Crypto Trading: Learn To Trade Cryptocurrencies (Guide)

Cryptocurrency trading requires knowledge of trading platforms, market trends, trading strategies, and styles. Trading without sufficient knowledge can result in significant losses.

The key points to know about crypto trading, such as types of trading platforms, a step-by-step guide, market trends, and trading strategies, will be discussed below. 

Key Facts Crypto Trading

• Crypto trading is any digital transaction that uses cryptocurrency or any blockchain derivative as a medium of exchange.
• Crypto trading is divided into exchange trading and CFD (Contract of Difference).
• Crypto trading is advantageous because it is decentralized, cheaper, and faster.
• Price instability and poor regulations are drawbacks associated with crypto trading.

What is Crypto Trading?

Crypto trading is the act of performing a transaction using cryptocurrency or other forms of blockchain currencies as the medium of exchange. 

Cryptocurrency trading can occur by predicting the movement in the price of a cryptocurrency and investing in it; this is known as CFD trading. Trading can also occur in the form of exchange, which is directly buying or selling cryptocurrency.

Trading cryptocurrency in the form of CFD gives investors leveraged access to that cryptocurrency, like BTC/USD, without ownership; investments are made on the price change. Meanwhile, exchange trading gives the investor ownership of the cryptocurrency.

Some cryptocurrency traders also opt for futures when they intend to bet against asset prices they believe are overpriced or undervalued. For instance, you can bet on a coin like Bitcoin by going short (selling) or going long (buying) in anticipation of a price increase or decrease.

Three Possible Types of Crypto Trading

CFD Trading

In Contract for Difference (CFD) trading, the price movement of a currency is invested in without owning it. Traders predict if the currency’s price will rise or fall to make a profit.

CFD trading gives traders access to an underlying market worth more than their deposit using leveraged products. Leveraged products increase the value of your deposit and act as a loan. Also, we know leveraged products can significantly increase your profit and loss.

Exchange Trading

The cryptocurrency is purchased directly during exchange trading. This form of trading involves buying and selling cryptocurrency via an exchange account. It involves opening a position and knowing when to hold or sell the currency.

Our research shows poor knowledge of the crypto market and currency trends will incur several losses. Exchange trading requires experience, practice, and patience.

Futures Trading

Future trading is based on the speculation of an asset’s future price. It is a contract derived from an underlying asset (cryptocurrency). Futures traders invest in their prediction of the value of an underlying asset after a time frame.

Future trades are defined by contract unit, price, trading hours, margin requirements, and settlement methods. These parameters vary with each cryptocurrency and exchange platform. 

How does Crypto Trading Work?

Crypto trading operates primarily on platforms like  Etoro, Libertex, Binance, Bitget, and others. These platforms provide traders with a secure connection to the blockchain network and facilitate crypto trading.

Any transaction that uses cryptocurrency as the medium of exchange is crypto trading. It is any digital transaction that occurs via the blockchain network. Trading can occur through CFDs or by directly purchasing digital currency. 

Functionality of the Crypto Market

A series of complicated processes and networks back all cryptocurrency transactions. These processes provide functionality to the crypto market and make it sustainable. The crypto market is a function of blockchain, cryptocurrency, digital wallet, and fiat currency. Below is a breakdown of each of these systems that make up the crypto market:

Blockchain 

A blockchain is a decentralized network over several servers, nodes, and computers. Blockchain technology eliminates centralization and gives users equal access. This technology is safe, easy, and reliable for trading.

Cryptocurrency is one of the applications of blockchain technology. Crypto trading operates via the blockchain network; transactions are encrypted and private. The decentralization of the network makes it secure, fast, and stable.

Wallet

A wallet is a platform that gives users digital storage for cryptocurrency. A digital wallet is integral to crypto trading. This digital wallet can be desktop-based, web-based, or app-based, requiring an encoded key.

Fiat Currency

Fiat currency refers to the traditional form of legal tender backed by the government. The fiat currency is local currency like the American dollar or British Pound. It is used in purchasing cryptocurrencies and the exchange of crypto for currency. 

Cryptocurrency Trading Platforms

Trading platforms are used for crypto trading. There are several of these platforms, and this poses a safety risk to traders. Here are a few of our best cryptocurrency trading platforms:

1. Etoro
2. Libertex
3. Binance
4. Bitget

#1 Etoro

Etoro is a trading platform that serves as a crypto exchanger and online brokerage platform. This platform supports the use of over 30 digital currencies. It also offers limited stock and exchange-traded funds.

