How to Trade Cryptocurrency: Ultimate Guide for Beginners

Published in

Game of Life

9 min readMay 6, 2021

The cryptocurrency market is an alluring concept with many hidden rocks. You can lose money while storing Bitcoin, buying and selling it on crypto exchanges, or just become a victim of a cyberattack on your crypto wallet.

How and where to start trading cryptocurrencies, how much money you need for crypto trading, how to avoid big losses, and develop trading skills — these are the most popular questions among crypto beginners. Welcome to the guide on cryptocurrency trading for beginners.

Digital money is gradually spreading around the world, thereby attracting new users. However, this concept can be complicated and daunting for many people, especially for beginners, and can cause a lot of questions. And the lack of answers can cause monetary losses or even the fear of starting it at all.

Trading is a rather risky way of investing, which requires a good base of knowledge and skills. Trading cryptocurrency is even riskier because of the extremely volatile nature of digital assets (Bitcoin is a great example there). It is a two-edged sword — high fluctuations in the value of digital money allow not only to quickly lose capital but also provide an opportunity to increase it.

We have to go back, Marty, and buy a lot of BTC.

To be successful on the crypto market, only having a theoretical understanding isn’t enough. Cryptocurrency trading is based on analysis — technical and fundamental.

The technical is about graphs and charts, learning trends, “up and down” history, market price, and everything in figures.

The fundamental analysis is related to diving into the available information about the market and monitoring the news.

Chapter 1. Social Trading on the Automatic Mode.

What Does Social Trading Mean?

Firstly, let’s have a look at the concept of social trading. Wikipedia gives the following definition:

“Social trading is a form of investing that allows investors to observe the trading behavior of their peers and expert traders… by looking at what other traders are doing and comparing and copying their techniques and strategies”.

To summarize, social trading is a way that allows people to make trades even without deep knowledge in this field by copying the financial transactions made by professional traders inside a trading platform.

In a word, you simply let experienced traders develop the trading strategy for you by directly copying the exact same steps they make.

Secondly, social trading allows people to learn faster and in a real-time and environment, work with other like-minded people for a mutual benefit. Beginners can see how experienced traders do business, examine their trading history, find out why they take certain actions and follow them using copy trading.

Note: Social trading, mirror trading, copy trading — most of the time it’s the same concept.

Why Social Trading Is a Good Option For Beginners?

This way of trading combines the practices of traditional trading with online communities and has many advantages for both novice and experienced traders.

Educational tool for those who are interested in studying the crypto market and learn how to trade on their own in a real time and environment.
The easiest entry to the global financial market — you don’t need to have much expertise, and you can see how professional traders do business, examine. Therefore, copy their steps on the cryptocurrency market.
Strong community — social trading networks/platforms build community with like-minded people that can share different insights on the market or strategies that can help you make investment decisions.
Time saver if you copy the trades automatically, in addition, you have more time for studying the market.

How to Use Social Trading?

Firstly, you need to choose the crypto social trading platform and tools that will help you while trading. Fortunately, the current financial market is rich in various tools and professional cryptocurrency trading platforms with a lot of useful features.

Such platforms provide an environment where beginners can trade online with the help of professional traders; they can interact with each other, exchange insights, and analyze the market.

You can check the article — Best Crypto Copy Trading Platforms for Beginners in 2021 — which gives detailed information about 10 cryptocurrency copy trading platforms for beginners.

Additionally, this material can be also useful for you. Maybe there you will find the one which best suits your needs.

To show you the way from social to traditional trading, we’ve decided to explain it on a practical basis. So, in this guide, we will pass the way from a beginner to a professional trader on the basis of cryptocurrency copy trading platform Coinmatics.

When I invested in my first $5 in Bitcoin, I was like…

Crypto Copy Trading with Coinmatics

Key facts about Coinmatics:

Launch date — 2018.
Platform for copying trades of successful traders, as well as an analytics tool.
Automatic and manual modes of trading.
For now, only Binance cryptocurrency exchange is available for copy trading.
Spot and Futures strategies are available for copying.

The main feature of Coinmatics is copy trading. The platform allows novice traders to copy crypto deals in automatic or manual mode, and traders can get additional income from their subscribers who decided to copy their strategies.

Generally, it can be a good and easy way to jump into the crypto world. This is the concept from social trading to traditional cryptocurrency trading:

create an account on the Coinmatics platform;
create an account on the Binance exchange and deposit it;
check and evaluate the trading strategies using credible statistical data;
start copy trading using automatic mode;
along with the copy trading, study the financial market and the principles of cryptocurrency trading;
switch to the manual mode of copy trading;
trade cryptocurrency in your own way;
become a successful trader and submit your own strategy on the platform.

According to the Base of Knowledge on Coinmatics, an investor is “a new trader who has little to no experience in crypto trading. He wants to copy trades from experts and earn money on that”.

