How to Trade Crypto: Everything to Know

By  Beluga Research October 7, 2023

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  • Trading crypto involves choosing a reliable exchange, creating an account, conducting research and developing a trading strategy, among other steps
  • Cryptocurrencies are highly volatile, with prices that can fluctuate significantly in a short period, and this volatility can present both opportunities and risks for traders
  • Cryptocurrency trading offers advantages such as the potential for high returns, accessibility, liquidity, diversification and decentralization
  • Disadvantages of trading crypto include volatility, lack of regulation, security risks, technical complexity and market manipulation


Trading crypto involves choosing a reliable exchange, creating an account, conducting research and developing a trading strategy, among other steps. It is also important for traders to analyze both fundamental and technical aspects of cryptocurrencies, implement risk management strategies and stay updated on market news.

One key feature of cryptocurrencies is their decentralization. They are not controlled by any central authority, like a government or financial institution. This eliminates intermediaries, reduces fees and gives individuals more control over funds. However, it is important to remember that trading cryptocurrencies carries risks, and it is essential for traders to do thorough research, practice responsible risk management and start with an amount they can afford to lose.

A Brief History

Cryptocurrency originated in 2009 with the introduction of bitcoin, the first decentralized cryptocurrency, by an individual or group using the pseudonym "Satoshi Nakamoto." Bitcoin's white paper, Bitcoin: A Peer-to-Peer Electronic Cash System, outlined the principles and mechanisms behind this innovative digital currency.

Bitcoin's launch marked the beginning of a new era in finance and technology. The underlying technology, the "blockchain," gained recognition for the potential to revolutionize industries beyond finance. Following bitcoin, numerous other cryptocurrencies, known as "altcoins," were introduced, each with unique features and use cases.

How to Trade Crypto: Everything to Know

  • Understanding Cryptocurrency Exchanges - To trade crypto, it is important for traders to choose a reliable cryptocurrency exchange that facilitates buying, selling and trading. Traders should consider factors like security measures, user interface, available trading pairs, liquidity and fees.
  • Creating an Account - Traders must create an account on the chosen exchange by providing an email address, creating a strong password and completing any necessary verification processes, such as "know your customer" (KYC) requirements.
  • Choosing a Wallet - To securely store cryptocurrencies, traders should use a digital wallet. There are two main types: Hot wallets, which are connected to the internet for frequent trading and cold wallets, which are offline for long-term storage. Traders should consider the pros and cons of each type and choose accordingly.
  • Conducting Research - Before trading, it is crucial for traders to thoroughly research the cryptocurrencies in which they are interested, evaluating factors like technology, team, use case, market demand and competition. Traders should also familiarize themselves with fundamental and technical analysis techniques.
  • Developing a Trading Strategy - Traders must also define personal risk tolerance, investment goals and preferred trading style. Common strategies include day trading, swing trading and long-term investing. Further, setting stop-loss and take-profit orders is important to manage losses and secure profits.
  • Fundamental and Technical Analysis - It is important for traders to analyze both fundamental and technical aspects of cryptocurrencies. Fundamental analysis evaluates underlying value, such as technology and adoption potential, while technical analysis focuses on price patterns and indicators for entry and exit points.
  • Risk Management - Traders should also implement risk management strategies to protect investments. These steps can include setting sensible risk-reward ratios, diversifying portfolios and avoiding investing more than they can afford to lose. Tools like stop-loss orders and trailing stops are helpful for risk management.
  • Keeping Up with Market News - Traders should stay updated on the latest news and developments in the cryptocurrency market. News and events can significantly impact prices, so traders should follow reputable sources, join communities and consider subscribing to newsletters or following influential figures.

Getting Started

To start trading cryptocurrencies, several fundamental steps are necessary. First, the trader must choose a reliable cryptocurrency exchange, which facilitates buying, selling and exchanging cryptocurrencies. The trader should consider factors like security, reputation, available trading pairs, fees and user experience when selecting an exchange.

