Beginner’s Crash Course To Cracking the Crypto Mystery

In trading crypto as a beginner, you only need three things: a well-documented goal, passion to learn, and a secret ingredient.

I’m one of the growing numbers of people interested to learn more about cryptocurrency trading and its opportunities to give people high returns on capital.

But, I’m also aware of the difficulties down the road.

There is a lot of social media hype about crypto trading, with users parading how crypto made them “rich overnight” and…that sounded a little scammy to me.

So I researched some more until I got to some serious traders who explained how to make money with crypto in a level-headed way.

The main point I took from them was how crypto trading is not for the faint of heart nor the lazy looking for a quick buck without any effort whatsoever.

Instead, making money from crypto trading was for people with the relentless drive to learn and those who keep a strong grip on their emotions when things go crazy good or crazy bad.

I’ve always carried that with me during my beginner’s journey. It wasn’t perfect and I’ve lost money along the way, but all that gave me a valuable set of lessons learned that I’d like to share with people starting their crypto trading journey.

Here is the detailed breakdown of every single thing I did to cracking the crypto mystery:

1. Know common beginner trader’s mistakes

Photo by Alex Palmer on Unsplash

“A smart man learns from his mistakes. A wise one learns from the mistakes of others.”

Since I was entering unfamiliar territory, I wanted to know what to look out for. I’ve probably read about ten articles from different sources and all of them tend to repeat some common mistakes, sprinkled with a few unique points.

The highlights:

• Not knowing how to control their emotions (because trading is more than just a game of numbers)
• Not establishing a clear goal with a detailed plan documented in a journal
• Using advanced trading strategies such as “margin trading” in the hopes of gaining 10x more money without having full knowledge
• Making trade decisions based on what random people on social media are saying (this includes falling for scams)
• Only considering trade gains as “profit” without checking the other fees involved in their profit calculation
• Being blindly optimistic — anticipating the potential gains but not preparing for negative outcomes and how to bounce back

But all mistakes really boil down to just TWO things:

1. Not having self-discipline
2. Being a lazy researcher. Or not doing any research at all.

2. Write down goals and keep a journal

When trading or doing anything else that’s worthwhile, you need to keep reminding yourself of the reason WHY you’re doing it in the first place.

For me, I decided to trade because I didn’t like the feeling of not maximizing my earning abilities while I was still young. So, my goal was to gain at least a thousand euros worth of profit during the first two years of trading.

That’s written clearly in my trading journal’s front page (I prefer pen-and-paper style). In that same journal, I keep a record of every single trade I make, just so I’ll have an idea of what exactly it is that I’m doing.

Of course, my first few trades were absolutely whacked because I didn’t know all the things I should be looking for. But, that knowledge gap directed me to do even more research.

In your trading journal, you should record these things:

• Date and time of your trade (entry and exit)
• Market conditions
• Crypto coins
• Quantity
• Price (entry and exit)
• Stop Loss
• Strategy and reason(s) why you chose to do that
• Risk management
• Outcome of your trade (Profit or Loss?)
• Other notes

Yeah, it’s a LOT. But this is especially helpful if you wanna have actual data to spot where you went wrong and where you got it right so you can do better in the future and hopefully stop losing money so often.

I definitely struggled with consistently recording and I admit there were some trades too shameful that I purposely left out (don’t do this).

I finally stopped being that kind of undisciplined trader, choosing to genuinely learn from my mistakes. All of it.

And many pages later, I’ve finally seen some improvements in my trades.

3. Choose a reputable exchange that fits

An exchange is where the actual trading happens. There are many good ones out there but it’s best to stick to one unless you’re confident enough in your skills to do arbitrage trading.

There’s a lot of factors to consider when choosing an exchange, such as:

• Good reputation
• Low fees
• Beginner-friendly interface
• Security features
• Popularity/number of users
• Available customer service team (beginners will have tons of questions!!)

At the time, I highly valued a beginner-friendly interface to lessen my difficulty in crypto trading.

