Cryptocurrency Trading Guide For Beginners – All you need to know

 

 

Cryptocurrency trading is more popular than ever and a huge number of investors are looking to jump on the crypto hype to make easy money. But it is very important to understand that crypto trading is no get-rich-quick scheme as most people think.

 

As a beginner cryptocurrency trader, you have to do your research to be positive about the cryptocurrencies you choose to invest in. You most definitely do not want to put your money into something that you do not believe in. In this article, I am going to examine all the necessary steps you should take as a crypto beginner. However, in the end, it is up to you to take them. But first, let’s start with some basic facts about the cryptocurrency market.

Cryptocurrency market is open 24/7

Unlike fiat currencies, cryptocurrencies can be traded 24/7. Trading volume differs during the day as traders from different countries enter the market at a different time. These changes have, however, a very low significance.

Crypto market is very volatile

The cryptocurrency market can skyrocket or fall down even by tens of percent in a matter of minutes or hours. It is completely different from stock or classic forex markets and it is important to realize that investing in cryptocurrencies puts your capital at high risk. The crypto market is probably the most welcoming one, even for beginners. Nevertheless, you still need to understand that the huge price spikes cryptocurrencies experience on a regular basis do not always bring the desired profit. In fact, they can also have a devastating effect on the investors’ capital. Now, I am going to teach you how to significantly reduce the risk. However, you always have to be aware of the crypto market volatility.

1. Find a broker where you can trade cryptocurrencies

Searching for the best crypto broker is not an easy task. There are many crypto companies and their offers vary. The main aspects you should consider when choosing a broker are the following:

  • a) Trust & Regulation

    If you come from a European country, the broker should be regulated by the CySEC, a regulatory body which oversees all the broker’s activities. They also provide full deposit insurance up to 20 000 dollars. Investors from Australia should be looking for brokers with ASIC license.

  • b) Fees

    The less you pay in fees the more you can earn. So it’s only logical to find a broker with the lowest fees possible. Most brokers charge an amount equal to a spread for opening a position. A spread is the difference between what you pay for a cryptocurrency coin and what you get when you decide to sell it to the broker. Apart from that, many brokers charge a swap when you stay in a position overnight. Such brokers are usually best for day cryptocurrency trading and brokers with no swaps are best for a long-term holding.

  • c) Cryptocurrencies you want to trade

    If a broker does not offer cryptocurrencies you desire to trade, there is no point in creating an account. Therefore, do not forget to check whether the company of your choice offers all the cryptocurrencies you plan to trade.

  • d) Leverage

    Leverage can help you benefit from small price movements of cryptocurrencies. It is a very powerful tool when used by professionals, however, beginners should only use it with great caution or not at all. Fortunately, the cryptocurrency market is volatile enough to make a good profit even without it.

TOP 5 Rated Cryptocurrency Regulated Brokers on our web

Rank Broker Regulated a regulated company complies with the requirements of regulatory bodies such as the European CySEC or the British FCA Expert ratings Expert ratings are based purely on reviews and experience of our visitors and our team members Min. deposit Special features Advantages of the company over its competitors Cryptocurrencies
4.7Read a review $100
  • Fixed Highly Competitive Fees/Spreads
  • Beginner friendly trading platform
BitcoinBitcoin CashEthereumLitecoinRippleIOTAMoneroNEOEOSTronStellarCardano Visit
4.3Read a review $10
  • An award-winning in-house built platform
  • Wide range of cryptocurrencies
BitcoinBitcoin CashBitcoin GoldDashEthereumEthereum Classic LitecoinRippleZcashOmisegoTronQtum Visit
3.9Read a review $200
  • Professional social trading network
  • Low spreads
BitcoinBitcoin CashDashEthereumEthereum Classic LitecoinRippleZcashTronIOTA Stellar NEO EOS Visit
3.9 Read a review $5
  • Superior trade executions
  • MT4 & MT5 & XM WebTrader
BitcoinBitcoin CashEthereumLitecoinRipple Visit
3.6 $100
  • Strong regulatory framework
  • Accepts US & Canadian traders
BitcoinEthereumLitecoinRipple Visit

Between 71.61-80.6% of retail investor accounts lose money when trading CFDs with these providers.
You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
The comparison above doesn't cover all brokers out there. We might be partners with some of the listed companies.

