I. Basic Knowledge That Crypto Newbies Must Know!
More and more people are now paying attention to crypto trading, but few really understand it. Newbies don't know where to start. Today, I will share some basic knowledge about the crypto space with the
newbies in the crypto space.
1. What is crypto trading
In this article, we will first talk about crypto trading. In fact, crypto trading is similar to stock trading, real estate speculation, and foreign exchange trading. It is all about buying low and selling high to
earn the price difference, thereby achieving profitability.
For example, if you think house prices are going to rise, you immediately buy a house, and when it has risen enough, you sell it and make a big profit. The difference is that
crypto trading is about trading digital currencies, with a more free trading mechanism (24/7 uninterrupted trading) and greater profit potential (no limits on price fluctuations).
This makes digital currencies investment targets with investment 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 now 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 top-ranked exchanges is very safe and you can trade with confidence. Some coins can only be purchased on specific special exchanges.
3. What is USDT?
Exchanges are places where you trade digital currencies like Bitcoin. Trading digital currencies requires an intermediary currency, also called a stablecoin, which is USDT.
This is also the most commonly used fiat currency.
USDT is called Tether, a virtual currency that pegs cryptocurrencies to fiat currencies (USD), and is a kind of
virtual currency backed by foreign exchange reserve accounts and supported by fiat currency. You can simply think of it as the US dollar.
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 USD.
Exchanges themselves cannot directly sell or buy virtual currencies, nor can they sell you USDT. You cannot buy from or sell to the exchange.
If you want to buy coins, you need to first use RMB to buy USDT, 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 for RMB. After having USDT, you can exchange it on the exchange for
any digital currency, which is called coin-to-coin trading.
4. Basic Terms for Playing with Coins
Position: Refers to the ratio of the investor's actual investment to the actual investment funds.
Full position: Buy virtual currency with all funds.
Reduce position: Sell part of the virtual currency, but not all of it.
Heavy position: Compared to funds, the share of virtual currency is larger.
Light position: Compared to virtual currency, the share of funds is larger.
Empty position: Sell all the virtual currency held and convert it all to funds.
Take profit: After gaining a certain profit, sell the held virtual currency to protect the profit.
Stop loss: After losing to a certain extent, sell the held virtual currency to prevent further losses.
Bull market: Prices are continuously rising, and the outlook is optimistic.
Bear market: Prices are continuously falling, and the outlook is bleak.
Long (go long): Buyer, believes that the price of the coin will rise in the future, buys the coin, and sells it at a high price after the price of the coin rises to close the position.
Short (go short): Seller, believes that the price of the coin will fall in the future, sells a part of the coin held (or borrows coins from the trading platform).
Lock the position and wait for the price of the coin to fall to a certain price level to close the position for profit, and also avoid risks.
Build position: Buy virtual currency.
Add position: Buy virtual currency in batches, such as: first enter 1BTC, and then buy 1BTC.
Rebound: When the price of the coin falls, the price rebounds and adjusts due to the rapid decline.
Consolidation (sideways): The price fluctuation range is small, and the price of the coin is stable.
Slow decline: The price of the coin declines slowly.
Dive (waterfall): The price of the coin falls rapidly with a large amplitude.
Cut meat: After buying virtual currency, the price of the coin falls, and the virtual currency is sold at a loss to avoid expanding losses.
Or after borrowing coins to go short, the price of the coin rises, and the virtual currency is bought back at a loss.
Trapped: Expect the price of the coin to rise, but the price of the coin falls after buying or expect the price of the coin to fall, but the price of the coin rises after selling.
Untrapped: The price of the coin falls after buying virtual currency, causing a temporary book loss, but the price of the coin rises later, turning the loss into profit.
Missed: Because of being bearish on the market, the virtual currency is sold, but the price of the coin rises all the way, and the opportunity to buy in time is missed, so profits are not earned.
Overbought: The price of the coin continues to rise to a certain height, the buying force is basically exhausted, and the price of the coin is about to fall.
Fake breakout: The price of the coin has been consolidating for a long time, and the possibility of a decline is greater. Most shorts have sold virtual currency. Suddenly, the shorts raise the price of the coin.
Induce longs to think that the price of the coin will rise, and they buy in, but the shorts suppress the price of the coin, trapping the longs.
Fake short: After the longs buy virtual currency, they deliberately suppress the price of the coin to make the shorts think that the price of the coin will fall, and they sell it off, resulting in falling into the trap of the longs.
5. What are the mainstream digital currencies?
Mainstream coins are value coins. Bitcoin is the boss, 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 cap on exchanges are considered mainstream digital currencies, and some people think that only those listed on mainstream exchanges are considered mainstream digital currencies.
Taking Feixiaohao as an example, we can see the market cap ranking of related coins. Mainstream coins rank high, for example, Bitcoin's market cap firmly occupies the top spot.
In general, coins with a higher market cap ranking have high market recognition, good liquidity, and high investment value.
Conversely, coins with a lower market cap ranking have low recognition, poor liquidity, and correspondingly high investment risks. It is recommended that users buy with caution.
6. Risks of Crypto Trading
One of the most sincere suggestions for investing in cryptocurrencies may come from Ethereum founder Vitalik Buterin.
That is, do not invest any money that you cannot afford to lose. I remind all newbies again, do what you can.
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 playing contracts.
7. How to Play Contracts
Coin-to-coin trading belongs to spot trading. If you want to make money in rising or falling markets, you need to do contract trading.
Contract trading is relative to spot trading and belongs to futures trading. That is to say, the underlying objects of these transactions are standardized contracts.
You can pay a certain percentage of margin and borrow a portion of digital currency. If you are bullish on the market, choose to go long.
If you are bearish on the market, you can also go short, and you can also trade in both directions, opening both long and short positions to hedge risks.
Therefore, through contract trading, you can make money in both rising and falling markets, greatly improving capital utilization.
Here, the margin payment ratio corresponds to different leverages. For example, if you judge that BTC will be bearish in the future and you want to open a short order of 100 BTC.
You only need to pay a minimum of 1% margin, which is 1 BTC, and you can borrow 100 BTC, which is 100x leverage.
Equivalent to using 1 BTC of capital to leverage the income of 100 BTC. After borrowing, you immediately sell and wait for it to fall. If BTC falls from $35,000 to
$34,000, immediately buy back 100 BTC and return it to the platform, and you will get (35000-34000) * 100 = $100,000 in income.
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 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 closer to liquidation and bankruptcy, rather than closer to financial freedom.
8. Three Essential Elements for Crypto Trading
1. An Android phone. (Android is more convenient, Apple is easy to lose certificates) Android phones are also essential for playing projects.
2. Spare money. Money that you don't need urgently recently and won't affect your quality of life.
3. Mentality. Crypto trading is risky, and people who are worried about gains and losses should not participate.
Crypto space is not only about trading coins to make money. There are so many ways to explore, and the return is always proportional to the investment.
I hope you and I can both gain something in the crypto space.
II. Illustrated Basic Introductory Knowledge of the Crypto Space
The crypto space 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 space.
It is very important to understand some basic knowledge. This article will introduce some basic introductory knowledge of the crypto space through 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 government or financial institution.
It has high security and anonymity.
2. What is blockchain?
Blockchain is the underlying technology of Bitcoin and other cryptocurrencies, and is a decentralized distributed ledger. It 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 through an exchange
and other digital currencies.
4. What is a wallet?
A wallet is a tool for storing and managing digital currencies. It can be a software wallet, a hardware wallet, or an online wallet. Users can
use wallets 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 by providing computing 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 whitepaper?
A whitepaper is a detailed project introduction and planning document, usually released by the 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 circulating supply.
Market capitalization can reflect the position and influence of a digital currency in the market.
Hopefully, the above simple illustrations can help everyone quickly understand the basic introductory knowledge of the crypto space. Before entering the crypto space.
Be sure to prepare adequately and assess risks carefully, and invest cautiously.
The crypto space is an area full of opportunities and risks. Only by continuously learning and accumulating knowledge can you better participate in it. Edit article
Complete Beginner's Guide to Digital Currency Investment (2024 Latest Edition)
I. Basic Understanding of Digital Currency Investment
Investment essence
Similar to traditional investments (stocks, real estate), earn price difference income by buying low and selling high
Unique advantages:
✓ 24/7 uninterrupted trading
✓ No limit on price fluctuations
✓ Globally unified market
Core trading venue
Mainstream Exchanges:
• Binance - Largest globally
• OKX - Chinese-friendly
• HTX (formerly Huobi) - Established platformRecommendation: Prioritize exchanges with the top 5 trading volume
II. Key Financial Tool: USDT
Basic attributes
1 USDT ≈ 1 USD
Main functions:
✓ Bridge between fiat currency and digital currency
✓ Hedging tool during market fluctuations
Transaction process
Chart
Code
Download
OTC purchase
Coin-to-coin trading
Exchange
OTC sale
CNY
USDT
Digital currency
III. Glossary of Professional Terms
Categorized terms and definitions Position management Full position All funds invested Light position Less than 50% of funds invested Market status Bull market Continuously rising market Bear market Continuously falling market Trading strategy Long Buy and expect price to rise Short Sell and expect price to fall Risk control Take profit Exit when target profit is reached Stop loss Control the extent of loss
IV. Mainstream Digital Assets
Top 5 Market Cap (2024)
Bitcoin (BTC): Digital Gold
Ethereum (ETH): Smart Contract Platform
BNB: Binance ecosystem token
Solana (SOL): High-performance public chain
XRP: Cross-border Payment Protocol
Selection criteria
Top 50 Market Cap
Listed on 3 or more mainstream exchanges
Project continues to be developed and updated
V. Key Points of Risk Management
Funding principles
Only invest with spare money
Single project investment does not exceed 20% of total funds
Prohibit leveraged lending
Contract trading warning
Leverage Multiple vs. Liquidation Risk Table:
Leverage Multiple Price Fluctuation Liquidation Threshold 10x ±10% 50x ±2% 100x ±1%
VI. Essential Tool Checklist
Basic configuration
Android spare phone (iOS has more restrictions)
Hardware wallet (Ledger/Trezor)
Google Authenticator
Analysis tools
TradingView (technical analysis)
CoinMarketCap (market data)
DeBank (on-chain analysis)
VII. Suggested Learning Path
Progressive learning
Chart
Code
Download
Basic knowledge
Spot trading
Technical analysis
On-chain analysis
Enter with caution
Recommended resources
Introduction: (Bitcoin Whitepaper)
Advanced: CoinDesk Academy courses
Practice: Simulated trading account
VIII. Important Reminders
Security rules
Never reveal private keys/mnemonic phrases
Beware of "guaranteed profit" scams
Large-value asset cold storage
Mental mindset building
Accept reasonable losses
Avoid FOMO (Fear Of Missing Out)
Establish trading discipline
Investment warning: Digital currencies are highly volatile. Statistics in 2023 show that 78% of retail investors lost money. It is recommended that beginners practice with less than $100 before gradually increasing their investment.
