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Learn how to Trade Cryptocurrency: A Beginners Guide

December, 14th 2023

How to Trade Cryptocurrency as a beginner is not as easy as it looks, but we are here with a basic guide. Trading digital assets is gaining popularity among traders, and that should be the case. That's not all. Traders prefer crypto over traditional stock exchanges due to minimal fees, high volatility, and the potential of the young and promising industry. Cryptocurrency trading - buying and selling digital investments like Bitcoin and Ethereum - has appeared as a dynamic and potentially lucrative initiative.

For beginners, it is essential to understand the characteristics of cryptocurrencies, familiarize yourself with common trading concepts such as order books, trading pairs, order types, etc., and familiarize yourself with specialized analysis charts and tools. This complete guide will teach newbies all this basic knowledge and prepare them to embark on a crypto trading journey.

How to use Cryptocurrency?

Before you learn how to Trade Cryptocurrency, you must clear your concept. A cryptocurrency transaction is a type of transaction involving two sellers and buyers. Buying and selling assets takes place on specialized platforms once the buyer and the seller agree on a price. This establishes the market value of the asset. In most cases, the buyer places an order at a lower price than the seller and creates an order book.

The asset value increases if the number of buy orders surpasses the number of sell orders. On the other hand, if the number of sellers overreaches the number of buyers, the market price of cryptocurrency will fall. Any crypto exchange has an order book on the trading terminal. The sell order is shown in red, and the buy order is in green.

The saying "Buy low and sell high" shows the basic idea of incentives for buyers and sellers. In addition to spot trading, exchanges can also borrow money to trade on long or short positions in credit or futures trading.

A long position is a type of economic trade in which someone buys an asset and profits in response to a rise in its price. Short positions, on the other hand, are a type of financial transaction in which an asset is sold and profit from a decline in its value.

How is Cryptocurrency created?

Mining (mining) is the term used to represent the cryptocurrency creation process. Transactions made with cryptocurrencies need to be verified, and mining does its verification, creating new cryptocurrencies. Mining uses dedicated hardware and software to add transactions to the blockchain. So clear are all the concepts to learnhow to trade cryptocurrency?

Not all cryptocurrencies are created from mining. For example, cryptocurrencies that cannot be used are not mined. Instead, developers create a new currency using a hard fork. Hard Fork Creates New Chain for Blockchain. One fork follows a new path, and the other follows an old one. Cryptocurrencies that cannot be mined are usually used for investment rather than purchase.

Comparison of cryptocurrencies and traditional currencies

The government issues traditional currency, such as banknotes and coins, which can be carried around or deposited in banks. Cash can be used for shopping and other transactions. Cryptocurrencies do not have government, banking, or financial management.

Traditional currencies can be deposited with banks and financial institutions, but cryptocurrencies are stored in digital wallets. Banks insure the money stored in their bank accounts against loss, but cryptocurrencies have no remedy in the event of a loss.

Learn More: What is Crypto Copy Trading? The Ultimate Guide to Traders

Most Popular Cryptocurrency Trading Strategies

Day trade

In this trading strategy, you take a position on the same day and exit. Traders who adopt such trading aim to accrue profits in the daytime price movements of their chosen Cryptocurrency. For a successful transaction, investors often rely on technical indicators to determine a particular cryptocurrency's entry and exit points.

Range trading

Market players also rely on professional analysts, who present their support and resistance levels daily. Resistance refers to a point at which the price may rise; thus, resistance level refers to a price higher than the current price. In contrast, "support" is the level at which crypto prices should not fall, and the support level is always below the current price.

Scalping

This trading strategy capitalizes on the increase in trading volume to account for profits. While there are risks involved, smart traders can be wary of the margin and other important rules they need to avoid bad trading experiences. The Scalper analyzes crypto assets, past trends, and trading volumes to select entry and exit points within one day.

High-Frequency Trading (HFT)

It is a type of algorithmic trading strategy used by Quantz traders. This includes the development of algorithms and trading bots that help in quick entry and exit to crypto-assets. Developing such bots requires an interpretation of complex market ideas and a strong knowledge of math and computer science. Therefore, it is more appropriate for progressive traders than beginners.

Dollar Cost Average Act

When finding the perfect entry and exit point in the crypto market, it is better to think that timing the market is close to impossible. So, there is the "Dollar Cost Average Act" (DCA) as a solid way to invest in cryptocurrencies. DCA means investing a certain amount at regular intervals. This strategy frees investors from the tedious task of timing the market and allows them to build wealth in the long run.

However, in the DCA style, an exit strategy is also troublesome. You need to study market trends and understand market cycles. Reading technical charts also helps to withdraw at the right time. Cryptocurrency investors need to monitor and then judge over-sold and over-bought areas.

Build a balanced portfolio.

Cryptocurrency trading is still in the developing stages. While some countries welcome cryptocurrency trading, some are still skeptical. As central banks around the world grapple with better ways to regulate digital currencies, trading cryptocurrencies has often become risky. However, some strategies can help investors avoid extreme volatility. Building a flat portfolio that includes various cryptocurrencies, such as Bitcoin, Dogecoin, Ethereum, etc., will go a long way in overcoming volatility.