2. Select your cryptocurrency

If you haven’t chosen the cryptocurrency you want to trade, now is the time. Selecting a digital coin with the highest potential is a very important step. You do not want to choose a cryptocurrency you don’t have faith in. When you do your research about cryptocurrencies, there are several things you should look for:

  • Infrastructure (App development, Cloud storage, Virtual Private Networks, funding, etc.)
  • Technology (Quick transaction process, firm and easy to use UI that is easy to adopt, etc.)
  • Development team (Skilled and experienced, solid amount of developers, etc.)
  • Growing popularity (Rising demand for the cryptocurrency, more people using it, media coverage, etc.)

These are the most important general rules when determining a cryptocurrency’s potential. Some of them are more important than others, but the cryptocurrency you select should meet at least 3 of these criteria.

3. Determine where the price is. Is it low or high?

Is the price now at its 45-week low? Or is it at its maximum? You probably know the saying “buy low, sell high”. Let me show you a great example of what I mean on the Ethereum chart which displays the price movement from the beginning of the year 2017 to 12.6.2017.

Wow, that looks really great, doesn’t it? That seems like a really good investment to make…Until…

The price went down to half in a one-month time. It is definitely true that there might be situations when the value of a certain cryptocurrency with good technology, funding and media exposure keeps rising for a long time. However, such investments are very risky for beginner traders because it is hard to determine how long the growth can last. We surely do not want to end up chasing highs and go with the excessive optimism when it actually is the only thing pushing the price up.

4. The best way to approach crypto trades not only as a beginner

One of the best investors of all time, Warren Buffett, once said:

Be Fearful When Others Are Greedy and Greedy When Others Are Fearful

And this is a great way to approach the cryptocurrency market. Are others dumping coins for a relatively low price? Great! It might be a good time to buy them. Is the market optimism fake? Well, now might be a good time to lock in those profits and get out of the trade safely.

5. Determine your target sell price

Traders buy coins of a cryptocurrency when they consider the price to be low. Now, once you are in a trade and the price goes up, you have to think about the best time to get out of the trade (if you speculate on the price growth). You do not want to hold onto it until the end of days. The best time for leaving is when the prices are going too high and the investors are getting carried away. One way to determine this moment is by asking yourself “Do I honestly believe the coin is worth more?”. If you think that there is currently no more space for the cryptocurrency to grow, it is time to get out of the position.

6. What affects the price of cryptocurrencies

There are many fundamental influences that can drive the price of cryptocurrencies down or up. The main of them are as follows:

  • a) Government Regulations

    Whenever any government makes a public statement about the regulation of a cryptocurrency, the market always reacts to it. Do you remember when China banned ICOs? The price of Bitcoin and other cryptocurrencies dropped down rapidly. Therefore, it is very important to keep an eye on such events, whether you are a beginner or a skilled trader.

  • b) Media exposure and other influencers

    Generally, cryptocurrencies gain in value when they receive positive media exposure. It is simply because more people are interested in buying the coins. There are also individuals who can influence the price of cryptocurrencies. Such people are usually extremely well-recognized in the field of finance and investing. So, when the CEO of the biggest American bank J.P. Morgan – Jamie Dimon publicly stated that he thinks that Bitcoin is a fraud that will eventually blow up, it was no wonder that the Bitcoin market took a big hit. Because of this statement, J. Dimon received many negative comments suggesting that his statements were intended to manipulate the price of Bitcoin.

  • c) Wider Mainstream Acceptance, New firms backing up the project

    Has just Amazon, eBay or other huge international firm announced that from now on they will accept payments in Bitcoin? Great! You probably know what that means for the market… Similarly, when big companies like Microsoft, Intel or others provide their name and finance, it is another reason for the price to go up.

