Beginner’s Guide to Cryptocurrency Trading – Basics

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 different times. 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 per cent 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 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 cryptocurrency broker you can trust

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.

 

Popular Regulated Cryptocurrency Brokers

Here’s a breakdown of some of the best and most popular cryptocurrency brokers.
Broker Regulated by Regulatory agencies ensure that brokers operate in a transparent and honest way. They protect the best interests of clients and also feature an investor compensation scheme which protects trader's deposits up to a certain limit. Some of the major regulators in the industry include the CySEC in Cyprus, the FCA in the UK and the ASIC in Australia. Min. deposit Trading platforms A trading platform is a computer or mobile software program used to execute transactions within the financial markets. Cryptocurrencies Special features A list of features that provide a given broker with a competitive edge. Warning &
Ad Disclosure The table below contains links to 3rd party websites of our top partners from whom we receive compensation at no additional cost to you.

Availability subject to regulation
SEC $ 10 In-house built platform 51 crypto pairs
  • The World's Leading Social Trading Network
Start tradingRead a review
FCA £/€/$ 0 MT4 & MT5 & ActivTrader 21 crypto pairs
  • Highly competitive fees
  • A wide range of trading platforms
Start tradingRead a review
CySECFCAASIC £/€/$ 50 In-house built platform 118 crypto pairs
  • The World's Leading Social Trading Network
  • Purchase of real cryptocurrencies (not only as CFDs)
Start tradingRead a review
CySEC $ 10 In-house built 12 crypto pairs
  • Supports Bitcoin deposits and Social trading
  • Ultimate trading platform
Start tradingRead a review
CySECFCA £/€/$ 1 MT4 & xStation 5 50 crypto pairs
  • Low trading costs, spreads on crypto are starting from 0.22%
Start tradingRead a review
CBIFSCAASIC £/€/$ 100 MT4 & MT5 & Avasocial App 15 crypto pairs
  • Competitive Spreads
Start tradingRead a review

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.
Between 74-89% of retail investor accounts lose money when trading CFDs.
You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.


All trading involves risk. Only risk capital you're prepared to lose.

2. Get started with the right 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 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 excessive optimism when it’s actually the only thing pushing the price up.

4. The best way how 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. Face the crypto market with an exit strategy

Traders buy cryptocurrency coins 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 safe havens investments.

 

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

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, the market’s best brokers and a 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

Try cryptocurrency trading on a FREE demo Want to give a shot to cryptocurrencies?
>> Use a free practise account
- no deposit nor ID verification required
Learn more
- 3# Crypto Chart Patterns for Day Trading
- The best Hodling techniques
- How to short any cryptocurrency like a pro

and much more can be found in our crypto section.
Check out more awesome
crypto related content
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Michael
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55 Comments

  • 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

  • Hi Michael

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

    Thanks,
    Maziya

    • 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.

  • 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.

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

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

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

    • 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.

  • 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.

    • 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.

      • Hello Kay . did you eventually invest in the scheme? Bitclub?I am considering but i am not sure of its viability.

  • 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

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

    • 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.

  • 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?

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

    • 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.

  • 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

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

  • 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

    • 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.

  • 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.

    • 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

  • 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.

    • 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.

  • I must say that this is an educative article to newbies that want to participate in cryptocurrency trading! For instance, when it’s someone’s first time at an exchange platform, how do you expect that person to understand trading tokens and how to grow their value yet he has no idea about the entirecryptocurrency concept

    • Thank you, I am glad you like our guide for crypto beginners. There are a lot of other educational crypto related articles on our website from which not only first-time crypto traders can benefit. We expect them to study these materials and also other resources that they can find elsewhere.

  • I’m looking for a crypto bot that has a pre-programmed platform. I don’t have the time but I do have the interest. Are there any Bots that are legitimate that you can invest in and they can transact for you, reading the markets and executing the trades? What are the top 5?

