Introduction

According to statistics from the Revolut online bank, there was a 68% increase in UK users investing in cryptocurrencies in 2020. Trading on the cryptocurrency exchange (crypto exchange) is getting more interest among citizens in Russia. According to Exmo, before the BTC halving, the number of deposits to the exchange wallet from citizens of the Russian Federation increased by 15-20%.

Before starting work on the cryptocurrency exchange, you need to carefully study the topic and choose a trading strategy. A beginner can easily lose funds when storing bitcoin, buying and selling, depositing and withdrawing funds to the exchange. Therefore, you should understand the basic principles of cryptoeconomics, investing, trading and security, and then move on to trading.

Where to begin?

You should start by choosing a basic strategy for trading cryptocurrency on the exchange. The main ones are investing and trading. The first means the acquisition of assets, the formation of a portfolio and long-term storage with or without portfolio replenishment. The second is short-term speculation on the stock exchange. A trader makes many transactions with crypto-assets, extracting the maximum profit for a certain period of time.

Each trading strategy on the cryptocurrency exchange has different ways of storing it. For investment there are cold wallets. These are devices that resemble a USB flash drive. They connect to a PC. They are almost impossible to hack. However, it won’t be possible to quickly withdraw and exchange crypto assets from them.

On the stock exchange, you can sell, buy, and exchange cryptocurrency. You can also trade with leverage, but this is a tool for experienced traders, as it’s associated with a lot of risk.

You can also use stock exchanges to store funds in cryptocurrency or use staking. So you can receive passive income for storing coins. However, keeping funds on the exchange is risky due to technical failures and hacker attacks.

Exchange selection

In this article, we’ll speak about the process of cryptocurrency trading on the stock exchange as the way to make money on cryptocurrency. Before starting trading, you should decide on the exchange. Due to their variety on the market, this can be difficult.

To choose the right exchange, you need to take into account various factors: security, availability of the necessary trading pair, language, interface convenience, transaction speed, etc.

When the choice is made, in order to start trading on the cryptocurrency exchange, you need to register to replenish your account. Depending on the quality of the cryptocurrency exchange, this can be done through bank cards, payment systems, electronic wallets, and crypto wallets.

Start trading

The cryptocurrency exchange rate is volatile. The price can fluctuate by 10-20% per day, and sometimes by 50% or more. Therefore, trading cryptocurrency on the stock exchange for beginners doesn’t always bring big profits. But this is a delusion. As a rule, 90% of beginners lose all their capital at the very beginning of their journey and leave the market due to ignorance of the basic rules of the cryptocurrency exchange.

Therefore, it’s better to learn how to trade cryptocurrency correctly on a training account. There are exchanges for beginners with an account on a virtual balance. So the user will know the market and understand how to use the exchange. He doesn’t lose anything, but at the same time, he is already starting to work and trade correctly, learning to close deals and focus on the course.

After a demo account, you can try real trading on a cryptocurrency exchange. You should start with a small amount. Losses when selling and buying are inevitable, but a novice trader must go through them. You need to feel what it’s like to lose money and hold a losing position. It’s important to remain calm when the rate falls and not make panicky, erroneous transactions in the hope of “saving at least something”, that is, working according to the chosen strategy. This is the first skill that a cryptocurrency exchange newcomer should master. And it’s better not to overpay for this experience.

At the same time, you should study the theory, say, read articles and books on the correct cryptocurrency trading, listen to lectures or sign up for a seminar or courses. In addition, it’s important to get acquainted with technical and fundamental analysis. So it will be possible not only to master the way how to start seeing ups and downs on the charts, but also to predict them.

Having mastered the basics, you can start choosing a strategy. For example, find an existing one or study the experience of other traders and investors. Each user has an individual strategy for trading cryptocurrency on the exchange. The main selection factors are the budget and the nature of the trader. Conventionally, strategies can be divided into aggressive, moderate, and conservative.

Aggressive. This is not a game for beginners, and trading in high-risk assets. There is a high probability of losing everything, but profits can reach several thousand percent. This is a get-rich-quick strategy. Suitable for those who are used to taking risks.

Moderate. The trader mainly trades well-known coins, but also acquires risky assets. This is a mixed strategy that combines two types. It’s aimed at gradual enrichment, combined with a certain amount of risk. Suitable for those who start trading on the stock exchange and appreciate stability, but aren’t afraid to experiment.