In the same way, you gotta figure out what’s most important to you and how it can help you learn and earn better.

With that, the first exchange I used was BitPanda. You can buy cryptocurrencies with fiat money, which was what I did as a complete beginner.

But after my first three months of trading (losing money most of the time), I decided the fees involved per trade plus withdrawals made my losses even more painful.

So, I eventually transferred to Binance for their super low fees: 0.1% trading fee that can go even lower if you’re using their coin called BNB. They also have more crypto coin pairs available, so that’s definitely a plus.

Note that I’m not saying one exchange is better than the other. Rather, you should choose an exchange based on what works best for you.

4. Load up on coin knowledge

It’s important to know that crypto coins are more than just Bitcoin.

There are hundreds, if not thousands, of crypto coins available for trading, but not everything is worth your attention and money (those kinds of coins are called “shitcoins,” BTW).

Coins are categorized according to characteristic:

• Bitcoin — The trailblazer in the crypto scene, runs on the blockchain, can be used for buying and selling goods and services through a peer-to-peer network (i.e. no third party)
• Altcoins — “Alternatives to Bitcoin” because of some shared characteristics. This is further split into many categories, such as stablecoin and other mining-based cryptocurrencies.
  Other crypto coins labelled as altcoins include USDT, Civic, Monero, Litecoin, etc.
• Tokens — These unique types come from decentralized apps (dApps) and are used for executing actions on those platforms.
  One very popular example is Ethereum, which is not actually a coin, but a platform for developers to create dApps that are free from downtime and fraud and runs these instructions using Ethereum’s token, Ether.

Before choosing a coin to trade with, you have to know a few important basics:

• Its purpose — What is it used for and are there a lot of users which reflect in its high liquidity rate in the market?
• Development team — Who are the people involved? Any reputable investors involved? What are its latest activities? (I recently started using a cryptocurrency events calendar to help me keep track.)
• Market capitalization — How much is a crypto coin worth and what do investors think of this?

Digging some info about coins you’re interested in can help you make smarter trades in the long run.

It’s fine to trade whatever’s currently hot on the market as a beginner (it’s natural) but you could start maximizing your trades by researching a lot during your beginner trading months.

5. Use different wallets

This is one of the must-haves you need to start trading. With fiat money, you store it in a physical wallet or at a bank or some sort of storage. But storing crypto coins works slightly differently.

The important thing to remember is that a cryptocurrency wallet is NOT where you store your cryptocurrencies. Instead, it is where you store 2 important things:

• Private key that only you can see and which you use to view and send your crypto coins
• Public address which is visible to others so they can send you their crypto coins

Our crypto coins aren’t stored anywhere, but instead every transaction we make using those coins will be recorded on a public ledger, like the blockchain.

So, if somebody sends you crypto coins, you can only access it if your private key matches the public address that somebody sent crypto coins to.

To ensure security, there are various types of wallets serving a different purpose:

• Software
  - Desktop: You download a wallet and install it on your computer. Make sure to update your security features regularly because hackers and viruses can eat up your crypto money.
  -Mobile: These are wallet apps you can download. It’s good to keep these for daily, common transactions as these usually carry a limited memory space.
  -Online cloud: Your wallet is stored here which, unlike your desktop, can be accessed anywhere. But once this third-party online wallet gets compromised, your crypto can get stolen.
• Hardware — This refers to any tangible, password-protected device (often looks like a flash drive or a portable phone charger) that you can just plug into any computer if you wanna make a transaction. When it’s not plugged in, it stores your crypto coins offline.
• Paper — Literally a piece of paper that carries a QR code that people can scan to get your public address. You can also have your private keys’ QR code printed on a paper wallet if you want and can ensure that it won’t get lost or seen by others.

You can hold multiple wallets at once for the reasons that not all wallets carry all types of cryptocurrencies and you may want to secure different amounts of crypto coins for different purposes.

It’s similar to how you would keep a savings bank account and another bank account for easy access to your disposable income.

