When first looking at getting into crypto trading and investing, it may seem like a daunting task and you may get overwhelmed by all of the options available in the market. The fear of getting scammed also creeps in to make the overwhelming sensation worse as you have heard stories of all of the crypto scams going around.
Fear not, this article will look at how to trade on some of the best platforms currently in the market as well as what you need to keep in mind to maximize your crypto investing and trading experience – giving you peace of mind.
What is Cryptocurrency?
Cryptocurrencies are virtual currencies built on a distributed ledger. This distributed ledger is revolutionary technology, and is called a blockchain – which is able to keep digital records of transactions of value without the need for a third party or intermediary.
The first cryptocurrency to enter into the market is Bitcoin (BTC) , and was created and launched by someone under the name of Satoshi Nakamoto. Until this day, it is not certain if Nakamoto is a company, a group of techies, or a single person.
How to Pick a Cryptocurrency to Invest In
Before you go ahead and buy some coins or tokens just because somebody says it’s a good investment, it will pay to do some research.
First of all, it’s important to understand that picking a good cryptocurrency is not like picking a good stock. A stock represents ownership in a company that creates profits for its shareholders, or at least has the potential to do so. Owning a cryptocurrency represents ownership in a digital asset with zero intrinsic value.
What makes a cryptocurrency increase or decrease in price is simple supply and demand. If there’s increased demand and a limited supply increase, the price goes up. If supply becomes constrained, price goes up, and vice versa.
So, when evaluating a cryptocurrency, the most important questions to answer are how the supply increases, and what will drive demand for the coin higher.
You can answer those questions by reading the white paper that a cryptocurrency team publishes to attract interest in their project. Look at the roadmap for a project and see if anything could spark an increase in demand.
Research the team behind a project and see if they have the skills to execute their vision. Try to find a community of people already investing in the cryptocurrency and gauge their sentiment.
It’s also important to consider how much money has already flowed into a cryptocurrency. If the market cap is already very high, there may not be much potential growth left.
A high price will curb demand and increase supply as early investors look to take money off the table.
Things To Keep In Mind With Crypto
Before you start investing in and trading with crypto, there are a few things to keep in mind before you start, given crypto’s relatively short existence.
Regulation is Still Be Developed
Since the main purpose of crypto at this point is to be a new type of financial technology, regulators from across the globe are racing to come up with a regulatory framework for it. This regulatory framework will see taxes being introduced on crypto, as well as better monitoring of value transfers.
Of course, there are countries that outright ban their citizens from touching crypto. Perhaps the country that is most renowned for placing outright bans on crypto is China. Other countries may follow suit in the near to mid future. Despite this, there are countries that are adopting the technology – making it legal tender and an acceptable form of payment.
You’re On Your Own
Being a decentralized technology, when transacting with crypto there is nobody that you can call when something goes wrong. Unlike a centralized financial system that relies on banks, you won’t be able to call a company or your local banker when you lose your crypto funds.
Furthermore, if you don’t back up your secret keys for your crypto wallets, and you lose your wallet or access to it, then you won’t be able to access them anymore. A bank will not be able to help you here. Simply put, you will be in full control of your crypto finances.
High Volatility
The crypto market is one of the most volatile markets out there. It is not out of the norm to see crypto prices drop by 20% overnight, only to enter into a rally over the following couple of days. With this in mind, make sure that you follow good risk management protocols to ensure that you don’t lose all of your funds.
Although the crypto market can give you quick gains, it can also take them away in half the time. So, it’s best to only use money that you are comfortable losing with crypto when you’re starting out until you get the hang of the crypto markets, or at least become more comfortable with it.
Scammers Are Everywhere
Due to the highly unregulated environment that the crypto environment is, a lot of scammers are present in the crypto market that are ready to pounce on unsuspecting crypto users. The cardinal rule in crypto is to not share your private keys with anyone. Also, don’t open any “crypto-related” links sent to your email or cell number, they’re likely scammers.
Getting Started On An Exchange
Similar to traditional bank accounts, before you can start buying and selling on most crypto exchanges, you will first need to register and create an account on the platform you want to use. Once you complete the Know-Your-Customer (KYC) process and have been authenticated, your account will be created and you can transfer either crypto or fiat funds to the platform.
What Are Crypto Exchanges?
Crypto exchanges are platforms that enable the trading of cryptocurrencies, as well as the trading between cryptocurrencies and fiat currencies such as the U.S. dollar or the Euro. Simply put, crypto exchanges serve as intermediaries between crypto buyers and sellers – making money through commissions and transaction fees.
On common exchanges, $100 worth of a fiat currency can be exchanged for an equivalent amount of Bitcoin, and vice versa. Similarly, $100 of Bitcoin can be exchanged for Ethereum of equivalent value. This same concept can be applied to other assets based on what is offered by the exchange you’re using.
How To Trade On The Top Platforms
Binance
Binance was founded by Changpend Zhao and Yi He in China in 2017. Both of the founders were working at OKCoin exchange for a while, but they thought that it would be better to build their own crypto exchange platform, so they did.
The platform is a crypto-to-crypto exchange, which means that people are able to trade cryptos for other cryptos and virtual currencies on the platform. In fact, Binance allows you to trade more than 500 cryptos, including Litecoin (LTC), Ether (ETH), Dogecoin (DOGE) and of course, Bitcoin (BTC).
Binance is one of the world’s largest cryptocurrency exchanges, and boasts low fees, access to a vast amount of cryptocurrencies, as well as advanced features for veteran cryptocurrency investors and traders.
