How to trade cryptocurrency from scratch

What is cryptocurrency trading?

Cryptocurrency trading is one of the ways to make money on the digital currency market, which consists of buying and selling cryptocurrencies on special platforms - exchanges. Cryptocurrency traders seek to profit from the difference in the price of coins at different points in time. To do this, they use various cryptocurrency trading strategies based on market, news and trend analysis.

Cryptocurrency trading has its own benefits and risks that you need to consider before you start trading.

Before you start trading cryptocurrency, you need to understand what a cryptocurrency is and how it works

Cryptocurrency is a digital currency that uses cryptography to encrypt its transactions and create new units. Each cryptocurrency has its own unique code, called hash, which serves as its identifier. In addition, each cryptocurrency has its own network of nodes - computers that keep the currency running and record all transactions in a common database called the blockchain.

The next step is to choose a suitable exchange for trading cryptocurrency, which will meet the requirements for liquidity, commissions, functionality and security. Next, you need to create a wallet for storing cryptocurrency, which should be reliable and convenient. After that, you can start trading cryptocurrency on the exchange, following the chosen strategy and controlling the risk.

There are many cryptocurrency trading strategies that can be divided into two main groups: long-term and short-term.

Long-term strategies involve buying and holding a cryptocurrency for several months or years in the hope of its growth in price.

Short-term strategies are focused on making a profit through frequent transactions during the day or several days. Short-term strategies require more attention and activity from the trader, but can bring more income if the market is predicted correctly.

Regardless of the cryptocurrency trading strategy chosen, it is important to consider the risks associated with this type of investment. The cryptocurrency market is highly volatile and unpredictable, subject to strong price fluctuations, news influences, and speculation.

Successful cryptocurrency trading requires constant education and market analysis. It is necessary to follow the news and trends in the field of cryptocurrency, study various indicators and charts, apply technical and fundamental analysis. It is also helpful to connect with other traders and cryptocurrency experts to get advice and support.

Cryptocurrency trading is an interesting and promising type of income that can bring big profits with the right approach. It requires a lot of time, knowledge and discipline from the trader. Therefore, before you start trading cryptocurrency from scratch, you need to understand the basics of cryptocurrency, choose the right exchange and wallet, determine your strategy and risk management. Only then will you be able to successfully earn on cryptocurrency.

How to earn on cryptocurrency?

To start earning on cryptocurrency from scratch, you need to follow a few steps:

1. Learn the basics of cryptocurrency: what is blockchain, how cryptocurrency wallets and exchanges work, what types of cryptocurrencies exist and how they differ from each other.

2. Choose a suitable cryptocurrency trading platform where you can open an account, fund it and make transactions. It is important to consider factors such as fees, liquidity, security, and of the platform’s reputation.

3. Determine your cryptocurrency trading strategy: what style of trading do you prefer (long-term or short-term), what risk are you willing to accept, what analysis tools will you use (technical or fundamental), how will you manage your capital and risks.

4. Learn the technical analysis of cryptocurrencies: how to read price charts, how to determine trends and support and resistance levels, how to use indicators and oscillators (indicators, the charts of which are displayed on a scale separate from the price chart), how to build trend lines and channels, how to determine points entering and exiting trades.

5. Study the fundamental analysis of cryptocurrencies: how to assess the prospects for the development of cryptocurrencies and projects on the blockchain, how to take into account the impact of news and events on the cryptocurrency market, how to analyze trading volumes and the dynamics of supply and demand for cryptocurrencies.

6. Learn the psychology of cryptocurrency trading: how to control your emotions and not give in to panic or greed, how to develop discipline and self-control, how to avoid typical traders' mistakes, such as overtrading or insufficient portfolio diversification.

 “If you can learn to create a state of mind that is not affected by the market's behavior, the struggle will cease to exist,”

— Mark Douglas, famous American trader, investor and author of several books on trading, popularizer of the “trading psychology” idea.

