How to trade cryptocurrency on the stock exchange - TOP methods

Cryptocurrencies are one of the most popular alternative assets. The turnover of the crypto market today exceeds 2 trillion US dollars. Bitcoin is legalized in more than 100 countries around the world. More and more people are investing or earning on digital assets. We tell you how to start trading on a crypto exchange.

Where to trade cryptocurrency?

The purchase and sale of cryptocurrency assets is carried out on specialized exchanges. For example, Capital, Avatrade, Bybit, Binance and others. They are analogous to stock exchanges. On crypto exchanges, users can participate in trading, track asset prices, engage in arbitrage, scalping, etc. Learn more about lock tokens. 

To store cryptocurrencies, you need a special wallet. Crypto exchanges provide "hot" wallets. However, they are not under the full control of the user and are not 100% secure. More reliable is a "cold" wallet.

Crypto assets can be purchased through online exchangers, services, payment systems, and trading can be done only through crypto exchanges. To perform transactions on such sites, you need:

1. register, create an account on the exchange;

2. pass verification, that is, confirm your identity;

3. replenish the balance of a "cold" or "hot" wallet (through a card, exchanger or payment system);

4. start making transactions.

When choosing a site, you should focus on 5 criteria: the country of regulation, the presence of a multilingual interface, user reviews, trading volume, commissions. Some crypto exchanges, such as Chinese ones, only support clients from their own country. Exchanges charge 4 types of fees: service fees, transaction fees, withdrawal fees, and bitcoin network fees.

Regulated crypto exchanges have an identity verification system for AML and KYC. These standards are introduced to prevent money laundering using bitcoin. The Know Your Customer (KYC) system requires personal data. Clients provide identification documents, residential address, income, etc.

Experienced users are advised to choose exchange platforms with the function of replenishing the deposit with fiat currencies. It is also important to have a user-friendly interface, and a  calculator and an online cryptocurrency converter are a must  .

How to trade cryptocurrency?

Short-term trading of crypto assets is called trading. The essence of trading is to buy assets at the time of depreciation and sell after it rises. For example, an investor bought asset A at a price of $1,000. After 6 months, its value rose to $1,500. After the sale of the asset, the investor received an income of $500 per coin without commission deduction.

In the example, only one of the possible strategies is considered. Crypto traders use different trading styles. Let's consider some of them.

• Scalping is the opening of multiple quick trades from 30 seconds to 10-15 minutes. Scalping is most successful during periods of low volatility when the market is experiencing moderate fluctuations.

• Day trading "intraday trading", the conclusion of short-term transactions within one exchange day.

• Swing trading is a medium-term trade where positions can be held from 2 days to several months.

• Trend trading is a long-term purchase of crypto assets for a period of several months. In this case, the trader expects an increase in the value of assets.

• Arbitrage is trading based on price monitoring and pair trades. For example, buying bitcoin on one exchange and selling it on another site.

To get a steady income, you need to be able to apply strategies. These are systems of rules for conducting exchange operations. Without their observance, trading becomes close to gambling. The strategies are based on methods of market research, opening and holding positions, risk management, error analysis, loss calculation.

What are the main mistakes of a novice crypto trader?

Cryptocurrencies are one of the most volatile assets. Prices in the crypto market are extremely volatile and subject to sharp fluctuations. Volatility complicates stock trading. Therefore, investors without experience often make the same mistakes.

Consider 7 typical mistakes of novice crypto traders.

1. Investing all your funds in the first deposit. There are always risks of losing money, especially in the absence of experience. Therefore, it is better to allocate no more than 10% of the capital for the first deposit.

2. The direction of all capital for the purchase of one cryptocurrency. There is a rule in any market: "Don't put all your eggs in one basket." Investments must be diversified.

3. Placing orders for large amounts in the absence of experience.

4. Neglect of fixing losses. Beginners often hold the position until the last moment, draining the deposit. Therefore, it is important to use orders to fix profits and losses.

5. Making spontaneous transactions, the lack of a strategy is the surest way to “drain” a deposit. The strategy must be thought out in advance and preferably written down.

6. Buying assets at the price maximum - such a mistake is often made under the influence of emotions. It is better to buy assets at the moments of growth immediately after the correction.

7. Buying unstable currencies with a weak capitalization for most of the deposit. Such currencies carry great risks and very often ruin investors.

In addition to those listed above, there are such mistakes as: early loss fixation, high expectations, use of bots, neglect of security and news analysis.

To conduct successful trading, a crypto trader must know the basics of exchange trading. At a minimum, understand the types of assets, charts, orders, order book, search for entry points, etc. To understand the movement of prices allows the use of fundamental and technical analysis. Analytics is prepared on the basis of news, charts, indicator signals.