However, Binance is currently not available to U.S. customers. U.S. customers will have to use Binance.US – a more limited version of the largest cryptocurrency exchange in the world.
Binance is more ideal for advanced cryptocurrency traders from all parts of the world, but cryptocurrency newcomers can also benefit from all of the services that the platform has to offer if they take the time to learn how to use the platform.
Binance Coin Explained
Binance has its own native token, called Binance Coin (BNB). The initial coin offering (ICO) for BNB saw a fundraising round where $15 million was raised in 2017. One of the neat things about BNB is that traders can get discounts on trading fees if they trade with BNB on the Binance platform.
How To Trade On Binance
Open Your Account
The first thing that you will need to do before you can start trading on Binance is to open an account on the platform. Go to the main page of the Binance platform and click on “Register”. You will then be sent to the registration page, where you will have to enter your email address and set up a password.
The email address that you enter must be a valid address and the one that you use on a regular basis. As for the password, you should set up a secure password. Generally, a secure password is a combination of numbers, letters, and symbols.
Rates And Terms
Next you will have to review the Terms of Use from Binance and agree to them, after which you can click on Register.
Captcha
You will then have to prove that you are a human and not a robot. This usually involves completing a puzzle, which isn’t that difficult. After that, you will receive an email. Click on “Verify Email” to complete your registration.
After this, you will now have an account on Binance and can start trading on the largest crypto exchange by trading volume. One extra safety precaution that you can take to secure your account is to set up 2FA. This will add an extra layer of security to your account, and will ensure that nobody else will be able to access your funds and spend them.
Fund Your Account
Now that you have an account on Binance, you can fund it. Let’s take a look at how to deposit Bitcoin into your Binance account.
Log In
Log into your Binance account and click on Funds, then Deposits. Enter the cryptocurrency you need the address for. If Bitcoin is the option you choose, Binance will make sure an address is generated in order to transfer the amount. Your Bitcoin funds will then be sent to the BTC Deposit Address.
Start Trading
Now it gets to the part that you have been waiting for, actually trading on Binance. Move your mouse cursor over Trade and then click on Basic or Advanced. This will show you all of the current market details. In order to sell BNB for BTC at the present Bitcoin price, you have to pick BTC in the right panel.
Next, click BNB/BTC and you will see the corresponding trading page. Keep scrolling down until you see a Buy BNB and Sell BNB opinion. You will use the Buy Coin option to buy BNB with your deposited BTC. Enter the amount that you want to purchase, then click the “Buy BNB” bar. You will then see a “Limited Sell Order Created” message pop-up immediately.
Scroll down to the Open Orders section afterward to see the limit sell order. Wait for the open order to complete, and once it happens, your trade will be completed.
Kraken
Kraken is a San Francisco-based crypto exchange where market participants can trade various cryptos. Users are able to buy or sell the cryptos using various fiat currencies, such as the U.S. dollar, Canadian dollar, euro, and the Japanese yen.
Create An Account
Similar to trading on Binance, if you don’t have an account on Kraken then you will need to complete the registration process to create an account on the Kraken platform.
Once you have created your account on Kraken, you will then have to deposit some funds to the platform. You can also bank wire fiat currency to the platform depending on where you are located. However, depositing crypto will be the quickest route to get your exchange account funded.
Select The Crypto Trading Pair
Next, you will need to know what assets you would like to exchange, for example buying BTC with your USD or selling ETH for another crypto. After you know which pairs you want to trade, you can select them from the ticker/quote bar near the top left corner of the page while in the Trade tab.
Fill Out The Order Form
After you have selected your trading pair, the next step will be to go to the New Order page and select the Simple form.
Here you will be presented with three text boxes and the option to either use a market or a limit order. Before you enter values into these boxes, it is necessary to know the difference between a limit and a market order.
A market order is meant for immediate execution, and will match with limit orders that are already available on Kraken’s order books. Market orders will incur a slightly higher fee than that of limited orders. With market orders, you can only enter the quantity of the crypto that you want to buy or sell, and not the price.
Limit orders will execute at a set price once your market reaches your limit price. If a matching order already exists and is executed immediately, a fee known as a taker fee will be charged.
Submit Your Order
Once you’ve decided on if you’re looking for a market or limit order, you can select your choice with the buttons to the left of the Total field.
After things look good you just need to press the large buy/sell button and you’ll be brought to an order confirmation screen for a chance to double check your order.
Wait For Order Execution
If a market order is selected, the trade will happen instantly and your balance will change. Funds can be withdrawn or used to trade again right away. You can view successfully executed (closed) market orders on the Orders tab.
Limit orders may not be filled right away but you can view their status in the Orders tab. If your order has not yet been executed you are able to cancel the order by selecting the red x button under New & Open Orders.
To Recap
An exchange platform allows you to buy, sell, and trade cryptos with other crypto holders and trades in the market. These cryptos are digital currencies that are powered by a revolutionary technology called blockchain technology.
Some of the biggest and most established platforms in the market are Binance and Kraken. To start trading crypto on these platforms, the process is more or less the same.
First, you will need to create an account on the platform if you don’t already have one. This step usually requires that you submit KYC information to the platform such as your government ID or passport and a proof of residency.
You will then need to deposit funds onto the platform so that you can start trading. These funds can either be in crypto or fiat, depending on what the available deposit options are for the platform you choose.
Once the funds have reflected on the platform, you can then choose a crypto trading pair that you want to trade. Then, simply enter in the trade details and select the buy or sell options. If you opt to place a market order then you will not need to enter a price, just the amount that you want to trade.