What is the best cryptocurrency to trade?

SHIB showed unrealistic growth in 2021

What is the best cryptocurrency to trade? This question is of interest to many novice traders who want to make money in the cryptocurrency market. There is no single answer to this question, since the choice of cryptocurrency depends on many factors, such as:

• Trading platform. Different cryptocurrencies and trading pairs are available on different exchanges and platforms. Some exchanges specialize in certain cryptocurrencies or regions, while others offer a wide range of assets and instruments. Therefore, it is important to choose a platform that suits your needs and preferences.
• Trading strategy. You can choose different cryptocurrencies depending on how you plan to trade them. For example, if you want to invest long-term, then large-cap, high-liquidity cryptocurrencies such as BTC, ETH, BNB, or USDT will suit you. If you want to engage in short-term speculation, then cryptocurrencies with smaller capitalization and higher volatility, such as DOGE, SHIB, ADA or SOL, are suitable for you.
• Risks and returns. As a rule, the higher the potential profitability from cryptocurrency trading, the higher the risks. Therefore, it is important to consider your level of riskiness and experience when choosing a cryptocurrency. Do not invest in a cryptocurrency that you do not understand or trust. Also, you should not invest your entire amount in one cryptocurrency, but distribute it among different assets to diversify risks.

There is no universal cryptocurrency that would suit everyone. Therefore, it is important to do your own analysis and research before making a decision to buy or sell.

Cryptocurrency security

Cryptocurrency security is one of the most important aspects of cryptocurrency trading.

Various methods are used to ensure security in the cryptocurrency market:

Contract audits. Contracts are programs that automatically perform certain actions based on conditions set in the code. Contracts can be used to create and manage cryptocurrencies, tokens, decentralized applications and other services. Contract audit is the process of checking contract code for errors, vulnerabilities, logical problems, and compliance with standards and specifications. Contract audit helps to increase the credibility of the cryptocurrency and protect it from attacks and fraud.

Exchange audits. Exchanges are platforms that allow users to exchange cryptocurrencies among themselves or for other types of currencies. Exchanges play a key role in the trading of cryptocurrencies, so they must be reliable, transparent and secure. An exchange audit is the process of checking its technical infrastructure, financial statements, rules and regulations, security measures and data protection. An exchange audit helps prevent the loss or theft of user funds, market manipulation, and other risks.

Exchange licenses. To ensure security in the cryptocurrency market, it is very important that cryptocurrency exchanges are licensed. Exchange licensing allows you to comply with the rules and requirements of regulators, such as setting standards for the security and protection of customer data, preventing fraud and financial crime, and controlling transactions on the exchange. ATAIX Eurasia is an authorized market participant and operates on the basis of licenses from the Astana International Financial Center (AIFC).

Reputation. Reputation is the opinion or assessment that the community or public has about a cryptocurrency, its creators, developers, nodes or exchanges that support it. Reputation is formed based on the history of successes and failures, feedback from users and experts, media coverage and other factors. Reputation affects the credibility of the cryptocurrency and its value in the market.

And as for the average user, how can he improve his security?

Here are some tips to improve security:

• Choose a reliable and trusted wallet to store your cryptocurrencies.

There are different types of wallets such as hot (online) and cold (offline). Hot wallets are convenient for frequent transactions, but more vulnerable to hackers. Cold wallets provide a high level of security, but require more care and attention. Choose a wallet according to your needs and preferences, but always use only trusted sources to download or purchase a wallet.

• Keep your private keys and passwords in a safe place. A private key is a unique code that gives you access to your wallet and allows you to sign transactions. The password is an additional layer of protection that protects your wallet from unauthorized access. Never share your private keys and passwords with anyone, store them on a computer or in the cloud, or write them down on paper or screenshots. Use dedicated key storage devices such as hardware wallets or paper wallets. Change your passwords regularly and use complex character combinations.