  • d) Technological Changes and Innovations

    With every new technological change, there is a high chance that it might significantly affect the price of a cryptocurrency. For example, if a new security protocol that will make the cryptocurrency even more reliable, secure and scalable is scheduled to be released, it might induce a positive response of the market.

  • e) State of other markets

    It should be no surprise that cryptocurrencies react to other markets' developments as well. In the past, cryptocurrencies tended to benefit from crashes of other markets. Gold and Japanese yen are no longer the only instruments categorized as the safe havens investments.

 

Is that all? Let’s wrap up the crypto guide for beginners

Here is the deal. The cryptocurrency market is still relatively new and unstable and its trading is complex. You should, therefore, never stop learning. Towards this very purpose, we have here on the website crypto guidepost where we feature crypto news, tips, guides, market’s best brokers and crypto glossary. Here is a selection of 3 articles you might want to read after finishing this guide for beginners.

How to day trade cryptocurrencies like a pro + 5 Best Cryptocurrencies to Day Trade
How to buy the dips in cryptocurrency market

Cryptocurrency Trading Guide For Beginners – All you need to know
4.3 (86.43%) 28 votes
Michael
Author: Michael
Hi, I'm Michael and my area of expertise is forex and cryptocurrency trading. I specialize in technical analysis, namely in chart pattern setups. I educate traders of all levels and I believe that prerequisite to successful active trading is always knowing risks of the game. My most current interest lays in cryptocurrencies, especially in Ethereum and in decentralized applications. I do not give investment advice, but for general inquiries please use the comment section under any article.

32 Comments

  • Avatar
    Salami James

    Dear Michael,
    Please I will like to know if there is anything like Automated trading as I am just a beginner. Please advice.

    Sincerely yours,
    James Salami

  • Avatar
    Maziya

    Hi Michael

    Great article! Do you offer lessons on cryptocurrency technical analysis?

    Thanks,
    Maziya

    • Michael
      Michael

      Hello Maziya,
      I am glad you like the post. Unfortunately not, such lessons would be very time demanding, but you can look forward to more articles about cryptocurrencies on the web, this will be one of the most discussed topics.

  • Avatar
    smith kerry

    You got a really useful blog I have been here reading for about an hour. I am a newbie and your success is very much an inspiration for me.

  • Avatar
    John Tierney

    Michael,I have been advised to invest in onecoin.What do you think ?
    Thank you
    John

  • Avatar
    andrew peters

    thanks for your insight micheal is there any good investments you would recommend

  • Avatar
    Kayakazi Sihentshe

    I would like to know if bitcoin is a scam or not? and what are the warning signs for scammers on others cryptocurrency agents

    • Michael
      Michael

      Hello,
      Bitcoin itself is not a scam. There are, however, many crypto scams that try to rob people by using the good name of Bitcoin. The most common red flags are: unbelievable results, state-of-the-art system that is only for a limited group of people and no need of any experience in the cryptocurrency field.

  • Avatar
    Kay

    Hello ,I am interested in trading bitcoin, I’ve attended a bitcoin presentation, I was told I have to join a bitcoin club network which includes a $99 registration fee and $500 investment in the mining pool. Is it the best way? Is it true you get some money on a daily ? I’m from South Africa.

    • Michael
      Michael

      Hello Kay,
      Thank you for your inquiry. I have no experience with bitcoin club network so I can not say whether it is a good system or not. But if you want to trade with Bitcoin or other cryptocurrencies with regulated companies, check the table above.

  • Avatar
    Fiona

    Hello Michael, I have just seen a presentation regarding Steve which referred to software using Bitcoin Loophole is it a scam – I have followed the link through twice and it has referred me to two different systems GreenField Capital and KayaFX? seems too good to be true

  • Avatar
    Becker

    Hello Michael, if you are to rate the crypto-currency price predictions on this site, what percentage would you give?