Conservative. The trader trades only proven assets that have proven themselves in the market (for example, TOP 20 cryptocurrencies). He doesn’t take risks and doesn’t go for broke. This strategy is aimed at long-term and systematic enrichment. This is a way to start trading for those who don’t like to take risks and appreciate a small but stable income.

The main mistakes of beginners

A trader who starts trading on the site, having barely figured out the rules of trading, will be disappointed. They suffer losses and quit trading. But if you follow the principles below, you can work and trade without unnecessary losses and gain the necessary experience faster. So, what a trader CANNOT do at the beginning of his journey:

1. Buy cryptocurrency on the news. If the trader found out about the rise in price of the coin, most likely the rise in price has already happened. In addition, when buying, you need to include a stop loss. These are orders to sell coins at a certain price. This way you can avoid losses.

Example: A trader buys Bitcoin at $9,000, the price rises to $9,100. You can then put a stop loss on the purchase price. In this case, the exchange automatically sells the asset at the specified price. The trader has nothing to lose.

2. Be greedy. After the first success, traders become greedy. They seek to earn as much as possible by selling all assets at the top of the chart. But despite the technical and fundamental analyzes, the crypto exchange can still behave unpredictably, so the rate can drop sharply.

Example: If a user bought a bitcoin at $9,000, then its price started to rise higher and higher, then it’s safer to sell some of the coins and withdraw money in a “cascade”. The rest can be placed on a stop loss.

3. Trust other people’s predictions. You should be careful about other people’s forecasts for an increase or decrease in the exchange rate. You can not trust the “advisers”. For example, Telegram has many channels where they publish forecasts for cryptocurrency. However, their admins are not responsible for subscribers’ money. Therefore, a trader needs to study everything himself in order to have his own opinion.

4. Give capital for trust management. Especially in the early stages. There is a similar practice in the crypto world, but it has more negative feedback than positive. Taking advantage of the trust and ignorance of the fundamentals of the market, scammers easily deceive beginners. It’s better to spend more time learning trading and manage your assets yourself, without shifting responsibility for your capital to others.

5. Get emotional. The majority of losing trades are made precisely because of the loss of self-control. Don’t panic when the rate starts to drop sharply. Perhaps this is another trend that will pass, and then the rate will rise again, and it will be possible to earn. This is how many inexperienced traders lose money. They don’t know how to ride out the storm. Experienced people know that depreciation is a normal and temporary phenomenon. They’re quietly waiting for a better moment in the market.

6. Trade with the last money. It’s not recommended to trade with leverage if you do not have a lot of experience on the exchange. At first, it’s better to invest only those funds that you don’t mind losing. It’s impossible to invest funds from personal capital, or store all capital in cryptocurrency. Even cryptocurrency millionaires recommend keeping most of the capital in traditional funds (bank deposit, real estate, bonds, precious metals). With cryptocurrency investments and trading, you risk losing this money.

7. Stop learning. You can’t stop learning to trade. Experienced traders constantly attend lectures, courses, seminars, trainings, read books. True trading is an art in which you need to become more perfect. In the cryptocurrency world, innovations appear daily. There are new exchanges, coins, ways of trade-exchange. Therefore, it’s important to be aware of everything. You can’t trade half-foot and expect fabulous profits at the same time.

8. Forget your trades. Trade records help you better evaluate and adjust your trading strategy, as well as work on mistakes. It’s important to be able to recognize losses. It’s safer not to conduct transactions in which there is no complete certainty. Better to wait for a better moment. Recording trades is a personal journey for every trader, which will help him understand himself better and find the best strategy, or simply repeat successful experiences and get more income.

Conclusion

Despite the high volatility, playing on the cryptocurrency market is not a casino, but a long-term and systematic work. Trading digital assets needs to be approached fundamentally. One shall calculate actions and think about the consequences, gradually forming a strategy.

Below is a step-by-step instruction for novice traders before they start playing on a crypto exchange:

Step 1: Carefully study the materials on trading.

Step 2: Choose the right crypto exchange.

Step 3: Practice on a demo account.

Step 4: Prepare a small trading amount that you don’t mind losing.

Step 5: Deposit funds to an exchange wallet.

Step 6: Close the first transactions on the exchange to practice.

Step 7: Work on the mistakes. Start building your strategy and view trade records.

These steps will minimize losses when playing on the exchange and will help you continue to successfully trade on exchange sites, and not quit everything, having lost funds.