• Be careful when choosing a platform for trading cryptocurrencies. Not all platforms are equally reliable and fair. Some of them may be fraudulent or incompetent. Before registering on a platform, check its reputation, reviews, licenses, terms and conditions. Keep an eye on the security of your account on the platform and do not give access to it to third parties.
• Stay up to date with the latest crypto news and trends. 

Cryptocurrency is a dynamic and innovative phenomenon that is constantly evolving and changing. To be successful in this area, you need to be aware of all the events that can affect the price, supply and demand of cryptocurrencies. Follow authoritative sources of information such as blogs, podcasts, social media, or news sites. Be wary of fake news or rumors that can be spread to manipulate the market. If you want to keep abreast of the latest news of the cryptocurrency industry, subscribe to our Telegram group — we cover the most important and interesting events in the world of cryptocurrencies every day.

Risks of cryptocurrencies

Classic "pump and dump"

When trading cryptocurrencies, it is necessary to take into account various risks that can lead to loss of funds or lost profits. In this text, we will look at some of the most relevant risks of cryptocurrencies and how to minimize them.

One of the most serious risks of cryptocurrencies is the hacking of exchanges where digital coins are exchanged and stored. In the history of cryptocurrencies, there have been several major cases of hacker attacks on exchanges, as a result of which users lost millions of dollars. For example, in 2014 the Japanese exchange Mt. Gox was hacked and about 850 thousand bitcoins were stolen, which was almost 7% of the entire existing supply. In 2016, hackers stole 120,000 bitcoins from the Bitfinex exchange, and in 2018, $500 million in NEM from the Coincheck exchange.

To protect against exchange hacks, it is recommended not to store large amounts of cryptocurrencies on the online wallets of exchanges, but to use personal wallets with a high level of security, such as hard or paper wallets. It is worth choosing proven and reliable trading platforms that have a good reputation and licenses.

Another such risk is bridge hacks. Bridges are special services or applications that allow you to exchange cryptocurrencies between different blockchains or networks. For example, a bridge could allow the transfer of ether (ETH) from the Ethereum blockchain to the Binance Smart Chain (BSC) blockchain or vice versa. Bridges are a potential point of attack for attackers to try to intercept transactions or spoof recipient addresses. To protect against such attacks, you must use only proven and reliable bridges and always verify addresses and amounts before confirming transactions.

Another risk is the theft of a seed phrase (mnemonic phrase). A seed phrase is a set of 12 or 24 words that is used to restore access to a cryptocurrency wallet in case of device loss or damage. The seed phrase is the most important security element of the cryptocurrency wallet, as it gives full control over the funds. If the seed phrase falls into wrong hands, the attacker can steal all the funds from the wallet. To protect against such a risk, it is necessary to store the seed phrase in a safe place, preferably in an offline format (for example, on paper or a flash drive), and do not disclose it to anyone.

Another risk is the loss of access to the wallet due to a forgotten password or a lost device. Cryptocurrency wallets usually require a password to unlock access to funds. If the user forgets the password or loses the device on which the wallet is installed, he may not be able to use his funds. To prevent such a risk, it is necessary to always remember or write down the wallet password and store it in a safe place. It is necessary to have a backup copy of the seed phrase, which will allow you to restore access to the wallet on another device.

In addition to these risks, there are other factors that can affect the security and value of cryptocurrency assets. For example, market volatility, regulatory changes, technical issues, cyberattacks and fraud. In this paragraph, we will look at some of these factors in more detail and provide tips on how to reduce your risks when investing in cryptocurrencies.

Market volatility means that the prices of cryptocurrencies can fluctuate strongly during a short period of time. This is caused by various reasons, such as demand and supply, news, rumors, emotions of traders, etc. Volatility can both increase and decrease the potential profit or loss of an investor. To protect yourself from volatility, it is important to follow market trends, analyze price charts and use risk management tools, such as stop-loss (an order set by an investor to automatically sell an asset when its price reaches a set level. It is used to minimize losses in if the price of the asset begins to move in an unexpected direction) and take-profit (an order set by the investor to automatically sell the asset when its price reaches a set profit level. It is used to fix the profit in the event that the price of the asset begins to move in the expected direction).