    • Michael
      Michael

      Hello,
      I and my partner have been working on those price predictions for quite some time and I am very satisfied with the result. They are, however, still just forecasts and you can not take them as an investment advice.

  • Avatar
    Becker

    Hello Michael, what happens to a coin / token when it reaches its maximum supply? Is it advisable to buy tokens almost close to the maximum supply?

  • Avatar
    Sara

    Hello. what do you know about FOIN? is it a scam? Thanks.

    • Michael
      Michael

      Hello Sara,
      I personally do not have experience with this cryptocurrency so I tried to search for some information about this coin. I found just one source, that claims that foins/financial.org is a Ponzi scheme, whether that is actually true? I do not know and there is no easy way to find that out. The cryptocurrency, however, is not even on the https://tradingbeasts.com/crypto list where are featured all cryptocurrencies that can be purchased, which to me, seems a little bit odd.

  • Avatar
    stewart burns

    Is it possible to get some advice from you?, i have a small portfolio of Coins / Token I purchased early this year.
    I would like to consolidate my coins and get rid of any ponzi scheme coins I may hold.
    Many thanks in advance
    Stewart

  • Avatar
    Marie

    Please, what short term cryptocurrencies can you advise me to invest in against this December and January 2019?

  • Avatar
    jake

    i am a university student and am wondering is there a way, to automate a notification to send through to my phone if a currency drops above or below a certain price as i am not always at my computer or have my laptop on me just a question.. just wondering if you have any ideasn ?.
    From Jake

    • Michael
      Michael

      Hello Jake,
      We plan to add this feature to our website as well, but for now, you might want to look elsewhere. For example, at Plus500 you can create a notification via SMS (or email) when a cryptocurrency drops or reaches a certain price.

  • Avatar
    Kaustubh

    Hi Michael, I purchased Bitcoin in December 2017 at 18500$/coin, just to experience crypto thing, over the period of time value has gone down & price reduced. Recently I saw some bold predictions. But in reality it seems like far from reality, a lot of middle class families invested & burnt their hands, very hard to win their trust again & bring them back to invest into it, so do you think in next 5-6 years time it can reach up to 6-7 figures price &/or will it stay for next 6-7years realistically.

    • Michael
      Michael

      Hello Kaustubh,
      From today’s perspective, it might look like the time when you purchased your coins was one of the worse (during the big hype). If you are asking me about my opinion on the bold predictions that forecast Bitcoin somewhere around the $100k benchmark by 2020, I don’t think they are likely to become reality. It might seem like the crypto market is slowly dying out, but that is because most of the investors that got in only because it was a thing to do at the time are all slowly selling. I am a realist and I have in Bitcoin only money I can spare, but I would like to be optimistic about the future of Bitcoin and cryptos in general, even now. Just think of how many great projects have been created thanks to the blockchain technology, and we are merely at the beginning of things. Not to mention, we never had more merchants accepting Bitcoin as we have now. I am sorry, but I do not dare to give you a price prediction as I do not want to become one of the crypto experts that pretend to know everything (even the future). If you are, however, a long term investor you should know why you got in on Bitcoin and you should not have the need to question your decision. Have a good day.

      Regards,
      Michael

  • Avatar
    Adrian Jones

    One thing to keep in mind is that cryptocurrency is extremely volatile in value due to the fact that its equivalent stock market fluctuates very wildly in a manner of hours–or even minutes since it is very different from the classic stock market that everyone knows about. Investing in this particular field is a gamble at best due to the fluctuations that keep happening in the crypto-market, but never bring the desired profit right away. One thing’s for sure, one has to be ready for the volatility of cryptocurrency–and while it looks tempting for me to try, I’m still hesitant on it considering that the stock market for it is much wilder and unpredictable.

    • Michael
      Michael

      Hello Adrian,
      I completely agree with you, the crypto market is super volatile and while it is possible to make a fortune on these price spikes, some people can heavily lose. For that reason, the stock market might look like a relatively safer option. It all comes down to what risk are you willing to take in order to make a profit.

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