Etoro is available in the United States and other countries. However, some platform features are restricted in certain areas, like Nevada, Hawaii, and Minnesota. This platform features digital coins like Bitcoin, Ethereum, Cardano, Solana, Dogecoin, Polkadot, and Polygon. Etoro charges 1% for every crypto transaction.

Pros	Cons
✅ It is user-friendly	❌ Restricted access in some areas
✅ You can move your cryptocurrency off the platform	❌ Poor customer service
✅ Detailed tutorial

#2 Libertex

Libertex is an online platform that trades CFDs, cryptocurrencies, and stocks. The CySEC regulates this platform, and its headquarters is in Cyprus. It’s also commonly recognized for its track record in the crypto industry.

Libertex offers up to 300 underlying assets, options, indices, commodities, and cryptocurrencies. This platform allows various deposit forms such as Sofort Wire Transfer, Neteller, iDeal, PayPal, Trsutly, Help2Pay, credit and debit cards, and more. Investors can withdraw through wire transfer, Neteller, Skrill, Debit and credit cards, and PayPal. 

Pros	Cons
✅ It offers a demo account	❌ Insufficient tutorial content
✅ Many tools are available
✅ Offers multiple trading options
✅ Very secure

#3 Binance

Binance was founded in 2017 and is now recognized as the most prominent cryptocurrency platform in the world. This platform is split into two parts: Binance and Binance U.S. Binance offers over 350 cryptocurrencies, while Binance U.S. has 150. Binance supports traditional currencies like EUR, INR, AUD, GBP, and USD. 

This platform supports popular cryptocurrencies, including Bitcoin, Litecoin, Cardano, Dash, Compound, Ethereum, etc. Binance has relatively low fees because it is a high-volume platform. The trade fees range from 0% to 0.6%. 

Pros	Cons
✅ Wide range of supported cryptocurrencies	❌ There are restrictions on the U.S. users
✅ Low fees	❌ Complex user interface
✅ Several trading options are available	❌ Regulatory problems

#4 Bitget

Bitget was founded in 2018 and now has about 20 million traders. It was named the 4th largest derivative platform by CoinMarketCap. This platform offers over 600 digital currencies and numerous trading pairs. It also features its token, BGB. 

Bitget offers different discount opportunities on the BGB token. It also provides affordable fees ranging from 0.02% to 0.06%. Bitget has features like copy trading, Bitget Earns, Launchpool and Launchpad, and bots.

Pros	Cons
✅ Numerous cryptocurrency options	❌ It is restricted in some locations
✅ Features like copy trading and bots trading	❌ Card transactions require a high fee

These four platforms, Bitget, Binance, Libertex, and Etoro, are our top choices based on our experience.

How to Learn Crypto Trading  

Learning to trade crypto involves the basic steps to start trading and some key points to know.

#1 Sign Up

For beginners, you must open an account with a crypto exchange or platform to access trading options. Crypto trading is an online process that occurs via digital means. It is only possible to trade crypto with an account. 

We’ve reviewed a few recommended crypto platforms, including Binance, Etoro, Bitget, and Libertex. These platforms offer different account options based on the subscription fee. The type of subscription also determines the features available to you. 

Most brokers require particular documents for verification and security purposes. You must provide information like your social security number, date of birth, address, email, security questions, and other documentation. 

#2 Funding

Signing up for an account gives you access to the features available on that subscription. You must connect a means of depositing funds into the account. The common methods are credit and debit cards, but different platforms have their diverse methods.

Other common options are PayPal, Skrill, Wire transfer, and other e-payment channels. You must connect your bank details and other sensitive information to this platform, which requires utmost caution. 

#3 Make a Choice

There are about 20,000 cryptocurrencies, and picking the right currency to invest in is a key part of trading. 

Trading involves buying a digital currency and expecting its value to rise. However, the value may fall below the initial cost, resulting in a loss. Good knowledge of market trends and crypto patterns will aid in picking a promising currency. 

#4 Learn the Basics of Trading

Trading without knowing the basics will result in losses. Crypto trading should not be rushed; you must properly educate yourself. Before attempting a trade, traders must know basic terms, strategies, and fee implications. For example, you should understand how to make buy/sell orders and the best risk management and diversification techniques. 

#5 Trading

There are different tools in place to aid trading, but this also varies with the platform you’re registered. Here are some key points to note while trading:

• Research: Read the whitepaper and other information on the crypto you want to trade. This will be insightful in determining the future of the trade.
• Careful investment: Crypto trading will always pose risks, and it is important to invest carefully. The chances of catching a major rise can be tempting, but it is equally risky. Only invest amounts that you’re willing to lose.
• Diversify: Diversification involves investing in more than one trade. Diversification aims to increase the chances of making a profit and reducing the scale of potential losses. 
• Market strategies: Successful crypto traders understand and have a good eye for market trends. You will incur many losses if you trade without knowing some market strategies. Take your time to observe known strategies and practice. Some trading strategies include margin trading, swing trading, and day trading.

