This is Part 2 of the “A short intro to cryptocurrencies and trading” series. To read Part 1, click here.

The first part of these series was an intro to some general terms like blockchain, altcoin, mining, exchange, etc. This second part will be focused on more practical things, like registering on an exchange and trading on it. But since we’re experiencing big ups and downs lately, we will be briefly discussing the phenomena around Impulsive Trading as well.

 

Registering on an Exchange - This part shouldn’t be difficult. Just read the login page instructions carefully and you shouldn’t have much trouble registering. As stated in Part 1, it is highly recommended to choose beginners’ friendly exchange with high liquidity (higher liquidity means you can fill a trade more easily).

You won’t make a mistake by going with any of our supported exchanges - Binance, Bitfinex, or Kraken (Coming Soon). But the first thing to watch out for - don’t get phished.

 

Phishing - The most important thing is to make sure that the site you’re visiting is the site you want to visit. There are malicious copies of many websites, especially the ones that have access to your assets. User logs in to a website thinking that they are logging to the real thing - and before they know it - all of their assets are lost forever. That is why it is of utmost importance to treat your computer and your phone as if they were your credit cards. If you wouldn’t give your credit card pin code to a shady person in a dark alley, then you shouldn’t install pirated software (very often it’s Adobe Photoshop, Games) or use a cracked operating system (very often it’s Windows, jailbroken iOS, Custom Android you found on the internet). It’s not really always the case the pirated software will steal your info or lead you to a phishing website, so it’s not exactly a good analogy - the better analogy would be leaving your credit card and pin code number next to a dumpster. You can find more on cybersecurity in Part 1.

 

To prevent phishing, you should always check the URL of the website you are on. If you want to visit binance.com, make sure it’s not blnance.com or benance.com. One mistake and you might deposit your funds to a scam website. Many exchanges actually provide instructions to beginners, so make sure to read everything thoroughly before making any deposit.

It’s good practice to bookmark the webpage once you are sure it’s the right one, but malware can easily change your bookmarked pages. In the end, if you have concerns over your device security, you need to manually make sure that you’re on the right website every time.

 

Deposit - as explained in The Part 1, in order to trade cryptocurrencies, you need to obtain them. Unless you plan on mining them or offering your services for coins, you need to exchange your regular money and buy some. Many exchanges, like Bitfinex and Binance, offer fiat-to-crypto deposits. You simply buy crypto with a credit card (or a debit card) and it usually simply appears in your exchange wallet.

 

If you already have crypto, you should find your personal deposit address and send coins/tokens to it. You are now ready to trade.

 

Trading - The principles of trading are really simple. You want to buy an asset, and then sell it at a better price. If you buy something at $1 and sell it at $2, that’s a great trade. If you buy something at $1 and sell it at $0.50 - you get the point. There are other types of trade, like margin trading and arbitrage, but those are more advanced and not suitable for beginners. Feel free to research them once you’re comfortable with the basics. First, let’s try to make any order.

Order is your request to buy/sell an asset. The simplest form among order types is “market”.

 

Market order means that you want to buy/sell an asset as soon as possible, at the current price. Usually, the only parameter you need to provide is how much of the asset you want to trade - e.g. you want to buy 0.1 Bitcoin - you just type 0.1 in the field designated for specifying an amount and you’re ready to go. The next order type you should know about is Limit Order.

 

Limit Order - Limit order is a very simple and very convenient order for beginners.
There are two parameters - one for the amount and another for the price you want to pay for an asset. Let’s say you want to buy 3 Bitcoin at $7000, with this type of order you can do it even if the price isn’t anywhere near that - it will be automatically executed once there’s a sell order at $7000. There’s another, a similar type of order, and that’s Stop Order.

 

Stop Order - These orders offer more functionality than an ordinary Limit Order. You can use stop orders to more clearly specify what you want to do.

a. Stop Limit - Let’s say you aren’t sure whether the price of Bitcoin will go up and down. But you think that once it reaches $6900, it is very likely to go even more.
You can set a stop order to do the following: Once the price reaches $6900, buy it at $6930 or better (less). The stop value would be $6900, and the limit would be $6930. Once the price goes to $6931, the order won’t get filled further.

b. Stop Loss - Another use case of Stop Order is limiting your loss. Stop point would be a point at which your trade isn’t profitable anymore and should be terminated. E.g. You bought Bitcoin at $6900, and of course, your goal is to sell it at a higher price. Instead, it comes crashing down to $5000. What you could have done to prevent this is to limit your loss. If you set your Stop value to $6500 and your Limit Value at $6400, your Stop Order would create a limit order to sell at 6400 or better (more), as soon as the price has reached $6500. Smart traders know when to admit that their prediction was wrong and to cut their losses. 

