Beginners’ Guide to Trading

BeginnerNov 21, 2022
This article opens the gate to cryptocurrency trading, explores unknown areas, explains crypto projects, and warns readers about potential risks.
Beginners’ Guide to Trading

As the crypto industry becomes more and more developed, a flood of people has started trading cryptocurrencies. According to a report by Crypto.com in 2022, nearly 300 million people worldwide have invested in cryptocurrencies. The current market cap is approximately 1 trillion USD, close to 1/2 of Apple’s market cap. Therefore, crypto can be seen as an emerging trend with considerable space for growth.

A New Type of Digital Assets

Cryptocurrencies are digital assets. Crypto is used in various scenarios in our daily life, such as online shopping and cross-border payment. Its “peer-to-peer” feature makes it easier and faster for users to transfer assets with fewer restrictions. Meanwhile, more people buy crypto as an investment, not just for making payments.

How to Buy Crypto?

Step 1: Install app. Register. KYC(identity verification).
You can register an account with your email or phone number on Gate.io Mobile App, Gate.io official website or Gate.io Desktop App. All services on Gate.io, including P2P trading, withdrawal and startup subscription, will be available for you once you have completed KYC verification.
KYC can be done on app and web. Your personal information (including a profile photo and face recognition) will be reviewed in the KYC verification process.
It is stated here that Gate.io will be 100% committed to protecting the privacy of all users and improving user experience on our website. However, users also need to cooperate to further improve your account security. Please refer to articles on security issues.

Step 2: Transfer assets in

Deposit

If you already have cryptocurrencies in other exchanges or wallets, please refer to Help Center articles on deposit and withdrawal to learn how to deposit and withdraw on Gate.io.

Be sure to read about crypto wallets as well. Users must be careful and do not disclose personal wallet passwords, private keys or 2FA codes to others, including people claiming to be Gate.io staff or official accounts, since Gate.io will never ask a user for such sensitive information.

Buy Crypto

Users can buy crypto via bank transfer, P2P trading, or with credit/debit cards, in which users exchange fiat currencies for cryptocurrencies.

Start Trading

Spot Trading

Gate.io provides more than 1400 trading pairs on the spot market. To better control risks, investors are recommended to start with mainstream coins like Bitcoin and Ethereum to explore crypto trading and gain trading experience, while reading Gate.io Learn articles to learn more about crypto, before trading coins with lower market caps. Here is how to trade spots.

Margin Trading

Based on spot trading, the gains and losses are amplified in margin trading, which is to use the digital assets held as collateral and borrow a lot more assets for trading. It is similar to securities margin trading in traditional finance.

Perpetual & Futures

The perpetual contract is a financial derivative in the crypto space, similar to futures in traditional finance, but without an expiration date and settlement date. Traders only need to focus on the ups and downs. Perpetual contracts have a wider range of leverage and more flexibility. Futures contracts are pretty much the same as perpetual contracts. The only difference is that futures contracts have a delivery date, meaning that the contract will expire. Gate.io offers simulated futures trading, which is designed for users to familiarize themselves with futures trading.

Quantitative Trading

Quantitative trading is collecting historical data of the market, and establishing a model after analyzing and verifying it using mathematical and statistical tools. This model can automatically complete efficient trading in the market with the formulated strategy, minimizing misjudgments caused by subjective psychological factors of traders themselves. Quantitative strategies can be applied to spot, margin, and future grid trading. Spot grid trading has HODL Mode, where traders can use the arbitrage profits to buy the currency at the best possible price and hold the currency for a long time.

Financial Products

In addition to various trading markets, investors can also choose financial products according to their preferences to effectively allocate their assets. Some low-risk financial products guarantee stable returns with the principal protected, such as HODL & Earn, Periodic Investment Plan, Crypto Lending, Crypto Loan and Structured Products. SharkFin products (in the “Structured Products” category) offer the probability of very high returns with the principal protected. Dual Currency Products and Liquidity Mining are non-principal guaranteed products and get returns based on the comparison between the linked currency price and the linked price at the time of delivery.

Risks

The following are the unique characteristics of the crypto market and the risks that traders should be aware of:

Permissionless

The ownership rights of cryptocurrencies are dependent on the nodes. People can freely create and destroy new tokens, make quick transfers without geographical restrictions, and even obtain more financial support through special application methods to complete the vision depicted by the project itself and bring more diverse applications.

Open 24 hours a day, 365 days a year

Cryptocurrency markets are traded 24/7. There is no such thing as closing the market. Transactions are conducted 24 hours a day without restrictions. In traditional finance, there is only day trading, and the market is closed when the rest period starts. After the trading closes, people will not be able to trade until the market opens again tomorrow.

High volatility brings both opportunities and risks

The purpose of trading is to earn from market volatility. The greater the volatility, the higher the reward and the risk. There is no limit on how high or low the price can be, that is, there is no intervention from outside at all. The price is solely subject to the actual trading between buyers and sellers in the market. Daily fluctuations of 3% are the norm. 10 to 20% is more frequent. In contrast, traditional stocks have a 10% fluctuation limit. If the US stock market falls or rises more than 7%, there would be a circuit breaker. Higher volatility often means higher risk but also means that there are opportunities for higher profits.

Trading Strategies

All trading strategies roughly fall into 2 categories: fundamental analysis and technical analysis.

Fundamental analysis

In short, fundamental analysis evaluates the situation of a team or company based on the current status and future development potential of its financial assets and also takes into account factors such as the general economic climate. This analysis makes a value assessment considering factors such as the general environment and economic prosperity. The fundamental analysis in crypto is not exactly the same as that in traditional finance, but the core is not much different. They are both to measure the value of the project team. The analysis uses 3 key metrics: on-chain, project and financial, to evaluate crypto projects and currencies.

Technical analysis

Technical analysis is to use various indicators to analyze and calculate historical market conditions to predict future price trends, which is the same as traditional financial analysis methods. The most basic technical analysis tool is the candlestick chart, which is used to tell whether the market is bullish or bearish based on price trends. Common indicators include tools such as RSI, MACD and Bollinger Bands, which are the most widely used technical analysis indicators to predict market trends.

Conclusion

Registering an account and trading on Gate.io is the first step into the crypto world, where you can explore unknown spaces, applications, and communities. It is definitely more than just buying and selling digital assets. If you want to know more about the crypto world, please keep on learning at Gate.io Learn!

Author: Jz
Translator: Yuanyuan
Reviewer(s): Hugo, Echo, Piper
* The information is not intended to be and does not constitute financial advice or any other recommendation of any sort offered or endorsed by Gate.io.
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