Starting from Scratch: A Complete Manual for Crypto Assets Trading

Core Points

• Cryptocurrency trading refers to the activity of achieving profit goals by buying and selling digital assets on trading platforms.
• Before starting trading, you need to choose a reliable platform, complete registration, and understand basic concepts such as trading pairs and order types.
• Common trading methods include day trading, swing trading, scalping, and long-term holding (HODL)
• Trading decisions rely on technical analysis and fundamental analysis as the two main tools, while risk management and asset diversification are the cornerstones of long-term success.

Introduction

Cryptocurrency assets have attracted millions of participants worldwide—both individual investors and professional institutions. However, complex market terminology, a myriad of trading methods, and significant price fluctuations often deter beginners. If you are planning your first cryptocurrency trade or want to gain a deeper understanding of this field, this guide will unveil the mysteries of cryptocurrency trading, covering comprehensive content from account setup, key concepts, mainstream strategies to fund protection.

Understanding the Nature of Cryptocurrency Trading

Cryptocurrency trading refers to buying and selling digital assets on cryptocurrency exchanges, with the aim of making profits through price differences. Unlike traditional financial markets, the crypto market operates without time restrictions, allowing for trading year-round, which provides participants with greater flexibility but also comes with higher price volatility risks.

Among the thousands of cryptocurrencies worldwide, the most well-known are Bitcoin and Ethereum – representing two distinct blockchain networks. Bitcoin (BTC) and Ethereum (ETH) are the mediums of exchange on these two chains.

Trading Mechanism Revealed

Market participants can establish long positions (i.e., buying assets in anticipation of price increases) or short positions (i.e., selling assets in anticipation of price decreases). Some investors choose to hold assets for the long term, while others make quick trades—this depends on their individual trading strategy styles and risk tolerance.

Transactions can occur in fiat trading pairs (using traditional currencies like USD, EUR, etc.) or crypto trading pairs (between two digital assets). The specific operational process will vary depending on the selected asset type and trading platform.

Preparation Work for Trading Launch

Step 1: Master the Essential Knowledge

Before entering the market with real money, it is crucial to have a solid theoretical knowledge base. It is recommended to learn the basics of trading through platform educational resources, industry training courses, and other channels.

Step 2: Select Trading Platform

When choosing a platform, attention should be paid to the following factors: high institutional credibility, strict security measures, and professional customer support. Beginners are best to start with centralized exchanges and, after accumulating experience, try the complexities of decentralized exchanges (DEX).

Step 3: Account Creation and Verification

After selecting the platform, you need to create an account by following these steps: enter your email address, set a password, and agree to the terms of use. Most platforms require identity verification (KYC verification) for compliance and risk management, which involves uploading relevant documents such as identification and address proof to complete this process.

Trading Practical Operation Guide

Step 1: Account Recharge

After the account is set up, transfer funds to the account. Mainstream platforms generally accept bank transfers, third-party payments, and other deposit channels. Depending on the platform's policy, users in certain regions can also purchase crypto assets directly with bank cards.

If you already hold cryptocurrency, you can transfer it to your trading account. Please ensure that the transfer address is accurate: Bitcoin must be sent to a Bitcoin address, and Ethereum must be sent to an Ethereum address; otherwise, the funds may be permanently lost.

Step 2: Identify the Transaction Counterparty

Cryptocurrencies are traded in pairs (e.g., BTC/USDT, ETH/BTC). A trading pair represents two interchangeable assets. For example, in the BTC/USDT pair, you exchange Bitcoin for Tether, a stablecoin pegged to the US dollar.

Examples of digital asset pairs with traditional currencies include BTC/EUR, where currently 1 Bitcoin is worth approximately 92,175 euros, and this figure is visually displayed on the chart. In other words, spending 92,175 euros will get you 1 BTC, while spending half of that would give you 0.5 BTC. It is worth mentioning that you do not need to buy whole coins; you can purchase a portion of Bitcoin with just 5 euros.

