Crypto trading, or cryptocurrency trading, is the exchange of cryptocurrencies. Like in Forex, you can also buy and sell a cryptocurrency like Bitcoin or altcoin for USD and Euro. This is one way of getting involved in the world of cryptocurrencies without having to mine it.
Anyone who is even slightly interested in learning about cryptocurrency has taken part in some form of trading. Therefore, here is a trading guide that will teach you all there is to cryptocurrency trading and get you ready. I will cover details of cryptocurrency trading and information you need about handling your crypto storage.
Fiat To Crypto
You decided to try yourself in some trading. First thing you want to do is to find a place where you can trade cryptocurrencies. These are called exchanges.
There are a lot of exchanges in the world of the internet, but if you are serious to invest your time and money into one, you need to consider some things before deciding.
For example, before you even consider going in those waters, you need to check is the exchange available in your country. Coinbase, one of the largest exchanges, is not available in India. So do your homework and check this.
Next step would be checking exchanges reputation. Are people that are using it happy? Do they have complaints? How secure is it? Has it been hacked recently? A good source for that information can be Twitter.
The verification process is an important step you need to consider. Exchanges that use ID verifications are usually a good choice. Even it may take some time to verify your account; it is worth to wait, rather than picking some anonymous exchange. After all, it is your money in stake, so make what you can to protect it and keep it secure.
And last, but not least, exchange rates. Different exchanges have their own exchange rates, and they may vary a lot.
One exchange I highly recommend is Coinbase. It is trusted and most popular exchange to buy cryptocurrencies with fiat.
Watch this video for step by step how to open a Coinbase account.
Managing Your Founds
Before we touch crypto to crypto exchange, you need a place to store your cryptocurrency. And just like storing your money, you store cryptocurrency in a wallet.
Your wallet consists of a private key and a public address. Private key gives you the right to send currency, and public address is where anyone will send you currency.
The public address is like your bank account number, where the private key is four digits on the back of your card and your signature. You NEVER want to give your private key to ANYONE! EVER!
There are two types of wallets: Hot Storage and Cold Storage. A wallet that is connected to the internet is hot storage, while cold storage wallet is not connected to the internet.
Although their purpose is the same: to store cryptocurrencies, their usage is different. I will explain each in simple steps and easy to understand.
Since it is connected to the internet, it is vulnerable to hacks and cyber attacks. And if the device on which your hot wallet is gets stolen (laptop or your phone), you could lose your founds, just like a physical wallet.
But hot storage has its benefits: quick, easy and instant access to all of your currencies, supported in different devices, user-friendly and ideal for beginners.
Most common examples of hot wallets are: exchange wallet and desktop and mobile wallet.
Exchange Wallet. If you watched video from earlier and followed instructions for creating a Coinbase account, you already have an exchange wallet. Kudos!
You have linked your account and have fast access for trading. But, don’t forget; this also means you are vulnerable to attacks. I highly recommend that you don’t keep all of your cryptocurrencies in an exchange wallet, but the only necessary amount for trading.
Desktop and Mobile Wallet. These type of wallets grow in popularity, and setting them up is rather simple and easy. Just download the client on your desktop or laptop, and you are done.
But in this simplicity lays the problem. You can’t access your wallet from other location than on which it was downloaded and installed.
That is why mobile wallets are a more convenient option. Setting it up as simple as with desktop version: download the app into your phone.
Pointing out the obvious again: since both of the devices are connected to the internet, they are vulnerable to viruses and attacks.
Hot wallets give you instant and easy access, but they still remain vulnerable and unsafe. For the safer option, you should consider using a cold storage wallet. A cold wallet is cut off from the internet, which makes it safe from viruses and attacks. It is a great place to store and hold your coins for a longer period of time.
But, it is impractical for daily transactions, it is not beginner friendly and vulnerable to physical damage (for example, it can break).
Example of cold storage wallets is a hardware wallet and a paper wallet.
Hardware wallets are physical devices where you store your cryptocurrencies — something like a regular USB stick. The most popular one is Ledger Nano X.
Since it is cold storage, your private key will be saved. The keys are stored in the protected area of microcontroller and can’t be transferred out of the device.
Because of their design and size, they are portable and easy to use. All you need to do is to plug in the wallet and follow the instructions to make a transaction. The user interface is user-friendly, and you won’t have a problem using it.
You can store several addresses on your wallet, however, only a limited amount. The ledger can store about 20 different cryptocurrencies.
Your wallet is protected with pin code, so if someone stole it from you, he wouldn’t be able to access your founds easily. Entering the wrong code three times will shut down the wallet. However, you can still recover your founds by following the restoration details.
One more thing that you should think about is that this is an actual object, which means it can be damaged. Example, if you misplaced it and stepped on it.
And finally, you have to trust that the company which is creating your hardware wallet is ethical and will not try to mess with the design of your hardware wallet.
