I. Basic knowledge that newbies in the crypto world must know!
More and more people are now paying attention to coin speculation, but few people really understand it. Newbies don't know where to start. Today, I'll share some basic knowledge about the crypto world with
newbies.
1. What is coin speculation?
In this article, we will first talk about coin speculation. In fact, coin speculation is similar to speculating in stocks, real estate, and foreign exchange, all of which involve buying at a low price and selling at a high price.
earning the price difference, thereby achieving profit.
For example, if you think the housing price is going to rise, you immediately buy a house, and when it rises to almost the same level, you sell it and make a big profit. The difference is that
coin speculation is speculating on digital currencies, with a more free trading mechanism (24 hours a day, uninterrupted trading) and greater profit potential (no price limits).
Making digital currencies an investment target with a return on investment far exceeding traditional stock markets, futures markets, funds, and real estate.
2. What is an exchange?
An exchange is a platform for trading digital currencies. The most commonly used ones are the three major exchanges: Binance, OKX, and Huobi.
There are also many other small exchanges, just like there are four major banks and various other banks.
Using a top-ranked exchange is very safe and you can trade with confidence. Some coins can only be purchased on specific exchanges.
3. What is USDT?
Exchanges are places used to trade digital currencies such as Bitcoin. Trading digital currencies requires an intermediary currency, also called a stablecoin, namely USDT.
This is also our most commonly used fiat currency.
USDT is called Tether, a virtual currency pegged to the fiat currency US dollar, which is stored in a foreign exchange reserve account.
A virtual currency backed by fiat currency. You can simply think of it as US dollars.
Tether (USDT) is a token Tether USD (hereinafter referred to as USDT) launched by Tether based on the stable value currency US dollar (USD),
1USDT=1 US dollar.
Exchanges themselves cannot directly sell or buy virtual currencies, nor can they sell you USDT. You and the exchange cannot buy it.
If you want to buy coins, you need to first buy USDT with RMB, and then exchange USDT for the digital currency you want to buy. If you want to sell coins,
you need to exchange your digital currency for USDT and then sell it, and exchange it for RMB. After you have USDT, you can exchange it on the exchange for
any digital currency. This is called coin-to-coin trading.
4. Basic terminology for playing coins
Position: Refers to the ratio of an investor's actual investment to the actual investment funds.
Full position: Buy virtual currency with all your funds.
Reduce position: Sell some virtual currency, but not all of it.
Heavy position: Compared to funds, the share of virtual currency is larger.
Light position: Compared to funds, the share of funds is larger.
Empty position: Sell all the virtual currency you hold and convert it all into funds.
Take profit: After gaining a certain profit, sell the virtual currency you hold to protect the profit.
Stop loss: After losing to a certain extent, sell the virtual currency you hold to prevent further losses.
Bull market: Prices continue to rise, and the outlook is optimistic.
Bear market: Prices continue to fall, and the outlook is bleak.
Long (go long): Buyers, who believe that the currency price will rise in the future, buy coins, and sell them at a high price after the currency price rises to lock in profits.
Short (go short): Sellers, who believe that the currency price will fall in the future, sell part of the coins they hold (or borrow coins from the trading platform).
Lock in profits after the currency price falls to a certain price level, while also avoiding risks.
Establish position: Buy virtual currency.
Add to position: Buy virtual currency in batches, such as: first buying 1 BTC, then buying another 1 BTC.
Rebound: When the currency price falls, the price rebounds and adjusts due to the rapid decline.
Consolidation (sideways): The price fluctuates little, and the currency price is stable.
Slow decline: The currency price slowly declines.
Plummet (waterfall): The currency price falls rapidly and significantly.
Cutting losses: After buying virtual currency, the currency price falls. To avoid further losses, selling the virtual currency at a loss.
Or after borrowing currency to short, the currency price rises, and buying virtual currency at a loss.
Being trapped: Expecting the currency price to rise, but the currency price falls after buying, or expecting the currency price to fall, but the currency price rises after selling.
Get out of trouble: After buying virtual currency, the currency price falls, causing temporary paper losses, but then the currency price rebounds, turning losses into profits.
Missing out: After selling virtual currency due to a bearish outlook, the currency price rises all the way, and failing to buy it in time results in not earning a profit.
Overbought: The currency price continues to rise to a certain level, and the buying power is basically exhausted, so the currency price is about to fall.
Bull trap: The currency price has been consolidating for a long time, and the possibility of a fall is high. Most shorts have already sold virtual currency. Suddenly, the short side pulls up the currency price.
Inducing the longs to believe that the currency price will rise and buy in, resulting in the shorts suppressing the currency price and trapping the longs.
Bear trap: After the longs buy virtual currency, they deliberately suppress the currency price, making the shorts think that the currency price will fall and sell, resulting in mistakenly entering the longs' trap.
5. What are mainstream digital currencies?
Mainstream coins are value coins. Bitcoin is the leader, and Ethereum is the second. Some people think that only these two are mainstream digital currencies.
Some people think that only the top ten market capitalization coins on exchanges are mainstream digital currencies, and some people think that only coins listed on mainstream exchanges are mainstream digital currencies.
Taking Feixiaohao as an example, we can see the market capitalization ranking of the relevant currencies. Mainstream coins rank high, for example, Bitcoin's market capitalization firmly occupies the first place.
Generally, coins with higher market capitalization rankings have high market recognition, good liquidity, and high investment value.
Conversely, coins with lower market capitalization rankings have low recognition, poor liquidity, and correspondingly higher investment risks. It is recommended that users buy with caution.
6. Risks of coin speculation
Perhaps the most pertinent advice on investing in cryptocurrency comes from Ethereum founder Vitalik Buterin.
That is, do not put any money into it that you cannot afford to lose. Remind all newbies again to act within their capabilities.
It is recommended not to borrow money, take out loans, mortgage assets, or use credit cards to participate in this type of investment, especially when trading contracts.
7. How to play contracts
Coin-to-coin trading is spot trading. To make money in rising or falling markets, you need to do contract trading.
Contract trading is the opposite of spot trading and is a type of futures trading, meaning that the underlying assets of these transactions are all standardized contracts.
You can pay a certain percentage of margin and borrow a portion of digital currency, choosing to go long if you are bullish on the market. |
You can also go short if you are bearish on the market, or trade in both directions, going long and short simultaneously to hedge risks.
Therefore, you can make money through contract trading regardless of whether the market is rising or falling, greatly improving capital utilization.
Here, the margin payment ratio corresponds to different leverage. For example, if you judge that BTC is bearish in the future and want to open a short order for 100 BTC.
You only need to pay a minimum margin of 1%, which is 1 BTC, and you can borrow 100 BTC, which is 100x leverage.
It's equivalent to using 1 BTC of funds to leverage the income of 100 BTC. After borrowing, you immediately sell and wait for the price to fall. If BTC falls from $35,000 to
$34,000, you immediately buy back 100 BTC and return it to the platform, and you will get (35000-34000) *100= $100,000 in profit.
If you don't use contract trading, you can't profit from this wave of decline. If you don't add 100x leverage, you can't get 100x the income.
This is a contract.
Newbies should not play contracts! Newbies should not play contracts! Newbies should not play contracts! Important things are said three times!
Contracts seem like the fastest way to get rich, but they are definitely not the closest way. The "fast" mentioned here
is more often fast to liquidation and bankruptcy, not fast to financial freedom.
8. Three essential elements for coin speculation
I. An Android phone. (Android is more convenient, and Apple is prone to certificate loss) An Android phone is also essential for playing projects.
II. Spare money. Money that you don't need urgently in the near future and that doesn't affect your quality of life.
III. Mentality. There are risks in coin speculation, and people who are anxious about gains and losses should not participate.
The crypto world is not just about making money by speculating on coins. There are so many roads to explore, and the return is always proportional to the investment.
I hope you and I can gain something in the crypto world.
II. Illustrated guide to basic crypto knowledge
The crypto world refers to the trading market and community in the digital currency field, the most famous of which is Bitcoin. For those who are new to the crypto world.
Understanding some basic knowledge is very important. This article will introduce some basic knowledge of the crypto world in the form of illustrations.
1. What is Bitcoin?
Bitcoin is a decentralized digital currency supported by the Bitcoin blockchain network. It is designed to not rely on any or financial institutions.
It has high security and anonymity.
2. What is blockchain?
Blockchain is the underlying technology for Bitcoin and other cryptocurrencies, a decentralized distributed ledger. It records all transaction information.
and ensures the security and accuracy of the data through encryption and consensus mechanisms.
3. What is an exchange?
An exchange is a platform for buying and selling digital currencies, allowing users to trade different digital currencies. You can buy or sell Bitcoin through an exchange
and other digital currencies.
4. What is a wallet?
A wallet is a tool used to store and manage digital currencies. It can be a software wallet, hardware wallet, or online wallet. Users can
use a wallet to send and receive digital currencies, and view balances and transaction records.
5. What is mining?
Mining is the process of verifying and processing Bitcoin transactions by solving complex mathematical problems. Miners maintain
the Bitcoin network and receive a certain amount of Bitcoin as a reward.
6. What is an ICO?
ICO (Initial Coin Offering) is a crowdfunding model where companies or projects issue new digital currencies to raise funds.
Investors can purchase these newly issued digital currencies and expect their value to rise in the future.
7. What is a whitepaper?
A whitepaper is a detailed project introduction and planning document, usually released by a digital currency project team.
It contains information such as the project's goals, technical architecture, and business model, helping investors understand the project's potential and feasibility.
8. What is market capitalization?
Market capitalization refers to the total market value of a digital currency, which is the current price of the digital currency multiplied by its total circulation.
Market capitalization can reflect the position and influence of a digital currency in the market.
I hope the above simple illustrations can help you quickly understand the basic introductory knowledge of the crypto world. Before entering the crypto world,
be sure to make thorough preparations and risk assessments, and invest cautiously.
The crypto world is a field full of opportunities and risks. Only by constantly learning and accumulating knowledge can you better participate in it.
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