The pairing between digital assets (such as ETH/BTC) indicates a direct exchange between two cryptocurrencies. According to the latest data, 1 Ethereum is equivalent to 0.02285 Bitcoin.

Session Three: Study the Order Book

The order book is a real-time dynamic form that lists all pending buy and sell orders. It shows the demand from buyers and the supply from sellers at different price levels.

Buy orders (buy orders) are submitted by traders wishing to purchase assets, arranged from high to low price. Sell orders (sell orders) are submitted by traders preparing to sell assets, arranged from low to high price.

Segment Four: Choose Order Mode

Market Order

This is the most direct order method - traders execute transactions immediately at the current market's best price. This is the quickest means of buying and selling, eliminating waiting time.

Assuming the current highest buy price for Bitcoin is $100,000 and the lowest sell price is $100,100. The buyer's order will be executed at $100,100, which is the lowest selling price; the seller's order will be executed at $100,000, which is the highest buying price.

Limit Order

With limit orders, traders can buy and sell assets at a specified price or a more favorable price. This method is relatively slower but gives you control over the transaction price.

For example, Bitcoin is currently quoted at $100,000, but you expect to buy it at $98,000 or lower. After setting a limit order, if Bitcoin drops to $98,000 or lower, the limit order will be triggered and executed. Conversely, if the price never reaches the target level, the order will remain in a pending state.

Establish Your Own Trading Plan

The key to successful trading lies in developing a trading system that aligns with one's own characteristics. Every trader is unique, and simply copying others' methods often leads to contrary results. Gradually perfecting one's own methodology and accumulating experience are essential to achieving long-term stable profit goals.

Regardless of the strategy chosen, risk management and experience summary cannot be ignored. Establishing a trading log (recording the decision logic and execution results of each trade) is a powerful tool for optimizing trading ability.

Overview of Mainstream Trading Strategies

There are many trading methods, each with its advantages and disadvantages. Below are some of the most popular ones.

day trading

Day trading refers to the strategy of completing buying and selling within the same trading day. Traders of this type often use technical analysis tools to select trading varieties. Although day trading has the potential for profit, it is highly difficult and not suitable for everyone. Compared to swing trading and long-term holding, day trading consumes more energy and involves greater stress, therefore it is not suitable for beginners entering the market to adopt this method.

swing trading

Swing trading also aims to profit from market trends, but with a longer time span—typically holding positions for several days to several months. Compared to day trading, swing trading is more beginner-friendly because it does not require monitoring the market all day long, and the pressure is relatively manageable.

ultra-short-term trading

Among all strategies, ultra-short-term trading has the shortest holding time. Ultra-short-term traders attempt to capture small price fluctuations, often completing entries and exits within minutes or even seconds. As a variant of day trading, ultra-short-term trading is also not recommended for beginners.

Short-term traders often rely on technical analysis to predict price movements, focusing on bid-ask spreads and other micro-structure of the market to find arbitrage opportunities. Due to the short trading cycles and thin profit margins per trade, traders typically need large positions or frequent trades to accumulate significant profits.

Long-term holding strategy

Although this is not strictly considered an active trading method, long-term investors (commonly referred to in the industry as “HODLers”) focus on the growth potential of the entire cryptocurrency market. They buy and hold for months or even years, one of the easiest ways to participate. This strategy is best suited for those who firmly believe in the long-term value of certain assets and can withstand short-term price fluctuations. While it requires patience to wait, the returns can be substantial in the long run, especially for Bitcoin holders.

Trading Decision Tools

Introduction to Technical Analysis (TA)

Technical analysis is a method of predicting possible price movements by interpreting price charts, identifying patterns, and using various indicators.

K-line chart

The candlestick chart is a graphical representation of the price changes of an asset over a certain period. The chart consists of multiple “candles,” each representing a unit of time. When selecting a 1-hour period, each candle represents 60 minutes; when selecting a daily period, each represents a full day.

Each candlestick contains four key points: open price, high price, low price, and close price (collectively referred to as OHLC). The open price and close price are the first and last transaction prices of the period, while the low price and high price are the minimum and maximum transaction prices during that period.

