Blockchain and crypto trading concepts are quite difficult to grasp as the foundational technologies backing them emerged from complex technological advancements. Some people need help to start their journey in the decentralized ecosystem, so it is challenging to be an explainer for them to break down complex concepts into simpler terms. The famous physicist Richard P. Feynman said, 'If I could explain it to the average person, it wouldn't have been worth the Nobel Prize.' So, no matter what you have learned in your life, if you cannot explain it to average people, it may not be considered a remarkable contribution to exchanging knowledge in this world. So, what would you do? If you are an experienced crypto trader in the blockchain and crypto sphere now, you have the challenge of explaining it to non-technical enthusiasts. Well, if knowledge has to serve everyone, this article has attempted to fulfill your demands to some extent. Starting from basic to complex steps, texts are organized in such a way that everyone can get it. Blockchain technology in simple terms: Before diving into crypto trading on Exchanges, it is essential to understand its underlying technology i.e. blockchain. The blockchain is a chain of blocks that can be accessed from all the connected nodes or computers. What kinds of blocks? Well, each block contains a collection of data containing information about a set of transactions. Each block in a blockchain is linked by including the cryptographic hash(A cryptographic hash is a unique, fixed-size string (fingerprint) created by a mathematical algorithm from input data) of the previous block in each block's header. What does it mean? It means data safety by making it extremely difficult to change one block without altering all the blocks that come after it. Crypto Exchanges Crypto exchanges are where users can buy, sell, and trade cryptocurrencies. There are different kinds of crypto exchanges. The most known exchange types are CEXs(Centralized Exchanges), DEX (Decentralized Exchanges), and hybrid exchanges. Centralized exchanges are managed by central entities which means your information is stored in their centralized servers while decentralized exchanges have no central entities so you have full control over your information including private keys, wallet balance, and privacy. The third one is Hybrid exchanges which are a mix of both centralized and decentralized elements. To use these sorts of different crypto exchanges, you can find plenty of guides to use them. Projects themselves release bulletins or guides on their websites or blogs. But, in the case of DEXs, there is no central entity or owner as it is decentralized so most of them have initiated their forums or groups, you can find resources about them through their community-managed channels or websites. The following diagram has a detailed description of different kinds of cryptocurrency exchanges, so you can get ideas about them. Well, these are the basic concepts before initiating crypto trading. Now, let’s move to our main focus which is the crypto trading guide. Caution: Please note that this article does not provide financial advice for crypto trading. So, you are cautioned to conduct your research and seek professional guidance before making any investment decisions. Crypto Trading: In short, "crypto" refers to cryptocurrencies which are digital or virtual currencies. They use cryptography for security and are based on blockchain networks. "Crypto trading" means buying and selling cryptocurrencies(coins/tokens) on various online platforms like Uniswap, Binance, Coinbase, etc. Traders aim to profit from price fluctuations in cryptocurrency markets by buying low and selling high. It is a form of financial trading that has gained popularity creation and rise of cryptocurrencies like Bitcoin(BTC) and Ethereum(ETH). Caution: Crypto trading might not be the best move if you find yourself aligning with any of the points below. Crypto trading can be pretty dicey as markets can be rapidly fluctuating. It is not a cup of tea for everyone. Please think twice if the following points are relatable to you. If you’re uncomfortable with high volatility and possible financial losses then crypto trading is unsuitable. If you aren’t in a financially stable position, it can be a good idea to avoid crypto trading. One of the key factors to a loss is impatience because crypto markets are unpredictable and prices may not move as quickly as expected. Successful crypto trading requires time for deep research and information about market trends. A basic knowledge of technical concepts, blockchain technology, and market dynamics is important for performing crypto trading effectively. The reason to place caution at the top is that it is important to acknowledge possible risks and considerations before jumping into the content. Know About Crypto Wallets and Transactions: Before choosing a crypto trading platform, it is crucial to understand the following key concepts: 📥Tokens: Tokens represent assets or utilities on a blockchain like Ethereum, Solana, etc., and they are often created through Initial Coin Offerings (ICOs) or Token Generation Events (TGEs). They can provide access to various functionalities within a blockchain ecosystem. Tokens examples: LINK, BAT, XRP, etc. Please note that coins like BTC can also be converted as tokens to support another blockchain like Ethereum with a value peg in a 1:1 ratio in such cases they are called wBTC or wrapped Bitcoin. 📥Coins: Coins are native digital currencies that operate on their blockchain. For Example BTC and ETH. Unlike tokens, coins have their own independent value and use cases within their respective networks. 