Introduction to Trading Types

A must-read for beginners! Basic Guide to Cryptocurrency Spot Trading

For investors who are new to cryptocurrency, understanding the core elements of spot trading is crucial. Spot trading refers to the direct buying and selling of the underlying assets (such as BTC/USD), without leverage or futures contracts, making the risk relatively controllable. Here are the key points to grasp for beginners:

1. Currency Pair Selection It is advisable to start with mainstream currency pairs, such as BTC/USD and ETH/USD, which have high liquidity and price fluctuations that are easier to analyze. Avoid niche coins to reduce the risk of information asymmetry.

2. Application of Technical Indicators

- Moving Average (MA): Determine the trend by the crossing of the 5-day line and the 20-day line (Golden Cross for buying, Death Cross for selling).

- RSI Relative Strength Index: A value above 70 indicates an overbought signal, while below 30 may suggest a rebound from the bottom.

3. Risk Management

- The position size of a single trade should not exceed 5% of the total capital.

- Set stop-loss and take-profit points, for example, set the stop-loss 3%-5% below the support level.

4. Trading Platform Rules Different exchanges have significant differences in order types (limit orders, market orders) and fee structures, so it is necessary to compare in advance. For instance, some platforms offer fee discounts for high-frequency trading.

Example Strategy:

If the 4-hour chart of BTC/USD shows the MA5 crossing above the MA20, and the RSI rises from 30 to 45, consider entering with a small position, setting the stop-loss at the previous low and the target profit at the previous high resistance level.

⚠️ Reminder: Avoid blindly following others; prioritize validating strategies through simulated trading. Keep learning, and pay attention to on-chain data and market sentiment indicators (such as the Fear and Greed Index).