Here’s a quick tutorial on how to trade cryptocurrencies for beginners.
How to read and analyze a trading chart, candles and simple technical analysis are covered in this tutorial.
Firstly and importantly, you need to get set up on a cryptocurrency trading brokerage. There are a lot of them like Coinbase or Binance. It doesn’t matter where you’d like to set up, this tutorial will still be applicable to everyone because the trading platform is pretty much the same thing across these different brokerage platforms.
Once you’ve signed up and logged in, click on spot trading. When the next page pops up you will see the different timeframes. The one day timeframe basically means that each one of the little candles showing on the screen represents one day. And if you set it to the four hour timeframe, then each of these little candles will represent four hours.
The next thing that you’re going to notice is the order book, you don’t need to pay attention too much to the order book, especially if you’re just starting off. But basically what the order book means is, the red is for sell and the green is for buy. So this basically means that a trader is going to buy Bitcoin at a price, and they’re going to buy an amount of Bitcoin at a specific price.
How do you actually read a chart?
Here are some basics on technical analysis that can help you determine the direction of a trend. When you click on the indicators, type in moving average, then click on moving average when it pops up. Do this two times so that you will have two moving averages. Set them to be a fast and a slow. The fast moving average having the smaller number of 21 And then the slow moving average 100. Also set the colors differently so that it will be easy to differentiate. Having two moving averages, the fast one, is going to be closer to the closing price while the slow moving average is going to be smoother. Basically, a simple way to determine the trend is when these two moving averages cross. If the fast one is above the slow one, then it is in an upward trend. And if the fast one comes below the slow one, then it is in a downward trend. So this is an easy way that you can determine the market bias.
One other indicator is an RSI and this can basically tell you when a cryptocurrency is overbought or oversold. There’s a scale from zero at the bottom to hundred at the top. If the price of a coin crosses above the 80 line, then it’s considered overbought, which means that price is likely to fall down. On the other hand, of it’s down below, then it’s oversold, which means you should likely be looking for buying opportunities. You can use these two in conjunction to get good entries into the market.
How do you place order?
Now, as far as placing your order is concerned, here are a couple of ways that you can do it. They are market order and limit order.
A market order basically means that you’re just going to get in the market right away. So simply put, you want to buy a thousand USD worth of Bitcoin and you’ll just get in at whatever the best price is right there.
Now, the other way, which is more popular is to actually do a limit order. And essentially what a limit order is, you can set whatever price that you’d like to get in at. So if the price is currently 39,660, you can set your limit order at 39,500, place the amount of BTC that you’d like to buy at this point. And immediately the price comes down to 39,500, your order will automatically enter.
So these are the two different types of market orders here.
What is a cryptocurrency pair?
BTC/USDT. USDT is what’s called tether, It’s tied basically one-to-one to the US dollar and it grows with the value of dollar. So the first one in the pair is Bitcoin and the second is US dollar. Basically when you are buying BTC/USDT, it means that Bitcoin is going to go up in relative price to the US dollar. If you were selling it, then you would think that USDT is going to become more valuable in comparison to Bitcoin.