Benefits of Crypto Trading

Highly Profitable

Trading cryptocurrency with sufficient knowledge and data can sporadically multiply your investment. Knowledgeable traders can harness the volatility of crypto value to increase their profit. Experienced investors can predict the change in the market value of a cryptocurrency by studying market trends and other strategies. This information helps investors invest in coins that are more likely to yield profit.

Protection from Inflation 

Inflation is a major setback of fiat currency, and it reduces the value of the currency. However, cryptocurrencies have a limited number, with hard caps. These caps ensure the value of the currencies always increases due to limited supply and increased demand. 

Fast Transactions 

Cryptocurrency trading is a digital online transaction. The decentralized and online feature of this process eliminates several time-consuming processes, making it one of the fastest means of transactions. 

Cost-Efficient 

Trading with cryptocurrency removes the extra cost of international transactions. The trading fees stated by the crypto platform are the only deducted fees. It also eliminates the need for VISA confirmation during trades. 

Decentralization 

Cryptocurrency and the blockchain network are decentralized, meaning no owner or monopoly exists. The Government or any other organization can’t tamper with the network. This contributes to the security of the cryptocurrency. 

Diversity

Cryptocurrency provides several investment opportunities to diversify your portfolio. The manner of crypto operation is very different from regular stock and other traditional investment types. Therefore, investing in crypto diversifies your portfolio and reduces the risk of losses. 

Availability

Cryptocurrency is very accessible and always available on your digital device. You can immediately access your crypto portfolio at any time and any place. This feature ensures you can perform any transaction when needed without missing out on opportunities. 

Safety

Blockchain trading is very secure. The decentralized system makes it impossible for hackers to access trading information and data. Also, an encrypted key that is known only to you protects your wallet.

Honest 

Every transaction performed is recorded and accessible in the transaction history. You can track the movement of your investment and currencies using the transaction ID generated. Once a transaction occurs, it is recorded automatically in the decentralized network. 

Privacy

The actions performed on the exchange platform are only known to the account owner. These transactions occur over millions of servers and are difficult to hack. You’re also protected during transactions; there is only a wallet address. 

Easy Exchange of Currency 

Different crypto brokers allow traders to purchase digital currencies using various fiat currencies. This allows traders to convert currency using crypto at a low fee.

Risks of Crypto Trading

Here are some of the risks we advise new traders to look out for in the market:

Lack of Regulation

Due to the decentralized nature of the system, cryptocurrency trading is unregulated. Each platform has its rules, which can be harmful to the investor. There is no regulatory body or panel to mitigate transaction issues, and only the policy of the exchanger stands. 

Volatility 

Crypto trading is very volatile, and prices can undergo drastic changes. There is always the chance of incurring a loss due to the unpredictable nature of the crypto market. 

Although experience and knowledge aid in reducing losses, there is always the risk. Poor investment skills can quickly lead to major losses or even bankruptcy. 

Hackers

Blockchain transactions leave digital footprints that are encoded. These footprints can be decoded to obtain information regarding the transaction. Therefore, crypto trading is not completely safe, and there is still a chance of compromise. 

Wrong Platform

There is a high influx of crypto brokers or platforms, and the wrong choice can easily be made. Picking the wrong platform can expose you to fraud and risk your sensitive information being exposed. Some of these brokers are not regulated and are fronts for fraudulent activities. 

What Moves the Crypto Market?

A move in the crypto market is a rise or fall in the value of a cryptocurrency due to the amount of supply and demand. The supply and demand relationship is the primary reason for any move in the crypto market, and some factors can affect this relationship. 

Supply and Demand 

There is a rise in the price of a digital coin when the demand surpasses the supply. Equally, there is a fall in the price when the demand falls below the supply. Here are the factors that can affect supply and demand:

#1 Media 

The way a cryptocurrency is portrayed affects the public’s view. Positive promotion drives traffic to the digital currency, leading to increased demand. There will be an increase in the value if the supply doesn’t rise to match the demand. 

Unfavorable promotion can also cause investors to sell off their crypto, leading to increased supply but low demand. Hence, the value will depreciate. 

#2 Whales 

Whales are investors that own a sizeable amount of a cryptocurrency, enough to affect the market stability. If a whale sells off a large portion of a cryptocurrency, it will increase the supply, reducing the price. 