After choosing an exchange, the trader must create an associated account. This involves providing personal information, completing verification procedures and setting up two-factor authentication (2FA) for security. Some exchanges may require linking a bank account or depositing funds before trading.

Once a user has an account, it is important to familiarize themself with different types of trading orders. Common types include "market orders," "limit orders" and "stop orders." Market orders allow buying or selling at the current market price, while limit orders let traders set a specific price for buying or selling. Stop orders trigger market orders at a specified trigger price, often used for managing losses.

Before live trading, a trader may consider practicing with a demo account or starting with small investments. This will help the trader to understand the trading platform, test strategies and gain confidence. The trader should also establish a clear trading plan with goals, risk tolerance and preferred strategies.

Unique Aspects

Cryptocurrency trading has unique aspects compared to traditional trading. One difference is that the cryptocurrency market operates twenty-four hours per day, seven days per week, unlike stock exchanges with specific trading hours. This constant availability offers flexibility but requires careful monitoring and risk management due to rapid market changes.

Cryptocurrencies are highly volatile, with larger price fluctuations compared to traditional assets. While volatility can create profitable opportunities, it also increases the risk of significant losses. Traders should use risk management strategies like setting stop-loss orders and diversifying portfolios to mitigate this risk.

The cryptocurrency market is influenced by news events, regulations and technological advancements. A single internet post or announcement can cause significant price movements. Thus it is crucial for traders to stay updated on the latest news and developments through social media, cryptocurrency news websites and reputable forums.

Cryptocurrency trading offers a wide range of trading pairs beyond traditional fiat currencies. Many exchanges provide altcoin trading pairs, allowing portfolio diversification and potential profits from promising projects. However, research and due diligence are essential before investing in lesser-known cryptocurrencies due to higher risks.


  • Potential for High Returns - There is a chance for significant profits in cryptocurrency trading due to the volatile nature of digital assets. Price fluctuations in the crypto market can be substantial, allowing traders to capitalize on these movements and generate substantial returns.
  • Accessibility - Trading cryptocurrencies is relatively accessible to anyone with an internet connection. Unlike traditional financial markets, which have high barriers to entry, cryptocurrency exchanges are open to individuals worldwide. This inclusivity allows people to engage in trading and benefit from the potential gains offered by the crypto market.
  • Liquidity - The cryptocurrency market operates twenty-four hours per day, seven days per week, providing constant liquidity. Traders can buy or sell digital assets at any time, regardless of location or time zone. Swift entry and exit contribute to the efficiency and convenience of cryptocurrency trading.
  • Diversification - Individuals can diversify investment portfolios beyond stocks and bonds with cryptocurrency trading. Including cryptocurrencies in an investment strategy can reduce risk by spreading investments across different asset classes, mitigating the impact of a single market downturn.
  • Decentralization - Cryptocurrencies operate on decentralized blockchain networks, free from central authorities. This provides traders with financial autonomy, lower transaction costs and faster settlement times.


  • Volatility - Cryptocurrencies are known for price volatility, which can lead to substantial losses if not managed properly. Therefore, traders must be prepared for the risks associated with market conditions.
  • Lack of Regulation - The cryptocurrency market lacks comprehensive regulation in many jurisdictions. This can create uncertainty and expose traders to potential risks such as market manipulation, fraud and security breaches. Caution and thorough research are crucial before engaging in cryptocurrency trading.
  • Security Risks - While blockchain technology provides security measures, traders must take additional precautions to protect digital assets, as cryptocurrency exchanges and wallets can be vulnerable to hacking attempts. Traders should implement strong security practices to safeguard funds.
  • Technical Complexity - Cryptocurrency trading involves technical complexity. Traders need to understand concepts like "blockchain technology," "wallet management" and "trading platforms." Market analysis and chart reading skills are also essential for making informed trading decisions. In other words, the learning curve can be steep for newcomers to the crypto space.
  • Market Manipulation - The small market capitalization of cryptocurrencies makes them susceptible to market manipulation. Traders must be aware of potential price manipulation schemes, such as pump-and-dump schemes. Staying informed and conducting thorough research can help traders avoid such practices.