Moreover, investors can also invest a certain amount of money in different cryptocurrencies on a regular basis. Doing so will systematically increase risk appetite and provide long-term favorable returns.

Bypass trading is based on hype.

Relying on social media for information about cryptocurrencies is a common mistake for investment beginners. No investment decisions should be made based on social media hype. Since digital currencies are a hot topic, disinformation on this topic tends to travel very fast.

Primary survey

One of the most important trading strategies is to do primary research. Even if you are not a trading expert, you can do a primary study on the value of the asset you want to buy. It requires updating the flow of all news about the crypto industry.

Crypto Investments and Trading

When it comes to the crypto world, two common approaches - investment and trading - stand out. While both involve digital assets, there are important differences between crypto investments and trading. Let's explore these differences easily：

Crypto investments：

Long-term focus on holding crypto for potential growth.

Focus on fundamental analysis and evaluate underlying technologies, teams, and market adoption.
Usually, people buy and hold cryptocurrencies for a long period (many for several years).
Investors aim to profit through long-term capital increases.
It is suitable for individuals seeking a passive investment approach in the crypto market.
The trading frequency is relatively low, and the exposure to short-term market fluctuations is low.
Popular crypto investment strategies include the dollar cost average method and the construction of a decentralized crypto portfolio.

Crypto Trading：

Focus on capturing short-term price movements and generating profits through active trading and speculation.
Rely on technical analysis of crypto and study charts, trends, and market indicators.
Buy and sell crypto frequently to profit from short-term price fluctuations.
Traders make use of various strategies such as day trading, swing trading, scalping, and arbitrage trading.
You must continuously monitor the market and make quick decisions based on trading signals.
It has a high-risk appetite and is suitable for active individuals in the crypto market.
The trading volume and market risk are high, and the return can be obtained quickly.

While both crypto investments and trading can bring benefits, they each cater to different objectives and risk tolerance. Whether you choose to invest or trade, it is essential to understand your goals, perform thorough research, and remain informed about the ever-evolving cryptocurrency landscape.

What is Crypto Automatic Trading?

Automated crypto trading is the best option for you if you are a beginner learning how to use cryptocurrency. Cryptocurrency automated trading is a trading style that utilizes dedicated software (trading bots) to buy and sell cryptocurrencies automatically when certain requirements are met. Cryptocurrency trading bots permit retailers to take advantage of price trends without having to monitor the market themselves.

When trading without an automated program, you look at charts, analyze data, look for great opportunities to enter the market using various tools and indicators, calculate potential risks, place buy and sell orders, etc. You have to do multitasking. Managing all of these simultaneously can be quite stressful, and it is not uncommon for traders of all levels to lose focus and miss out on important information that can influence the success or failure of a trade.

However, crypto trading bots escape this problem. Bots can automatically (and much more quickly) collect and analyze the data they need and can start and end trades when pre-populated requirements are met. Automated trading software helps traders save a lot of time, energy, and profits at a relatively low price.

Crypto trading bots are automated algorithmic programs developed to use specific trading methods founded on predefined parameters to implement trading systems in the global crypto asset market.

Crypto trading bots can work 24 hours 365 days in the crypto market to compensate for the human limitations of traders and achieve optimal trading. Algorithmic Trading The types of trading strategies that bots can perform vary from bot to bot, with some professional traders developing their own programs to take advantage of market inefficiencies.

Best Crypto Trading Bot for Beginners

Refonte Infini stands at the forefront of the crypto trading bot landscape, providing innovative solutions through its Scientific Trading Bots. Are you looking to learn how to trade cryptocurrency? With an array of plans catering to diverse user needs, Refonte Infini offers a free, starter, and standard plan, each equipped with powerful features and cutting-edge technologies. Whether you are a seasoned retailer or a newbie to the crypto space, Refonte Infini's suite of tools promises an immersive and strategic journey through the ever-evolving world of digital assets. You can also learn more about the best crypto trading bots.

Features:

Varied plans cater to different user preferences, ensuring flexibility.
The platform charges a percentage of profits as an incentive fee, aligning interests with users.
Users can receive signals directly to their wallets or brokers, streamlining the trading process.
Refonte Infini prioritizes user assistance, offering continuous support to address queries and concerns.
The platform employs Gaussian Mixture Models to cluster signals, enhancing precision.
Hidden Markov Models are utilized to detect regime changes in signals, adapting to market dynamics.
Entry and exit points are triggered using Johnson's Su Model, optimizing trading decisions.
Signals are spread and scraped across 320 data centers globally, ensuring fast and high-frequency connectivity.

Conclusion: How to Trade Cryptocurrency?

In closing, embarking on the journey to learn how to trade Cryptocurrency requires a solid understanding of the market dynamics, risk management, and strategic decision-making. This beginner's guide provides essential insights for those stepping into the crypto-trading realm. For a streamlined and automated trading experience, consider Refonte Infini Bot . This innovative tool employs cutting-edge technology to execute trades on your behalf, incorporating artificial intelligence and algorithms for informed decision-making. By combining newfound knowledge with advanced tools like Refonte Infini Bot, beginners can navigate the complexities of the crypto market confidently and efficiently.