Regulatory changes may have an impact on the cryptocurrency market. Different countries have different approaches to regulating cryptocurrencies and related activities. Some countries take a friendly stance and support the development of the crypto industry, while others prohibit or restrict the use of cryptocurrencies. Regulatory changes can increase or decrease the credibility of cryptocurrencies, affect the availability and legality of certain services and platforms. To avoid unpleasant surprises, it is important to follow the news and legislation in the countries where you plan to invest or trade cryptocurrencies.

Technical problems can also cause the loss or decrease in the value of cryptocurrency assets. If a user forgets or loses his password or wallet key, he may lose his assets forever. To minimize technical risks, it is important to choose reliable and proven services and platforms, and store your assets in secure wallets.

Cyber attacks and fraud are another major threat to cryptocurrency investors. Hackers and scammers use various methods to steal the money of users who want to capitalize on the growth of digital currencies. Among the most common cryptocurrency fraud schemes are the following:

Fake websites and apps. Scammers create websites and mobile apps that mimic official platforms for trading or keeping cryptocurrencies. They attract users with low commissions, favorable rates or free giveaways. Once a user enters their details or sends their funds to a fake website or app, they lose access to them forever.

Phishing attacks. Scammers send emails, messages on social networks or messengers in which they invite users to follow a link to a fake website or download a malicious application. The purpose of such attacks is to obtain the user's personal or financial information, such as a password, secret key, or crypto wallet recovery phrase.

— Market buildup schemes (“pumping and dumping”). Scammers organize groups on the Internet in which they agitate users to buy a certain cryptocurrency or token, promising its rapid growth. When the price rises due to increased demand, the scammers sell their assets at inflated prices and then disappear. After that, the price drops sharply, leaving investors with losses.

Stay vigilant and don't trust offers that are too good to be true. Before investing in cryptocurrency, check the sources of information, reviews from other users and the reputation of the platform. Do not give your data or funds to strangers or services. Use reliable antivirus programs and protect your crypto wallet with a strong password and two-factor authentication.

Conclusions

Cryptocurrency trading is not an easy and quick way to make money, but a serious and responsible activity that requires constant learning, analysis and self-control. Only then can you count on a stable and profitable result.

Continuing the conclusions about trading, we can highlight its pros and cons. Among the pros are:

• The opportunity to earn on the growth and fall of cryptocurrency rates using various strategies and tools.
• Independence from geography, time and political factors. The cryptocurrency market operates around the clock and is accessible from anywhere in the world.
• Large selection of cryptocurrencies and trading platforms, allowing you to diversify your portfolio and reduce risks.
• The high volatility of cryptocurrencies, which creates many trading opportunities and the potential for large profits.

The cons include:

• High level of risk and uncertainty. The cryptocurrency market is subject to strong fluctuations, speculation and manipulation, which can lead to large losses.
• The need to constantly monitor the market and adapt to its changes. The trader must be aware of all the news, technical indicators and signals that may affect the prices of cryptocurrencies.
• Complexity of taxation and regulation. Different countries have different rules and laws regarding cryptocurrencies and trading. The trader must be aware of them and comply with them in order to avoid problems with the tax authorities or law enforcement agencies.

Thus, cryptocurrency trading is a complex and risky activity that requires high qualifications, discipline and self-control from the trader. With the right approach, trading can be an interesting and profitable activity.

This information does not constitute individual investment advice and may not reflect your investment objectives, expectations and acceptable risks. ATAIX Eurasia is not responsible for possible losses in case of making transactions or investing in the financial instruments mentioned in this information, and does not recommend using it as the only source when making an investment decision