    • Hello Christopher,
      To be honest, I can’t recommend any trading bot, as most of them are just scams. People who are behind most of these bots care just about your money and not about the results they can bring you. If they worked, the creators would use them themselves and would not sell it for profit to other people. If you really don’t have the time to learn how to trade, there might be for you other reasonable option how to participate in the market. By that, I mean using social trading networks. There are very popular platforms such as eToro (more about this system can be read here) where you can follow and copy other traders who perform exceptionally well. I personally don’t use any social networks, but I can understand why they are so attractive to some people.

      • Hi Michael I use Voyager and Coinbase for crypto trading and just started about three weeks ago. Do you think these are good apps to use and are these what you mean when you say you don’t use the social trading? What do you suggest is best? Also would you say it’s good to buy a little of several coins or just stick to Bitcoin? So far I have bought bitcoin, XLM, IOTA, litecoin and Dogecoin…. are any of these a ponzi?

        • Hello Amber,
          I think Coinbase is a solid choice, the other one I don’t know. By that I mean I don’t follow and copy other traders, I trade on my own. But I know many people don’t have the time or will to trade this way, so for them social trading might be something to consider. eToro stands high in regards to social trading. The majority of my crypto portfolio consists of BTC, but some altcoins are good too (tho I prefer rather coins like Ethereum over Dogecoin).

  • Hi Michael. Your reviews are awesome. I am from the Caribbean and looking to make investments at a young age. However there isn’t much help or knowledge about crypto currency in the Caribbean. Can you advise on how I can get started? Most reviews I find point to European or Australian investment.

    • Hello Randy,
      I am glad that you like my reviews :). That is true, most brokers focus primarely on the European and Australian market. With that being said, I believe that IQ Option, which ranks very well in our comparisons, accepts Caribbean traders. You can check out our IQ Option Review to see if they would meet your requirements and expectations. They offer about 12 cryptocurrencies (CFDs), including Bitcoin, so you could start there on a free demo.

  • Hello Sir Michael please which cryptocurrencies are the safest to Join for now?

    • Hello,
      I consider the safest to be the ones with big market cap. It might sound like a cliche, but Bitcoin…

  • Please do you have idea any Broker in Ghana – West Africa

  • Please is Oinvest same as ETFinance?

    • ETFinance is run by MAGNUM FX, which is a CYSEC regulated broker. Oinvest is operated by BASFOUR 3773 (PROPRIETARY) LIMITED, which is a broker regulated in South Africa by the FSCA. They might be partner brokers, but each of them is run by a different entity.

  • Hay Michael,

    Honestly, this is an eye-opening article to amateurs seeking to invest in the crypto market!
    The fact the your interested in the etherium coin as stated in your bio struck my interest. I would really like to know why your so interested in the etherium coin and also, would you recommend someone else to invest in this coin in 2020 and if yes, why?

    Thank you!?

    • Hello Erijo,
      Thank you for your kind words, I am glad you like the article! I like Ethereum because it does not function only as a currency, but also thanks to dapps as a platform for decentralised applications (which inherit some unique properties that traditional applications do not have e.g. any risk of counterparty fraud, business clients privacy, 100% uptime with no risk of interference etc.)

      Regards,
      Michael

  • Hi Michael,

    Thank you for your favourable reply. I would also like to have an extensive conversation with you ( I don’t know if that would be possible). I’m very interested in cryptocurrency.

    I would like to know what you think about the Bianance and their ecosystem.

    Thank you.

    • Hello Ejiro,
      I don’t have much experience with Binance, but from what I heard, they seem solid. I focus more on day trading crypto than anything else. I don’t do 1 on 1 lessons or consultations per se, but if you want to reach out to me with smth you do not want to disclose here publicly, then here is my email: [email protected].

      Cheers!

  • Please Michael, I want to go into this business but am just a novice, is there any other site that I can learn more about this?

  • Hi Michael I am thinking to join this side but are they scam or ligit what you think thanks so much

    • Hello Hank,
      What side do you mean? The crypto side? :D. Are you asking if cryptocurrencies are scam or companies that support their trading?

  • I am a beginner in this space and alot to learn, thanks for the article. Somethings Still don’t understand. I cannot withdraw some SHIBA ANU from my meta mask wallet. What am I doing wrong 0x61f604460e99a2670a451e1bc8205bc1e879af1a777df6db016c4d6618fbd26f

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