How to trade Bitcoin: A simple guide for beginners
In this guide, we’ll break down what crypto trading is, what strategies traders use, and how to start trading with reduced risks. Please note that this article is for educational purposes only and does not provide financial advice.
What is crypto trading and how does it differ from investing?
Dictionaries describe trading as the activity or business of buying, selling, or exchanging goods. In the context of crypto, the goal is the same as in traditional markets: to make a profit. However, compared to stocks and traditional markets that operate on fixed schedules set by regulatory bodies or exchanges, crypto markets aren’t tied to a single country or institution, and trading is available 24/7.
Trading requires active engagement in buying and selling. Compared to investing, which focuses on long-term growth, trading:
Demands frequent market monitoring
Requires faster responses to market changes
Involves higher risks
Relies mostly on defined strategies
Trading profits come from buying low and selling high repeatedly, while investing generates returns through long-term appreciation. Traders execute dozens or hundreds of trades monthly using specific strategies, whereas investors may make only a few per year, relying on long-term gains. If you buy actively but don’t sell, it’s considered investing. The core of trading is making profitable deals from short-term volatility, though there are different approaches to how to trade cryptocurrency.
Step-by-step guide to trading cryptocurrencies
Crypto trading is available on different types of platforms. The most popular places to trade crypto are crypto exchanges, like Binance, OKX, and Coinbase. According to a survey by CryptoQuant, most traders (76% of participants) engage in spot trading, which means buying crypto at a current or set price. Beginners usually start with spot trading on exchanges, as it’s straightforward and doesn’t require complex strategies or tools. Here’s a simple step-by-step guide to get started:
Choose a cryptocurrency exchange: When selecting a platform to start your crypto trading experience, consider its availability in your country, security features, fees, ease of use, and whether it supports the assets you want to trade. Take your time and research different aspects of each platform to find an exchange that fits you best. Read guides, like this review of Coinbase, to learn more about the exchange and save time.
Verify your identity: After choosing a platform, you need to open an account. Most exchanges require completing KYC (Know Your Customer) verification, which usually involves submitting a government-issued ID and sometimes proof of address. Verification helps secure your account and ensures compliance with regulations.
Manage risks: Only trade with money you can afford to lose. Start small, set loss limits, and consider lower-risk cryptocurrencies or portfolio diversification to minimize potential losses.
Fund your account: Deposit funds using bank transfers, credit/debit cards, or other supported payment methods. If you already own digital assets, you can convert one crypto to another or make crypto deposits.
Place your first order: Decide whether you want to buy or sell crypto, and choose the type of order (market order for instant execution, limit order to set a specific price). Review the transaction carefully, including network and trading fees, before confirming.
Track performance: After your trade, monitor your portfolio regularly. Track price movements, account balances, and overall market performance to plan your next move.
Following these steps will guide you through the basics of how to trade crypto safely and effectively, whether you’re trading Bitcoin, Ethereum, or other cryptocurrencies.
Types of crypto trading strategies you can use
There are several strategies for trading crypto, each suited to different goals and risk levels, including:
Day trading involves buying and selling within the same day to capture small price swings, requiring constant monitoring.
Swing trading holds positions for days or weeks to ride medium-term trends.
Arbitrage trading is buying the same crypto cheaper on one platform and selling it higher on another.
Derivatives trading means that instead of buying or selling the cryptocurrency directly, you’re agreeing to buy or sell it at a certain price in the future.
To learn how to trade cryptocurrency and make profit, start with a style that fits your time and risk tolerance. Beyond centralized exchanges, traders also use decentralized platforms like Uniswap and automation tools such as Telegram bots or Discord groups. In any case, no strategy or trading tool guarantees profits.
