Crypto Basics - How to Start Cryptocurrency Trading

Cryptocurrency has been catching a lot of attention lately. But what is it, and how does it work? If you're wondering if you should invest and asking how to start Cryptocurrency trading, understanding Crypto basics is the first step. This article will help you make the best decision for yourself by becoming familiar with general cryptocurrency terms and definitions before jumping on board.

Cryptocurrency Terms and Definitions

Put simply, cryptocurrency is an encrypted and decentralized digital currency that uses blockchain technology. It differs from traditional currencies because it is not regulated by banks or governments. Many people and businesses around the world use cryptocurrency to exchange value. Cryptocurrencies like Bitcoin use blockchain technology to operate their systems and make it impossible for a single entity to control the supply.

What Is a Blockchain?

A blockchain is a public ledger that records transactions in code. You can think of it as the digital equivalent of the old paper checkbooks that recorded financial transactions at banks.

It consists of two parts:

Consensus mechanisms like proof of work check each transaction to ensure they are legitimate. Proof of work is commonly used to verify transactions before adding them to a blockchain.

How Cryptocurrency Works

Cryptocurrency's appeal lies in its decentralized nature. There is no central authority managing coin supply. This makes buying, selling, and using cryptocurrency fast and easy—no matter where you are.

The way it works is simple. When you buy something with your credit card, you pay a fee for the bank to process your payment. But when you purchase with cryptocurrency, you send money directly from your wallet to another without paying hefty fees.

Should You Invest In or Trade Crypto?

Are you thinking about investing in or trading crypto? You may wonder if your investment will pay off. The truth is, that cryptocurrency is a volatile market. As such, it is impossible to predict how well your investments will perform. But there are measures you can take to become a smart and strategic investor/trader:

Crypto Trading for Beginners

Embarking on your journey into cryptocurrency trading can seem daunting, but it doesn't have to be. Below, we've detailed an extended guide to get you started:

1. Sign Up for a Cryptocurrency Exchange

Your first step into the world of cryptocurrency trading is registering for an account on a reliable cryptocurrency exchange. These platforms allow you to trade a wide variety of cryptocurrencies against fiat currencies and other cryptos.

Binance, founded in 2017 by Changpeng Zhao, is the world's largest and most popular cryptocurrency exchange.

Which Crypto exchange you use is not only a matter of personal preference, but dependent on your location and needs as well. These platforms are highly regulated, and only available in specific countries. Each one also offers a different selection of coins and trading features. You'll likely want to try out a few, starting with the larger, more accessible platforms, and branching out as needed. A few of the more popular exchanges are:

When choosing an exchange, consider factors such as security, user interface, customer support, available cryptocurrencies, and trading fees. Furthermore, you'll need a digital wallet associated with your account. This wallet can either be online (hot wallet) or offline (cold wallet), each with its own benefits and security measures. Hot wallets provide easier access for transactions but are vulnerable to online threats, while cold wallets are more secure but less convenient for frequent trades.

2. Fund Your Account

Once your account is operational, it's time to deposit funds, which you can usually do through a bank transfer, credit card, or even by depositing cryptocurrency directly. As a beginner, it's recommended to start with a low balance to minimize your exposure to risk.

The method of funding your account varies with each exchange. Binance and Coinbase, for instance, accept direct fiat deposits from your bank account. You can then use these funds to buy cryptocurrencies. Binance even has fiat-Crypto pairs, that allow you to trade directly with fiat, removing any concern over holding balances in stable coins. Other exchanges like KuCoin however, do not support direct fiat-to-crypto transactions. And while onboarding fiat is an option, it's a little more complex. Most users wind up onboarding on another platform like Binance, and transferring USDT (or another stable coin) into their KuCoin account. KuCoin offers more Altcoin options than Binance or Coinbase, making this sort of transfer necessary when you want to buy less common small-cap coins.

As a beginner, it's a good rule of thumb to start with a modest amount until you're comfortable. Crypto is a high-risk asset, subject to very volatile price changes. While there are opportunities to make quick gains, you can also lose money just as fast. For this reason it's also smart to consider practicing with paper trading before investing with real money. Paper trading is a risk-free mode available on many exchanges, where you use fake money to simulate real trades. This tool helps you understand market trends and refine your trading strategy without any real losses. Despite its benefits, remember paper trading can't replicate the emotional impact of real trading.

3. Pick a Crypto to Invest In

When buying Crypto, an important term you'll always need to consider is "Market cap", or market capitalization. This refers to the total value of a cryptocurrency, calculated by multiplying the current price by the total supply. Cryptos are grouped into large-caps, mid-caps, small-caps, and micro-caps based on their value at the time. Generally, larger caps are safer and more stable but offer lower returns, while lower caps are much riskier but potentially offer higher returns.

Bitcoin (BTC) and Ethereum (ETH) are the top 2 leading Cryptocurrencies by market-cap

When starting out, it's advisable to choose well-established large-cap cryptocurrencies, as they generally offer more stability and less risk. A few of the most popular large-caps are:

The Crypto market is constantly fluctuating. Traders need to stay up to date on the latest news, trends and research to be successful. Joining ARCollective is the best way to make sure you're part of a vibrant community that is always in the know.

4. Choose an Investment Strategy

Deciding on your investment strategy involves defining your trading style - day trading, swing trading, or long-term holding - and establishing your entry and exit strategies. Becoming well educated on each of these styles and strategies is necessary to determine which you're capable of executing. Your trading style should reflect your financial goals, risk tolerance, and time availability. Each style requires a different approach, tools, and understanding of market trends. Members of ARCollective have access to our custom online courses that cover the most lucrative trading methods, as well as access to our online community, and livestreams for realtime guidance. We'll help you navigate through these strategic options and tailor a strategy that best fits your profile.

5. Start Trading

Now comes the exciting part - starting to trade! With your strategy and goals now in mind, and a little discipline, you're ready to start small and get your feet wet. It's common to have losses when you start so don't worry; it's a part of the learning curve. Always keep track of your trades, analyze your wins and losses, and adjust your strategy as necessary.

6. Keep Learning!

The crypto market is constantly evolving, making continual learning of how to start cryptocurrency trading crucial. Stay updated with market news, understand the impact of external factors like government regulations, economic events, and technology advancements on crypto prices. Joining a community like ARCollective can immensely aid in this ongoing learning process. Embrace the journey, learn from each step, and welcome to the exciting world of cryptocurrency trading!

Become a Skilled Crypto Investor & Trader

Crypto is a novel and exciting digital currency that stands out from traditional fiat currencies. It has the potential to make millionaires and change the world as we know it. But there are many risks involved with investing in this market. Trading cryptocurrencies can be daunting for beginners who don’t know what they are doing.

At AR Collective, our mission is to help people become successful traders and investors. We provide our members with the necessary tools and knowledge to make educated decisions when trading crypto.

Whether you're an experienced trader, or a beginner just learning how to start Cryptocurrency trading, our academy has something for you. We offer in-depth courses on Crypto basics, fundamental trading strategies, technical analysis, risk management practices, research techniques, and more. Sign up today and try us out for 7 days FREE to see how our community can help you be a profitable crypto trader.