LUCKY'S CRYPTO GUIDE FOR BEGINNERS
PART SIX
Welcome to the sixth installment of Lucky's Crypto Guide For Beginners, where my aim is to take the average person with no prior knowledge in cryptocurrency and mold them into a crypto trading machine through the application of well built and easy to understand tutorials. So far this series has been a success, in my eyes anyway, thanks to each and every one of you who has taken the time to read my material. Today, I am going to scratch the briefly surface on the subject in which these tutorials have been constructed around, crypto trading. Today, you will learn what exactly crypto trading is and how it works. Though I'm not going to go very deep into the subject in this article, be advised there will be a compilation of future lessons dedicated to just this one subject. Properly equipping yourself may take some time and effort on your end, but these "baby steps" will provide you with the understanding and tools you will need in order to successfully trade within one of the biggest equity building phenomena of our lives, the cryptocurrency trading market.
WHAT EXACTLY IS CRYPTOCURRENCY TRADING?
Cryptocurrency trading is by far one of the most financially profitable, exciting, risk involved opportunities standing right in front of your face. It is the act of taking your traditional FIAT currency (money like the euro or US dollar) and using it to buy cryptocurrencies such as Bitcoin or Ethereum. It is also the act of buying and selling individual cryptocurrencies (digital currencies) in one of the many marketplaces (exchanges) across the world. Crypto trading derives from the same basic structure and principles that the FOREX market (FIAT currency market) and the stock market (NASDAQ for example) flourish from. The prime difference between a crypto trading market and a stock market or forex market is the essentially the product traded. Crypto markets buy and sell cryptocurrencies whereas forex markets buy and sell traditional currency and stock markets buy and sell company stakes/shares.
The beautiful thing about trading in the crypto world is that it is open to the entirety of the modern world through the use of the world wide web. This means anybody, anywhere, with a way to pay for cryptocurrency can access the internet and join an exchange (crypto marketplace), making them now able to buy and sell crypto. This opens the world of investing to people who normally never have the opportunity or that could not afford typical buy ins (investment costs) for traditional markets. I have personally seen people go into a crypto exchange with $100 USD and leave with $5,000 USD. On that same note, I have watched some go in with $5,000 USD and leave with $100 USD. Your success or failure really rides on your research, knowledge, patience and most of all, the tools that you utilize and bring to the table when trading.
Before I go much further, I am going to share an idea with you that most people do not know or recognize. There is a clear difference between crypto trading and crypto investing. Crypto trading is geared more towards acting on the impulses of the here and now, making the market a volatile, yet profitable ground for someone to come in and immediately begin seeing substantial profits or losses. Crypto investing is geared more towards the the idea of future gains, making coin holders that are invested in the company buckle up and settle in for a long term relationship. Understanding the difference between these two terms is often the key in deciding which approach fits your budget, personality and skill set. The more you know, the more you grow!
HOW DOES CRYPTO TRADING WORK?
Though crypto trading appears to be a daunting experience, once you gain insight and understanding, it is rather easy to get involved in. It is broken down into two different phases to help in clarity and differentiation. Learning the difference between these two is imperative to your progress in the crypto world
PHASE ONE - USING FIAT CURRENCY TO BUY BASE CRYPTOCURRENCY
This is the first phase of the process and is the only phase you need to complete IF you are content with solely purchasing a base cryptocurrency to trade with. Being traditional currency is not able to be traded freely on 95% of the crypto markets available today, most traders have to rely on trading in their FIAT funds for crypto funds. This process is essential for anyone looking to either invest in or trade crypto. To break this down even more I am going to define a base cryptocurrency and explain the process briefly.
A base cryptocurrency is a main currency used in crypto exchanges (and the crypto world) to acquire various other forms of cryptocurrency. Base cryptocurrencies or "coins" typically are Bitcoin, Ethereum and Litecoin and alternative currencies typically are coins such as IOTA, BCPT, XMR (and many more). Certain exchanges use their own token as a means of creating their own "micro-economy", making alternative currencies such as the BNB Token and the KuCoin also a form of base cryptocurrencies I have branded as "sub-base coins". Typically a base coin has its own market in an exchange, meaning it will have hundreds of other coins available to be purchased WITH the use of this base coin. In example, an individual can buy 100 IOTA with the Bitcoin in their account (or any base coin), however they cannot buy this IOTA with traditional currency or with another alternative currency.
Basically, an individual would register an account with an exchange (crypto marketplace) and then proceed to take their traditional money (such as the US dollar) to purchase a quantity of a base coin (such as Bitcoin). The base crypto which was just purchased with your USD is now ready to be used to your liking. With this Bitcoin, you can either "hold" it, waiting for gains, or "trade" it for one of thousands of other existing cryptocurrencies in hopes of faster, larger profits. Proceed to Phase Two if you are interested in playing ball on a significantly larger playing field.