 

The only thing left to do is to figure out is predicting what the price will do. Let’s talk a bit about that. Unless you want to just take a guess and enter a trade, you should do some analysis. There are two types of analysis - technical and fundamental.

Technical and Fundamental Analysis - If you were to go to the website of the project of the coin you are about to trade and started snooping around, looking for a business plan, revenue reports, partnerships, etc, you would be performing fundamental analysis.
If you don’t take those things into consideration and just look at the charts in your favorite exchange’s dashboard in order to figure out whether your coin is going to increase or decrease in price, you would be performing technical analysis.


Attribution: EasyLiveTrade software [CC BY-SA]
Image source

 

Since now (at the time of writing) we are experiencing a “dip”, meaning that the value of most cryptocurrencies has dropped significantly, it is a great time to write a word or two about your worst enemy in trading - yourself. 

 

Impulsive Trading - You may actually be experiencing FOMO right now without realizing it. It is a “fear of missing out”, and it’s very common among traders (and investors) that lose money. It is crucial to your success to be rational when trading, and it’s not always easy to realize when you’re about to do something out of fear, something biased or take impulsive, emotionally-driven actions. Intuition may be an important thing to consider in business, but traders also need to know the difference between intuition that comes from decades of experience and “feeling out of the blue” that will more often than not lead you to bad trades. 


There are, generally speaking, two emotions at stake that prevent people from making a profit on their trades - fear and greed.

 

FEAR - Let’s say you have entered ETHUSDT trade at 150$ per 1 ETH. You think that the price of Ether will go up, and you plan on selling it at 170$. However, it suddenly drops down to 148$ and you sell it immediately. However, it doesn’t go lower than 148 - in fact, it climbs back to 150, proceeding to 170 two days later.

 

What our hypothetical trader just did was that he/she panic sold. The trader tried to cut the loss and exited the position too soon, losing their profit.

Why? Knowing that your hard-earned money loses its value is scary, and it is even worse when you have a real-time graph representation of it.

Cutting your losses is probably a valid mechanism to have in case of crashes, but premature exits will cost you in the long run.

 

GREED - “Bulls make money, bears make money, pigs get slaughtered”. Let’s analyze this Wall Street saying:

  1. “Bulls” (bullish market) means that the price is supposed to go up. You can earn money on it by taking a “long position” - meaning that you bought at a certain price, and you will sell at a higher price. 
  2. “Bears” (bearish market) means that the price is supposed to go down. You can then short an asset (for more advanced traders), meaning that you borrow an asset from an exchange, and sell it, only to buy it again at a lower price. Finally, you would return the borrowed asset and take the difference for yourself.
  3. There’s no “Piggish” market in the charts. “Pigs get slaughtered” means that greedy traders who don’t take profit on time and wait for the price to hit some non-realistic goal are greedy “pigs”, and they lose their money. If you can predict that the price will rise and buy an asset, but fail to sell at a reasonable point, the outcome is the same as if you didn’t make a good prediction at all.




Your emotions can be your biggest enemy in trading.  It is common knowledge that more than 90% of traders lose money or end by quitting. That is exactly why we recommend you to follow one of our leaders and learn by watching instead of learning on your own mistakes. On Crypto Denada, you can follow successful traders and their trading strategies. Once you subscribed to a Leader, you get notified when the trader makes a trading move, and even better, you will be added into a private channel with the successful trader where you get exclusive market analysis and can ask any questions you want. 

 

Create an account at Crypto Denada now, and start exploring successful traders from around the world!

 

Don’t forget to take advantage of our reward system, make sure to check it out! Hurry up, it won’t last forever!

Happy trading!

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©Crypto Denada, 2019
Authors: Adam Radivojevic, Denada Marketing Dept, CEO of Futuristicon, & Man Hay Hong, founder and CEO of CryptoDenada.