Support and Resistance

Support levels are price levels that are difficult to break below—this is where a large number of buyers come in, pushing the price upwards. Resistance levels are upper boundaries that are difficult for the price to break through—this is where a large number of sellers come in, driving the price down.

Technical Indicator Tools

Traders use technical indicators to analyze asset price trajectories. These tools help identify price patterns and determine the best entry and exit points. Common technical indicators include trend lines, moving averages, Bollinger Bands, Ichimoku Cloud, and Fibonacci retracement levels, which assist in confirming potential support and resistance levels.

Fundamental Analysis (FA) Methodology

Fundamental analysis is a method for assessing the intrinsic value of an asset, widely used in the fields of investment and trading. In the cryptocurrency sector, it involves a deep study of the project's technical architecture, the capabilities of the development team, the application prospects, and overall feasibility.

Specifically, fundamental analysis examines the underlying technology, use cases, team background, token economics design, and market adoption level of crypto assets. In the cryptocurrency trading environment, fundamental analysis will also take into account the following factors:

• Blockchain data metrics (such as active addresses, transaction volume, etc.)
• Progress and Major Announcements of the Project Roadmap
• Community Activity and Developer Engagement

Risk Control System

Risk management involves identifying financial risks associated with investments and minimizing them. Here are several commonly used methods.

Method 1: Stop-Loss Mechanism

Do not invest more than you can afford to lose. Use advanced order features to lock in profits or prevent losses. Stop-loss orders can automatically close positions when trades go against you, limiting the scale of losses. Take-profit orders automatically lock in profits when trades are going well.

Method 2: Exit Planning

Prepare for the worst-case scenario in advance. Developing a clear exit plan is another important aspect of risk management. In the excitement of a bull market, traders can easily lose their rationality, but a pre-planned exit strategy can help you realize profits in a timely manner and prevent significant losses. You can set limit orders to take profits or establish a maximum tolerable loss threshold. The key is not only to make a plan but also to strictly execute it. Plan your trades before executing them.

Method 3: Portfolio Diversification

Diversification is the fundamental means of risk reduction. Traders can hold a variety of assets, reasonably allocate the size of each position, and regularly adjust their portfolio to avoid excessive exposure to a single asset. This can significantly reduce the probability of incurring substantial losses.

Method Four: Hedging Operation

Although it requires some experience accumulation, hedging is an optional protective strategy: simultaneously establishing a reverse position in related assets, expecting the price trends of both to move in opposite directions. This approach can offset potential losses.

For example, a trader holding a Bitcoin position worth $10,000 could purchase a put option contract that allows them to sell at $100,000 in two weeks. If the price of Bitcoin drops to $80,000, you can exercise the option to sell at $100,000, significantly reducing your losses. If the price does not drop, you only lose the option premium, but you can still benefit from the gains of your long position.

Summary and Outlook

The crypto market is ever-changing, with volatility that is rare in traditional markets. However, continuous learning can gradually make you a better trader. The core principle is to always prioritize risk management. Keeping up with industry trends, continually honing trading skills, and adjusting strategies accordingly is the path to success.

Extended Reading

• Discussion on the Application of Swing Trading in Cryptocurrency
• Day Trading vs. Long-Term Holding: How to Choose the Right Approach for You
• Complete Guide for Beginners to K-Line Charts
• Detailed Explanation of the Five Major Exit Strategies for Traders

Disclaimer: This content is for educational purposes only. It should not be understood as financial advice, legal advice, or any specific product or service recommendation. Please consult relevant professionals on your own. The products mentioned may not be available in your region. This article is written by a third-party author, and their views are personal and do not represent the stance of any official agency. For more information, please refer to the full disclaimer. The value of digital assets is volatile, and the principal investment may increase or decrease, and it may also result in total loss. You bear full responsibility for your investment decisions. No platform shall be liable for your losses. This information is not financial, legal, or professional advice.