For investors, there are 2 options available for copying the trades: automatic and manual modes of copy trading. It is recommended to start with the automatic mode by subscribing to a trader’s strategy.

How Does It Work?

When a trader makes a new deal on the exchange as a part of his strategy, the system automatically conducts the same transaction on the accounts of the subscribers.

What are your steps to start automatic trading on the platform?

Create your account on Coinmatics.
Connect your Binance exchange account by adding an API key.
Choose the best cryptocurrency strategy to follow by clicking on “Subscribe”.
Track your gains in the “Accounts” section.

Screenshot from Coinmatics Platform. — Crypto Copy Strategies on Coinmatics for copying

More detailed information on creating an account on the Coinmatics platform, adding an exchange account, and choosing a trading strategy can be found in the User Guide.

Tip: before subscribing to trading strategies, examine and evaluate them thoroughly — study the trading signals, total profit, risk level, and trading period. On Coinmatics we’ve found free trading strategies to follow.

Along with automated cryptocurrency trading, educate yourself in the crypto market. Be curious, check crypto exchanges, examine the orders that are copied in your account. Read the crypto news, market and financial analyses, watch vlogs of traders, check the channels of Bitcoin, Ethereum, and other crypto enthusiasts. The more you surround yourself with cryptocurrency sources of information, the easier and faster you will complete the “beginner” level. Educate yourself in cryptocurrency investments and continue learning day by day.

Chapter 2. Social Trading on the Manual Mode.

When you get basic knowledge of the cryptocurrency market, experience in exchanges and you feel that you are ready to trade on your own, then you can try a manual mode of copy trading.

The idea: you subscribe to the trader’s cryptocurrency Telegram signals, and then manually start trading by placing the market orders in your exchange account — most similar to traditional trading.

Trading cryptocurrency signals contain the following information: strategy name, currency pair, buy/sell status, % involved in trade, price, exchange.

*The example of Telegram signals on Coinmatics. At the moment of writing this article, there are only from the Binance cryptocurrency exchange.*

Tip: use manual mode with trading signals as a practice tool to become a professional trader, and also work a lot on your emotional intelligence.

Also, the platform offers analytics tools that can be useful for further monitoring the cryptocurrency market: Ticker Alerts, Crypto Arbitrage, Twitter Analytics Chart, Margin Positions Amount, Margin Positions Quantity, Fear and Greed Index, BTC Social Volume, and more. Moreover, analyze all the signals you get and what was the strategy behind them.

Chapter 3. Traditional Trading.

After you have got the necessary knowledge and skills, understand all risks, you can start trading cryptocurrency by yourself. Traditional trading is our last stop there, but cryptocurrency trading requires constant development on the financial market. There we’d like to share tips and tricks that we’ll help to develop yourself at this stage.

Common Tips

Study before investing. A good start is reading articles, reputable news, checking online forums, channels of crypto enthusiasts in social networks, blogs/vlogs about cryptocurrencies. It will help broaden your mind to learning and seeing the nature of the crypto market.
Invest only what you are willing to lose — a golden investment rule. The crypto market is extra volatile and risky: you can make a bundle or lose everything in a twinkle.

In finance, this is shown in the formula: Risk = Rewards — “relationship between the amount of return gained on an investment and the amount of risk undertaken in that investment”.

Focus on the long-term. Don’t be based on short-term gains, especially if you don’t have the necessary cryptocurrency trading skills. And again, the cryptocurrency market is extremely volatile and is still in its infancy stages of widespread adoption.
Make a well-built portfolio. A well-built and diversified portfolio is one of the most important steps in ensuring success. There is a great number of different coins in the crypto market. Just need to learn about them and find the coins with good fundamentals. You can check CoinMarketCap to view the list of coins with all necessary statistical information.
Choose reputable tools for your needs. When selecting the tools/platforms, you should focus on your needs and goals. And don’t forget about security! The internet is rich in horror stories of cryptocurrency scams and fraud! Check twice!

To make a long story short, every investment decision must be based on a cool mind, diligence, and patience. There is no “Get Easy Money” button and “Become Rich Quickly” scheme. Be brave and rational, work hard. And you’ll succeed, indeed.

Disclaimer: PLEASE NOTE THAT IT IS NOT AN INVESTMENT ADVICE. RESULTS/PROFIT MAY NOT BE TYPICAL AND MAY VARY FROM PERSON TO PERSON. MAKING MONEY ON BITCOIN AND OTHER CRYPTOCURRENCIES TAKES TIME, DEDICATION, AND HARD WORK. THERE ARE INHERENT RISKS INVOLVED WITH INVESTING IN THE CRYPTOCURRENCY MARKET, INCLUDING THE LOSS OF YOUR INVESTMENT. PAST PERFORMANCE IN THE FINANCIAL MARKET OF CRYPTOCURRENCIES IS NOT INDICATIVE OF FUTURE RESULTS/PROFIT. ANY INVESTMENT IS AT YOUR OWN RISK.