If the whale buys a large amount of crypto, it will create a supply void. The price of that cryptocurrency will rise if the demand exceeds the supply. 

#3 Regulations

Introducing restrictions or new regulations can affect the demand and supply relationship. Strict or unfavorable regulations can reduce the demand for cryptocurrency. 

#4 Market Events 

The new market trends can affect the demand and supply relationship by boycotting a particular currency. When investors notice major players avoid a currency, they tend to avoid also reducing the demand. 

Several external factors can affect the demand and supply relationship of the crypto market. Most of these factors hinge on human judgment, which explains the high instability of the crypto market. 

The Best Cryptocurrency Trading Strategies

#1 Day Trading Strategy

Breakout trading refers to opening and closing trades within a day to make quick profits. This form of trading takes advantage of the volatility of the market. Day trading focuses on the small changes in prices within the day. 

An example of day trading is opening a position at the start of the day and then closing the moment there is a rise in the underlying assets or cryptocurrency value. The position must be closed within 24 hours of opening to be considered day trading. 

#2 Whale-Watching Strategy

The whale-watching strategy involves trading based on the actions of crypto tycoons. The actions of these whales affect the demand and supply balance because they own a sizeable amount of the currency.

For example, if a whale purchases a particular cryptocurrency, there is a high chance the value will increase. The whale-watching strategy involves mirroring this whale and investing in that coin. Some tools are used to monitor whale transactions, such as Whale Alert and Etherscan. 

#3 Swing Trading 

Swing trading features a mix of day trading and holding investments. In swing trading, market positions remain open for several hours to days. The swing trading strategy is an extended form of daying trading which allows for more risk and potential profit. This form of trading is suitable for experienced traders. 

#4 Dark Pool Trading

Dark pool trading is a strategy used by large-volume traders. This involves privately trading large amounts of cryptocurrency so it doesn’t affect the market trend. Whales mostly employ this strategy.  For instance, in dark pool trading, traders don’t employ third-party websites to carry out their trades.

Costs and Fees Associated with Cryptocurrency Trading

The costs and fees associated with crypto trading are exchange and network fees. Exchange fees are fees charged during trades, deposits, withdrawals, liquidations, and loans. Network fees validate transactions on the blockchain network, not the platform or broker. The network fees go to the blockchain managers. 

Here are the costs and fees associated with crypto trading:

• Spread (Varies depending on the cost and selling price of cryptocurrency).
• Commission (0.1% to 0.5% of total trade amount).
• Network fee (For ETH, 1 – 5 gwei (0.000000001 ETH to 0.000000005 ETH)).
• Taker/ Maker fee (0.2% to 0.6% of trade amount for taker & 0.1% to 0.4% for maker).

Spread 

Spread describes the difference between a cryptocurrency’s cost and selling price. The spread varies for different cryptocurrencies and the broker platform of choice. The spread also depends on the market value of the cryptocurrency.

Commission 

Some cryptocurrency exchanges charge a commission based on the individual’s trade volume percentage. This percentage varies, but in most cases, it falls between 0.1% to 0.5% of the total trade amount.

Network Fee

The decentralized nature of crypto trading requires miners to validate transactions. Network fees are paid to these miners responsible for validating transactions. The network fee is charged on every transaction. The network fee is paid in Ethereum and denoted as gwei; it fall between 1 to 5 gwei (0.000000001 ETH to 0.000000005 ETH).

Taker/ Maker Fee

Makers, or market makers, provide a tradeable market that the takers trade. Makers set limit orders and add liquidity to the market. The maker fee is charged when the taker executes the limit order. 

The taker fee is charged when a taker acts on the limit order. Takers need to buy or sell immediately. A trader can be charged both taker and maker fees depending on the nature of the position. The taker fee falls between 0.2% to 0.6%, while the maker fee ranges between 0.1% to 0.4% of the total trade amount.

Leverage and Non-Leverage Crypto Trading 

Leverage trading is a form of trading that allows you to trade more than your capital permits. It involves borrowing capital to increase gains on a particular trade. Leveraging crypto trading can increase potential profits but can also multiply incurred losses.

The capital invested is called the margin, and it serves as collateral for the broker if the trade gives a loss. Non-leverage crypto trading means trading without borrowed funds. This form of trading is performed strictly with the investor’s capital. 

Conclusion: Crypto Trading is an opportunity

Trading cryptocurrency entails constant risk, and we recommend having proper information and experience before you start trading. There are different strategies for trading cryptocurrency, and practice is critical. It is also key to pick the right broker to prevent regulatory issues and have the best experience, making you significant profit.

Frequently asked questions on Crypto Trading: