I. Basic knowledge that newcomers in the cryptocurrency world must know!
Now there are more and more people paying attention to cryptocurrency trading, but very few truly understand it. Newcomers don't know where to start, so today we will share some basic knowledge about the cryptocurrency world.
We will share some basic learning about the cryptocurrency world with newcomers.
1. What is cryptocurrency trading?
In this article, we will first talk about cryptocurrency trading. In fact, cryptocurrency trading is similar to stock trading, real estate trading, and foreign exchange trading, which is all about buying low and selling high.
Profit is made by earning the price difference.
For example, if you think house prices will rise, you immediately buy a house, and when the prices have risen sufficiently, you sell it for a big profit. The difference is.
Trading coins involves digital currencies, a more flexible trading mechanism (24-hour continuous trading every day), and a larger profit space (no limit on price fluctuations).
Let digital currencies become investment targets with returns far exceeding traditional stock markets, futures markets, funds, real estate, etc.
2. What is an exchange?
An exchange is a platform for trading digital currencies. The most commonly used ones are the three major exchanges: bi an, okx, and 火bi.
There are many other small exchanges, just like there are four major banks and other various banks.
Using a top-ranking exchange has a high safety factor, so you can trade with confidence; some currencies can only be purchased at certain special exchanges.
3. What is USDT?
An exchange is a place for trading Bitcoin and other digital currencies. Trading digital currencies requires a type of intermediary currency, also called stable currency, namely USDT.
This is also the fiat currency we use most often.
USDT, called Tether, is a virtual currency that links cryptocurrency to fiat currency US dollars, stored in foreign exchange reserve accounts,
and supported by fiat currency. You can simply understand it as US dollars.
Tether (USDT) is a token based on the stable value currency dollar (USD) launched by Tether.
1 USDT = 1 dollar.
Exchanges themselves cannot directly sell or buy virtual currencies, nor can they sell you USDT. You cannot buy from the exchange either.
If you want to buy coins, you need to first buy USDT with Renminbi, then exchange USDT for the digital currency you want to buy. If you want to sell coins,
you need to convert your digital currency into USDT before selling it, and then convert it into Renminbi. Once you have USDT, you can exchange it for
any digital currency on the exchange, which is called coin-to-coin trading.
4. Basic terms for trading coins
Position: Refers to the ratio of the investor's actual investment to the actual investment funds.
Full position: Using all funds to buy virtual currencies.
Reducing positions: Sell part of the virtual currencies but not all.
Heavy position: The ratio of virtual currencies to funds is high.
Light position: The ratio of funds to virtual currencies is high.
Empty position: sell all the virtual currencies you hold and convert them all into cash.
Take profit: After gaining a certain profit, sell the virtual currencies held to secure the profits.
Stop loss: After losses reach a certain level, sell the virtual currencies held 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.
Bullish (long): The buyer believes that the price of the currency will rise in the future, buys the currency, and sells it at a high price to realize profits after the price rises.
Bearish (short): The seller believes the price of the currency will fall in the future and sells part of the currencies they hold (or borrows coins from the trading platform).
Locking positions to wait for the price to drop to a certain level before taking profits while also avoiding risks.
Building positions: Buying virtual currencies.
DCA (Dollar Cost Averaging): Buy virtual currencies in batches, for example: first buy 1 BTC, then buy another 1 BTC.
Rebound: When the price of the currency falls, it rebounds due to a rapid decline.
Consolidation (sideways): The price fluctuates minimally, and the currency price is stable.
Gradual decline: The price of the currency slowly decreases.
Plummet (waterfall): The price of the currency drops rapidly and significantly.
Cutting losses: After buying virtual currencies, if the price drops, sell the virtual currencies at a loss to avoid further losses.
Or after borrowing coins to short, if the price rises, buy back the virtual currencies at a loss.
Being trapped: Expecting the price of the currency to rise, but after buying, the price drops; or expecting the price to fall, but after selling, the price rises.
Unwinding: After buying virtual currencies, a price drop causes temporary paper losses, but later the price rises, turning losses into profits.
Missing out: After selling virtual currencies due to bearish sentiment, the price rises all the way, and they fail to buy back in time, thus not making a profit.
Overbought: When the price of the currency continues to rise to a certain height, buying power is nearly exhausted, and the price is about to fall.
Inducing bulls: After the price of the currency has been flat for a long time, the possibility of a drop is high. The bears mostly have sold the virtual currencies, and suddenly the bears push the price up.
Inducing the bulls to think that the price will rise, they all buy in, but the bears suppress the price, trapping the bulls.
Inducing shorts: After the bulls buy virtual currencies, they intentionally suppress the price, making the bears believe that the price will fall. They all sell, resulting in falling into the bulls' trap.
5. What are mainstream digital currencies?
Mainstream coins are value coins; Bitcoin is the leader, Ethereum is the second. Some people believe that only these two are mainstream digital currencies.
Some people believe that only the top ten in market capitalization of exchanges count as mainstream digital currencies, while others believe that as long as they are listed on mainstream exchanges, they are considered mainstream digital currencies.
Taking the example of non-small numbers, we can see the market capitalization rankings of related currencies. Mainstream coins rank high, such as Bitcoin, whose market capitalization firmly occupies the top position.
Generally, currencies with higher market capitalization rankings are more recognized in the market, have good liquidity, and have high investment value.
Conversely, currencies with lower market capitalization rankings are less recognized, have poor liquidity, and have relatively higher investment risks, so users are advised to buy cautiously.
6. Risks of trading coins
In terms of investment in cryptocurrencies, the most sincere advice may come from Ethereum founder Vitalik Buterin.
That is, do not invest any money that you cannot afford to lose. A reminder to all beginners, act with strength.
It is recommended not to borrow money, take loans, mortgage, or use credit cards to participate in such investments, especially in contract trading.
7. Contract gameplay
Coin-to-coin trading belongs to spot trading. To make money in a rising or falling market, one must engage in contract trading.
Contract trading, in contrast to currency trading, belongs to futures trading, meaning that the underlying assets of these trades are standardized contracts.
You can pay a certain percentage of the margin to borrow part of the digital currency, choosing to go long when expecting a rise in the future.
In the case of expecting a decline or going short, you can also trade in both directions, opening both long and short positions to hedge risks.
Thus, through contract trading, you can earn money whether the market is rising or falling, greatly increasing the utilization of funds.
The margin deposit ratio here corresponds to different leverage levels. For example, if you judge that BTC will be bearish in the future and want to open a short position of 100 BTC.
You only need to deposit a minimum of 1% margin, which is 1 BTC, to borrow 100 BTC, which is 100 times leverage.
This is equivalent to using 1 BTC of your funds to leverage a profit of 100 BTC. After borrowing, you can immediately sell and wait for the price to drop. If BTC drops from $35,000 to
$34,000, you can immediately buy back 100 BTC and return it to the platform, you will gain (35000-34000) *100= 00000 dollars in profit.
If you do not use contract trading, you cannot profit from this drop. If you do not apply 100 times leverage, you also cannot achieve 100 times profit.
This is the contract.
Beginners should not trade contracts! Beginners should not trade contracts! Beginners should not trade contracts! Important things are worth saying three times!
Contracts may seem like the fastest way to get rich, but they are definitely not the safest path. The 'fast' mentioned here
More often, it is about being close to liquidation or bankruptcy quickly, rather than being close to financial freedom quickly.
8. Three essential elements for trading coins
1. An Android phone. (Android is more convenient, Apple is prone to losing certificates) An Android phone is also a must-have for playing projects.
2. Spare cash. Money that is not urgently needed in the near future and does not affect the quality of life.
3. Mindset. Trading coins involves risks, and those who are anxious about gains and losses should not participate.
The currency circle is not the only way to make money; there are too many paths to explore, and returns are always proportional to investment.
I hope both you and I can gain something in the currency circle.
2. Basic entry knowledge illustration of the currency circle
The currency circle refers to the trading market and community of digital currencies, the most famous being Bitcoin. For those new to the currency circle.
It is very important to understand some basic knowledge. This article will introduce some basic knowledge of the currency circle in the form of illustrations.
1. What is Bitcoin?
Bitcoin is a decentralized digital currency supported by the Bitcoin blockchain network. It is designed not to rely on any financial institution.
It has high security and anonymity.
2. What is blockchain?
Blockchain is the foundational technology for Bitcoin and other cryptocurrencies. It is a decentralized distributed ledger that records all transaction information.
and ensures the security and accuracy of 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
and other digital currencies through the exchange.
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 the wallet to send and receive digital currencies and check 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 by providing computational power and receive a certain amount of Bitcoin as a reward.
6. What is 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 white paper?
A white paper is a detailed project introduction and planning document, usually released by the digital currency project team.
It includes the project's goals, technical architecture, business model, and other information to help 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, that is, the current price of the digital currency multiplied by its total supply.
Market capitalization can reflect the position and influence of a digital currency in the market.
I hope the above simple illustrations can help everyone quickly understand the basic knowledge of the currency circle. Before entering the currency circle.
Make sure to do thorough preparation and risk assessment, and invest cautiously.
The currency circle is a field full of opportunities and risks. Only by constantly learning and accumulating knowledge can one participate better.
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A single tree cannot form a forest, and a lonely sail cannot sail far! In the circle, if you do not have a good circle or first-hand news in the currency circle, it is recommended that you follow Lao Wang, who will help you get on board, welcome you to join!!!