Paper Wallet. The safest way to store your cryptocurrency is by far the paper wallet option. The idea is rather simple. You set up a wallet offline following simple instructions after which you print our the private and public key in a piece of paper. The keys will also be printed in a QR code, and you can also scan it to access your funds.
This may seem like the best option to choose, right? Well, it would depend on your needs. If you plan to use it regularly than no, it is not the best option. The paper wallet will be a pain to use it like that. You would be better off with a hardware wallet.
But, if you plan to store your founds for a longer period of time, then, without a doubt, a paper wallet is your best option. Two most used paper wallet sites are Walletgenerator and MyEtherWallet.
Crypto To Crypto
Now that you have an account with Coinbase and you understand the principle of wallets and how to use them, let’s dive into the world of trading.
First, what you need to do is create an account in one of the exchanges, the one that enables crypto to crypto trading. Two well known and trusted exchanges are Binance and Bittrex.
You can use a different one if you feel comfortable. Just do your homework and do your research about security and credibility of the exchanges.
Most of the exchanges will only allow you to buy other cryptocurrencies with Bitcoins, so that will be your primary resource of trading.
Once you set up your account with the chosen exchange, everything is in your hands. How and where will you invest your currency is up to you.
Hopefully, you have learned something new. Purpose of this guide was to explain what is cryptocurrency trading and how do you get to that point.
Do you have any experience with cryptocurrency trading already? I would love to hear your story. Did you find this information useful? Do you know someone that would want to read it? Why not share it with your friends?
If you have any questions or you need more details about something, feel free to message me at firstname.lastname@example.org, and I will reply to you shortly.
Disclaimer: This is an informational article, and scamdebunk cannot be responsible for any damage caused by a 3rd party.
11 thoughts on “What Is Cryptocurrency Trading (Complete Trading Guide)”
This is a very good article. I have been looking for a while good info on Cryptocurrency Trading and most of the site I found didn’t look right….like scam….By reading your article I feel that you really know about Cryptocurrency Trading. I will bookmark your site and I will also share it. Thank you so much for sharing your knowledge!
Thank you so much for your comment. I appreciate that you like my article. Can I ask you what are you interested in cryptocurrency investing? Any specific field?
Very interesting info on the bitcoin. Even though it’s still over my head with the information. Where it mentioned taking banks and gov out of the picture. It just makes me think of having a 1 bank and 1 currency for everywhere. Signs of the end times I’d say.
Thank you so much for your comment.
The point of cryptocurrencies is exactly that: to have one decentralized unit, without interfering with banks or government.
Are you interested in any special cryptocurrency?
I’ve heard of Cryptocurrency and it still confuses me as to why people want to own it? I liked your article. It is very informative with lots of information.
I have a few questions. Why do people want Cryptocurrency? Are they trying to do away with the dollar? How many companies accept Cryptocurrency?
Although I did like your post, I still don’t get it.
Could you explain it to me?
Thanks again and it is a great post!
Thank you for your questions. People buy cryptocurrency because it has more value than money itself. Banke will tell you that your money is safe in the bank but, at the same time, they are lending it out to others. They will tell you that it is your money while, legally, it belongs to the bank and they can do what they want with it.
Also, people buy bitcoin to protect their wealth outside of the traditional financial system and because it is decentralized.
A lot of companies accepts cryptocurrency, starting from Digitec and Galaxus – one of Switzerland’s biggest retailers, but even Wikipedia and WordPress are accepting cryptocurrency as payment.
You could look at cryptocurrency as digital gold: it has its value and it will be here to stay for a long time!
I’m thinking that investing in cryptocurrency (i.e. Bitcoin) so far does have it’s advantages in terms of a higher return of investment (ROI) over time like stocks, but at other times the value seems to be extremely unpredictable.
As far as being able to keep what you invested in a Coinbase account safe, I would prefer a cold/hardware wallet storage solution myself, as accounts being compromised from many companies are on the rise. A secure USB stick like the one you’ve shown is great. You’ve got wonderful tips on how to get started in this digital currency trading industry as well.
thank you for your reply.
Yes, investing in cryptocurrency does have advantages over the stock market, but as you said, prices can be very unpredictable. It is always advisable to do research before you invest money somewhere.
Cold storage wallets definitely have their advantages, however, it can be a bit harder to retrieve founds if you are planning to trade with them. I would advise using hardware wallet only if you plan to keep cryptocurrencies for a longer period of time.
I appreciate this detailed information on cryptocurrency. It’s something that I’m slowly getting to understand better – thanks to you! I actually know of someone who made millions off of it in 2017, so it does sound intriguing. I’m not sure if I’ll take that leap until I have more money to play with, but I’ll bookmark this post for future reference.
Thanks for this awesome breakdown on crypto trading essentials. Ever since I heard about the bitcoin craze I have been wanting to learn about cryptocurrency and trading it. This was a great breakdown and an awesome starting point.
I’m glad I could help you and point you in the right direction.
Cryptocurrencies can be wild west if you don’t know what you are doing. I suggest getting familiar with trading and strategies before venturing to this journey.