PHASE TWO - TRADING BASE CRYPTO FOR ALTERNATIVE CRYPTO
This is the phase where things get really exciting and interesting. At this point, you would take the base coins you traded your FIAT money for and would then use them to acquire thousands of different cryptocurrencies on the market. Just about every single coin available is basing it's volume (growth) off of the model of the infamous Bitcoin, meaning just about every coin on the market can be purchased by spending Bitcoin to buy it. For example, crypto such as NEBL is an alternative cryptocurrency that is about to go through a growth spurt that you have your eyes on. Well of course you'd like to buy it, how else would you make a profit off it? Certainly not just by watching it grow! You have to actually own some NEBL to be able to cash in on any profits from it growing. So let's go ahead and buy some NEBL with your Bitcoin. I'll explain how below."
So, to go ahead and buy that NEBL with some Bitcoin, you will need to go ahead and locate the Bitcoin marketplace of the exchange you are using. The Bitcoin market will show numerous cryptocurrencies that are valued and priced according to the price and volume of Bitcoin. All of them will have a BTC price, making them able to be bought with BTC or sold for BTC. Once you have located NEBL, you would click on it to enter the statistics screen for NEBL, which shows pricing, charts and more. Once you are here, go ahead and BUY some NEBL. Click on the BUY button, enter the amount of NEBL you would like to purchase with BTC, and VOILA - you just made your first cryptocurrency trade. Not so hard huh?
At this point you have just completed your first actual trade and crossed the threshold into a new and exciting world. The reason we buy and sell these alternative cryptocurrencies is always going to be the same, for the money. So how does one actually make money trading? I'll sum it up right now without going too deep. You make money by buying low and selling high. You buy an alternative coin at a lower price than what you sell it for, meaning you are making profit in the sale. Being you are hypothetically trading your alt coins for bitcoin, you also have the possibility of doubling down on your profits with the price of Bitcoin going up as well. At the end of your run, once you have had enough trading, IF you ever decide to pull back and gather your money you would sell your Bitcoin for FIAT money at another marketplace and send to your bank. That's pretty much it in a sense of the basics to give you a general understanding of what crypto trading is.
WHERE DO I TRADE CRYPTOCURRENCY?
Cryptocurrency is traded in a wide variety of places across the globe, mainly on the world wide web through online marketplaces called "exchanges". These exchanges typically offer hundreds of currencies available for purchase and sale, making it possible for a trader to widely diversify their profile and also be open to more profitable options. After all, trading is a numbers game and statistics show with a high selection comes the higher probability of finding a money maker. A great majority of these exchanges also utilize modern technology by offering their services as an android or apple based application, making trading an option for those who are on the go. Examples of some of the crypto community's finest exchanges include Binance, Bittrex, CoinBase, Cryptopia, Poloniex and more.
Though the dominant platform for buying and selling is typically an exchange, there are other outlets available for individuals to trade their crypto. Several online forums offer private sale and trading of cryptocurrency and now even some applications have emerged that allow users to sell person to person, eliminating the need for an exchange. With so many options available, it is certainly understandable how his can be a confusing thing to grasp. To set yourself in the right direction, I advise to register with a few (or all) of the exchanges listed above and prepare yourself for my future articles that give a very in depth look at crypto trading.
So there we have it, a practical way to break down the term "crypto trading" to where it is understandable in several aspects. If I happened to leave something out, or not rightly explain it well enough, please mention something to me in the comments portion and I will be sure to not only reply to you, but edit this post accordingly. I hope that this gave a little insight into one of the most important pieces of knowledge to retain in the crypto world. As always, remember that knowledge is power and the more you know the more you grow. Thank you all for reading and for supporting my beginner's guide!
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An excellent and comprehensive introduction to cryptocurrency trading, you make some very good points I wish I had some of this information when I started out.
This looks like it has been a very good series, I will be going back to check out the other posts in it.
#thealliance
Thank you @c0ff33a! I'm hoping this series can prove to be helpful for those new to the scene and give them valuable insight I too wish I had when I dove into it! I am happy to have #thealliance supporting this and I am damn happy to be joining you guys!
Stay posted, the next issue will be out today. I am improvising older writings and producing, then following up on the series. I'm thinking it will have a crazy number like thirty issues, but we will see. I want them to be as comprehensive as possible. Thank you again for your support brother!
every time you make a post cryptocurrency, I am happy with your work to share knowledge about trading cryptocurrency ... continue brother
Thank you my friend @azyref! It is because of supporters like you that I continue to do this series and try my best to educate the platform :D
You have a minor grammatical mistake in the following sentence:
It should be its own instead of it's own.Touche! Once again you have gotten me for it's instead of its. For a pain in the ass, you certainly serve a good purpose on the platform. So thank you @grammarnazi for not just being a douche like spam bot and actually helping people understand the English language a wee bit better. Cheers! I appreciate what you do!
This is awesome , infact i am gonnna join crypto trading as soon as possile
Awesome @royaltiesboss-eu, I am glad that you have found something positive and useful in this article! Make sure to check the rest of them out my friend!
This is one or perhaphs the most complete guide I saw around, and I appreciate your clever explaining style. What do you think about IOTA? It's one of my favorite coins. One thing I do is often to try and get the right moment for exchanging sbd in sp or steem.. checking compulsively blocktrades paid back several times and newbies should learn about that IMHO. Bravo Dev! Keep posting quality contents like this 👍