6. Get smarter with a little help

There’s only so much money that can be lost to honest mistakes. At multiple points I was tempted to quit, being sleep-deprived and admittedly stressed and overwhelmed from everything I had to do.

But I still hadn’t reached my goal of at least a thousand euros in 2 years.

So, I decided that there had to be some other way to go about crypto trading without feeling like I had to stop everything else in my life and this led me to look for automated trading bots.

Automated trading bots come with strategies ingrained in the system, made by either purely AI algorithms or with experienced human traders or a mix of both, with the goal of getting the right trades (profitable buy or sell) at the right time (especially in a volatile market like the one cryptocurrency has).

In the many YouTube videos on crypto that I’ve watched, I’ve seen multiple eToro ads.

I thought it was really clever to just copy trades from human experts so I tried it out for a couple of months to see whether I liked it or not.

But in the end, I decided I wanted something that’s made solely for crypto trading, so I tried automated trading bots.

There are lots of popular ones out there but the ones I’ve tried are bots I’ve taken from some crypto trading groups I’m a part of.

I tried Nexfolio, Napbots, and ProfitFarmers which were all partnered with Binance, the exchange I’m currently using.

• NexFolio — Charged €80 per month, but I opted to try it out for free first.

Its user interface was pleasant-looking but being my first time using a crypto trading bot, I had to know what each feature meant and how it could help me make big profits with less effort.

This is where the friction starts, where I tried to check for the FAQs and some form of learning library…but I found none. It was either an incomplete part of their website or there was a glitch, but every time I check it it’s still not showing up.

I figured that if I can’t learn the specific details about its features, it’s probably not safe for me to get the paid plan if I don’t understand all of it.

• Napbots — This time I made sure to check if they had a functioning FAQ section first before I used it, which they did.

Their monthly Premium plan is €99, but the first three months for the other plans were much cheaper. But because I wanted to maximize my profits, I decided to shell out €99 for their premium plan that gave me more options to do with my trading.

Overall it was good but not great since some trades turned out to make me continuously lose money.

• ProfitFarmers — Lets the users trade in just 3 simple steps where they give users seed signals to copy for their trades and all the user has to do is input the quantity to set the trade, all for less than $100 a month.

When I tried it out, I was able to see how it semi-automated my trading orders while giving me all the information I need in a neat signal showing suggestions for the buy prices (entry zone), sell prices (4 targets), stop-loss, and leverage multiplier (usually set at 1x).

The ProfitFarmers system takes care of the buying, selling, stop-loss, and other factors in setting trades automatically, but the user gets to choose the signals they want to follow and enter how much money they would like to use.

I really liked how this gave me the freedom to pick and choose my battles.

As a beginner and first-timer in using an automated crypto trading bot, that was good for me. Eventually, I found out that there’s also an advanced option where I could adjust those suggested prices according to my preferences.

Simplifying the pre-trade preparation and the actual execution of it and still leading to reasonably big profits was just what I wanted (of course!).

There are numerous automated trading bots out there but as beginners, you should look for the one with a good balance of working strategies and an easy-to-understand interface.

Whilst ProfitFarmers isn’t exactly a bot (as you need to choose the signals to follow) it does remove a lot of the hassle from trading and, more importantly, suggests really good trades. I have to say it blew the other two options out of the water.

You can learn crypto trading the hard way like I initially did by doing everything manually, but if you want a proper trading-work-life balance, definitely get an automated trading tool.

Conclusion

Photo by Olav Ahrens Røtne on Unsplash

With crypto trading, you just really need to:

• Recognize common mistakes and how to avoid them
• Know what works and what doesn’t base on data
• Choose an exchange that caters to your needs
• Research crypto coins before you throw money into them
• Protect your crypto assets
• Automate your trading using tools

Venturing into anything new comes with its own set of challenges. But with research, grit, and a little help, you can definitely go a long way.

I’m still trading (using the ProfitFarmers tool actually) and really enjoying it, but I wish I had all of this knowledge at the start, so listen up and take notes. See you on the trading battlefield!

https://twitter.com/thecapital_io