📥Hot Wallet: A hot wallet is an online wallet connected to the internet. They offer quick access to funds for trading or transactions and most of CEXs use this sort of wallet to store users’ funds. While convenient, hot wallets are more susceptible to hacking. So, frankly speaking, they are less secure for long-term storage. Examples: Coinbase, MetaMask, Trust Wallet, etc. 📥Cold Wallet: A cold wallet is an offline storage solution for cryptocurrencies, enhancing security by keeping private keys offline. Cold wallets, such as hardware wallets or paper wallets, are ideal for long-term storage and safeguarding assets from online threats. Example: Hardware wallet like Trezor Model T. Crypto Transactions: Crypto transactions mean the transfer of digital assets between two parties on a blockchain. Transactions are verified by network nodes through cryptography which are generally traceable through specific blockchain explorers like Etherscan in the case of Ethereum. Understanding transaction processes, fees, and confirmation times is very important for effective crypto trading. In most of the cases, users are making mistakes in performing the transactions. Please take care of the following points: Crypto transactions are irreversible, so double-check the address once you copy and paste as you intended. Coins and tokens are different. If you send coins to the token’s address, then your fund will be lost. The most common confusion seen in the crypto sphere is, EMV(Ethereum Virtual Machine)-compatible networks-based ETH address. There are shared characteristics of EMV-compatible networks like Polygon, BSC(BNB Chain, Fantom, and Avalanche(C-Chain) so you can use the same Ethereum address for the mentioned network in case you are using network-supported non-custodial wallets like MetaMask, MEW, etc. You can switch networks to see your tokens but be cautioned, if you are using CEXs and attempting to send ETH-based tokens to BSC addresses then your funds will be lost or the exchange will demand you a handsome recovery fee to recover your funds. Choose Your Preferred Crypto Exchanges: Based on the above diagram about crypto exchanges, you can decide which kinds of exchanges to choose. There are both cons and pros for all crypto exchanges. Centralized exchanges need you to open and verify(KYC verification in most cases) on their platform while decentralized exchanges need you to connect your wallets like MetaMask, Trust Wallet, Ledger Nano S/X, etc. Here are brief starting tips for DEXs, CEXs, and Hybrid Exchanges: 📥CEXs: You can pick the best or most reliable cryptocurrency exchanges that are listed on . Before, starting on any platform, please care to perform thorough research about them first. Search users’ feedback, reviews, and liquidity inflow in such exchanges. After creating an account, verify your email address. Some exchanges demand you to upload KYC documents to use their services while some opt out of them by limiting some features and services. Coinmarketcap Once you have created an account on CEX, please adjust the following settings: Enable MFA by using SMS or the Authenticator app Adjust the anti-phishing code. Enable biometric security layer if it is applicable. 📥DEXs To start a DEX, you need to have a crypto wallet first. For example, if you have MetaMask installed on your smartphone or browser on a PC, you can initiate DEX like Uniswap and then connect to preferred networks as follows. Depending on the network cost, you can switch the network. Comparatively, Arbitrum, Optimism, and Polygon-like layer -2 scaling solutions of Ethereum charge you less fee than Ethereum. To choose the best DEX, you can check the ranking and other details on . DappRadar 📥Hybrid Exchanges: To begin on Hybrid Exchanges like IDEX, start by researching platforms. Once you've chosen, create an account, fund it with crypto or fiat, and adjust essential security measures. Hybrid Exchanges offer a user-friendly interface for trading. These sorts of platforms assist you in experiencing the advantages of both centralized and decentralized trading features. Basic Crypto trading: As a beginner, you can start basic crypto trading on exchange with a small amount. Comparatively, for the short term, a good CEX can be the best option as they may have an active support system if any issues persist. Once you have an account on your preferred exchange, deposit the fund and navigate to their trading interface. Things have been made easier for most of the reputed crypto exchanges by introducing their mobile apps. You can do it from the app too. After that choose your desired trading pair. For this example, / is chosen. BTC USDT Alright, you might try with Spot trading (chosen from Spot, Margin, P2P, Swap, etc.). As shown in the above figure, it exhibited a basic trading strategy(manual trading, buy lower and sell higher), especially for spot trading. In the order book, you can pick the lowest price just above the highlighted price if you are purchasing crypto immediately and there is less volatility in the crypto market otherwise you can adjust your price lower than the highlighted price if you expect the price to go down from the highlighted mark. You can perform a technical analysis which is described below. Remember, that there are different kinds of orders in trading: 📥Market Order: A market order is an instruction to buy or sell crypto immediately at the current market price. It is executed promptly. 📥Limit Order: A limit order allows you to set a specific price at which you want to buy or sell a crypto. The order is executed when the market reaches the specified price. 