a specific project.

Part 3: Executing Cryptocurrency Trades

Placing a Trade

Are you ready to place a trade? You save several order types to choose from. Let’s look at it.

Order types

Simply put, an order is an instruction from a trader/investor to buy or sell an asset in a market or on a trading platform such as Bitget. You will definitely come across Market Order, Limit Order, and Stop Loss Order – the three basic orders.

Market Orders

The most simple must be Market Order – as the name implies, orders are executed immediately at the current market price.

Limit Orders

Also set to be completed as quickly as possible, but the Limit Order will be filled at a price closest to the price you are willing to sell/buy, and can be combined with other conditions to refine your trading decision.

Stop Loss Orders

An order to purchase or sell a certain asset at a specific price is known as a stop loss order. An open position’s losses are intended to be capped by a stop loss. For instance, a stop-loss order placed 3% below the price at which you purchased the asset will cap your loss at that amount.

How to Buy and Sell Cryptocurrencies

Step 1: Choose your preferred pair

Log in to your Bitget account and navigate to the ‘Markets’ page. Use the search function to locate your preferred trading pair.

Click ‘Trade’ to proceed to the order interface.

Step 2: Customize your order

Select Order Type: The platform defaults to the Limit Order option, but you can switch to other available order types, such as Market Order, Trigger Order, or Trailing Stop.
Input the quantity of the asset you want to trade. Thoroughly review all order details before proceeding.
Once you are satisfied with the trade details, click the ‘Buy’ or ‘Sell’ button to finalize the order.

Step 3: Cancel / Edit orders

If you wish to revoke a placed order, simply click the ‘Cancel’ button.
To make adjustments to an existing order, click the ‘Edit’ button and update the order parameters as needed.

Calculating Trade Costs and Fees

When trading crypto on any centralized exchange, you need to account for trading fees. These will depend on the total trading volume you have on that exchange (the more you trade, the less the percentage of the trading fee).

Tips for Successful Trading

Crypto attracts traders and investors who seek to profit from price swings. However, it is important to acknowledge the inherent risks associated with its volatile nature. Here are some tips to help you approach crypto trading in a more successful way:

Developing a Trading Strategy and Sticking to It

Start with a plan and stick to it: Define your trading goals, risk tolerance, profit targets, and preferred trading strategy.

A great way to test your strategies is by using a demo account (consider using one on Bitget). This allows you to practice trading with virtual funds without risking your real money.

Avoiding Emotional Decision-Making

Once you’re ready to move into the real world, start with small investments to avoid big emotional rollercoasters due to the rapid changes in your crypto portfolio.

As hard as it is, the goal is to really not rush into anything. We’re in the middle of an economic crisis, which can continue for a long time. We recommend that you take your time to invest and think carefully about your positions. If you wish, spread your investment over time and build a well-balanced portfolio.

Learning from Past Trades and Mistakes

The most important thing is to keep learning and adapting. Take your time to understand how the coin works, the factors that affect its price, and the fundamentals of technical analysis. Familiarize yourself with different trading strategies and stay updated on market news and trends.

Bitget Academy provides you with in-depth guides, practical tips, and market updates covering everything from the basics of blockchain technology to advanced trading strategies.

Managing Your Portfolio

After creating your portfolio, you’ve to manage it regardless of the positions you entered as markets are always changing. Here are the top three things to consider about managing your portfolio:

Tracking Your Investments and Profits

The first steps to manage your portfolio is to keep an eye on your positions, the news that might influence it, the overall crypto markets, and any factor that may influence your investments or potential profits.

Rebalancing Your Portfolio for Risk Management

Have you defined a percentage of each crypto to your portfolio? Given the price changes that occur daily, you may need to sell or buy more of that coin to rebalance your portfolio and manage your risk. This active approach to your portfolio will help with guaranteeing the consistency of your strategy.

Considering Tax Implications of Trading

In the US, crypto trading is a taxable event, leading to capital gains taxes. Investors will be taxed based on the holding period of their trades, with taxes ranging from 0% to 37% depending on if they are short-term or long-term gains. This includes trading crypto for crypto, NFTs, and more. Learn more about crypto taxes in the US.

Closing thoughts

This guide offers invaluable insights, aiming to guide both novices and experienced traders through the multifaceted world of cryptocurrencies. It highlights the importance of understanding trading fundamentals, utilizing platforms like Bitget for secure experiences, and implementing robust risk management strategies to navigate the inherent volatility of the crypto markets.

While the cryptocurrency landscape presents boundless opportunities and potential for innovation and financial growth, it’s crucial for traders to approach it with caution, due diligence, and a well-balanced perspective, acknowledging the possibilities of substantial rewards but also respecting the associated risks. The journey in the crypto universe is exhilarating and challenging, beckoning traders to explore, learn, and adapt in this constantly evolving domain.

Explore Bitget to start your crypto journey!