📥Stop Order (Stop-Loss and Take-Profit): A stop-loss order is designed to limit potential losses by automatically selling crypto when its price falls to a predetermined level. A take-profit order locks in profits by selling at a predefined target price. Well, these are the basic steps for the basic trading as a beginner but you can also gradually enhance your trading skill by performing the technical analysis. Once you understand the technical analysis, you can move forward with advanced crypto trading. Technical Analysis: To become a good cryptocurrency trader, it's crucial to learn some basic technical skills. These skills help you analyze the market by looking at past data and trading volumes on different platforms. Don't worry if you're new to trading, these tips are here to teach you important techniques for technical analysis. This analysis involves studying how the market behaved in the past using different tools. By understanding the chart patterns and market dynamics, you can make better decisions about when to buy or sell. Many traders follow these patterns to predict what might happen next in the market. Essential Concepts for Technical Analysis: 📥Market Trends: Also known as an uptrend where the crypto price is rising. Bullish Trend: The price neither falls nor rises significantly it moves horizontally. Sideways Trend: Also called a downtrend where the crypto price is decreasing. Bearish Trend: 📥Trend Lines: Lines on a chart indicating price movements from low to high. 📥Support and Resistance: Support: A lower level where a bearish trend may pause, and the price bounces back. Resistance: The highest level where a bullish trend may pause, and the price reverts. 📥Moving Averages: Used to analyze market momentum and identify support and resistance levels for a specific time frame. 📥Candlestick Charts: Each candlestick represents opening and closing prices. 📥Bullish vs. Bearish: Bullish Market: Buyers compete to set higher prices, as seen in upward-moving bullish candles. Bearish Market: Sellers compete to set lower prices, observed in downward-moving bearish candles. 📥Volatility Check: Cryptocurrency markets are generally volatile, as illustrated in the provided diagram above. 📥Overbought and Oversold: Overbought: When cryptocurrency is heavily bought, signaling a good time for a trader to sell. Oversold: Sellers sell assets at the lowest rate, presenting an opportune time for a buyer to purchase at a lower cost. 📥Trading Volume and Price Connection: Larger trading volumes often correlate with more favorable price trends for cryptocurrencies. 📥Crypto Fear and Greed(CFGI) Index: The Crypto Fear and Greed Index(ranging from 0 to 100) serves as a valuable tool for predicting potential market behaviors in major cryptocurrencies. When the index registers a value between 0 and 50, it signifies fear– a bearish or oversold market. Conversely, an index value between 50 and 100 reflects greed –a bullish or overbought market. For example, if the current Crypto Fear and Greed Index stands at 88, it implies an extreme greed scenario, which signals a bullish market. In such a situation, it might be an opportune time for traders to consider selling their holdings. Nontechnical or beginner traders can find this tool as the best for performing crypto trade. You can check the update . here Please note that crypto trading and technical analysis are vast subjects. You can enhance your skills and expertise based on regular practices, tests, and trials. This is much for the basic crypto trading concepts for now. For advanced trading, you have to build all the essential skills to book profits in crypto trading. Scam tactics preferred by malicious projects in trading: Sounds interesting, right? However, not all crypto projects are genuine. Some malicious projects exploit your psychology and greed. Despite being a skilled trader, you may fall victim if you cannot resist excessive greed. For example, even when all technical indicators point to a bullish market, malicious projects may favor the pump-and-dump strategy to deceive you and take away your funds. If we locate the case of Terra Luna’s fall, it has brought international attention. The incident has taught us that serious vulnerability could exist even in well-established projects. In such situations, it is very important to exercise caution and conduct deep research before making any investment decisions. You know, malicious scammers often take advantage of market sentiments, manipulate prices, and launch fraudulent schemes. It is important to stay up-to-date on possible risks. You can constantly follow up on project developments and prefer effective risk management practices accordingly. Conclusion: The learning process can be complicated for non-technical people so, we have broken down the complex parts in a simple and understandable format by applying the easy-to-understand text structure. The article has attempted to make clear the essential concepts about tokens, coins, types of exchanges, and many more. Crypto trading has both sides i.e. profits as well as loss. Technical analysis assists in predicting the real-time market’s dynamics but it may not accurately work for all cases. You should have basic ideas about trends, support, resistance, and other tools to perform the technical analysis. If you have complexities in understanding the market’s volatility and overall sentiments, you can take references from tools like Crypto Fear and Greed Index which is handy for traders but it also can’t generate 100% accurate outcomes. You should be very clear that excessive greed and expectation could hurt particularly if you are stepping into the crypto world considering that crypto is a get-rich-quick scheme because the market won’t always follow the bullish uptrends.
