One way to make money from cryptocurrency is trading cryptocurrencies on a Crypto Exchange like Binance.
The Crypto market is highly volatile and it makes it possible for traders to leverage on the price swing to make profit off the market.
At the same time, you can lose a lot of money if you don’t know how to take advantage of the market volatility. In other words, understanding Market volatility is very important if you want to make profit trading on any crypto market.
As a beginner trader, you want to make sure you’re trading with the required guidelines to enable you minimize your losses and maximize your profits.
While there are several exchanges out there, I personally recommend Binance to the beginner trader for the following reasons;
Liquidity: Binance exchange has the greatest market and asset liquidity. Liquidity is simply the ability of traders and investors to convert their assets to cash.
Great Interface: This is very important, especially newbies to crypto trading on an exchange. Binance Exchange has a very friendly and interactive interface designed to meet easy flexibility and accessibility.
Low Transaction Fees: Transaction fees on Binance are quite low and using BNB (Binance native token) as transactions fees attracts a 25% discount in fees.
Secured Platform: Binance has a good security system that can guaranty the safety of your crypto assets in your wallet while trading.
Great support Team: With the Binance support team, at any point you encounter a problem with trading on Binance you can easily assess the Binance support team and get quick assistance.
Powerful Community: Binance has powerful communities that helps maintain market liquidity and drive market trading volume. Also, Binance has communities doing a great deal towards global crypto adoption through mass education.
Generally, cryptocurrency exchangers are market places that matches buyers and sellers order. On the crypto market place, you will find both traders and investors seeking for gains.
However, while investors are long-term gain seekers, traders thrives to make profits within short period of price swing.
Here are a few reasons why you should trade cryptocurrencies?
Volatility: The change in price of crypto assets happens rapidly, you can make great profit if you are well positioned for the ride.
7Days - 24 Hours Market: Unlike the traditional market, cryptocurrencies are traded 24/7 days a week around the clock. The crypto market never sleeps like other financial markets.
Liquidity: Traditionally, this is the ability to convert assets to cash. Trading crypto assets with high liquidity like Bitcoin on a crypto exchange is a great deal.
As a beginner trader, trading on Binance or any preferred exchange, you need to be able to make good price projection to enable you enter or exit from the market. To achieve a good price projection, you need the knowledge of Fundamental and Technical Analysis.
Fundamental Analysis
This looks at the technical side of development of the token, news, regulations, team and issues affecting the price. This guys are focused on the technology, ideology and team.
The Price of asset can be affected positively or negatively through fundamentals like news, regulations or adoption. More people will be willing to buy when there is a positive news about a particular cryptocurrency asset.
Technical Analysis
This side study price chart patterns, trading volume, and statistics, since price movement speaks for themselves and tell you a story of what will happen.
There are candlestick patterns and technical indicators you can use to determine price action. You need to get yourself familiar with them.
One thing to bear in mind is that you can never have a 100% market prediction accurately because the market can change direction at anytime. You should never bet on any market regardless of how good the analysis may be.
However, it’s very important that as a beginner trader you acquire proper education of Trading Analysis to determine Price Action before trading the market.
Navigating on The Binance Mobile Trading App
When you open your Binance Mobile app, at the base of the interface, you’ll observe a number of buttons there.
You can create an account here on Binance if you don’t have one.
A lot of beginners get confused about what the buttons represent and how to navigate with them to trade. So what do they mean?
Home
This is where you first appear on logging into the app. At the top, you have a search button where you can search for any coin listed on Binance. At the middle of the interface, you have the "Buy with cash" button where you can buy Bitcoin via the P2P Trading Platform or with a Credit/Debit card. But in order to access both Platforms through the "Buy with cash" button, you must be verified on Binance with a valid ID card.
Markets
When you the click the market button, what you find at default is a market under spot trading where several crypto trading pairs like POLY/BTC are trading. To enter a trade, you need to click on any preferred trading pair then click buy or sell depending on what trade you are about to do.
Trades
On Trades, you’ll find a an interface where you can buy/sell cryptocurrency from the spot, margin, cash and p2p market.
Just make sure you understand whatever market you want to trade with. But it is advisable to begin spot trading first. The P2P is also another easy platform you can trade on without having to study the market or rely on signals.
Futures
On Futures, you’ll be able trade derivatives with a leverage margin like 10X but as a beginner you don’t need to risk your capital on this when you don’t know how to trade.
Wallets
This is where you’ll find your Bitcoin wallet and other crypto assets listed on Binance with your their balances and an overall equity value in BTC at the top.
To get your wallet address for deposit, you simply click on “Deposit”, click on the asset you wish to deposit, let’s say BTC you’ll find a “Copy address” button. Click on it, immediately your wallet address will be copied to your device’s clipboard. You can paste it anywhere you wish to make funding from.
How to Use Order Book, Market Oder, Limit Order, Stop Limit Order and OCO Order Types on Binance Trading
Order Book
An order book is a ledger containing all outstanding orders – instructions from traders to buy or sell bitcoin. An order to buy is called a “bid” and an order to sell is called an “ask.”
Market Order
A market order buy or sell is an immediate order for the best available price. These orders are filled by immediately pairing buyers and sellers with orders currently in the books.
One advantage of using a market order is that it helps you enter or exist the market instantly especially at breakout points.
Limit Order
A limit order buy or sell is an order for a quantity of assets at a specified price or better. An example of Limit Order would be setting a buy order of $100 worth of Bitcoin at the price of $5000.
Your Buy or Sell Order largely depends on the circumstances that surrounds your Price Action. If your analysis informs you that the price of a given market pair is most likely to go down to a support zone, then it is safer to use the Buy Limit Order.
Stop Limit Order
A stop limit order has both a stop price and a limit price. The stop price is a specific price you want to set at which to trigger your limit order. Your limit price is that price at which your limit order was triggered.
You use stop limit order to minimize your loses in trading. After entering the market either by market order or limit order, you set your stop limit to minimize your lose in a situation where the market reverses against your price projection below your entry price, your stop limit prevents your trade from further loss.
So you want to set a stop limit that can accomodate the market swings with a little percentage of your capital.
OCO (One-Cancels-the-Other)
An OCO order is a combination of limit order and Stop Limit order but only one of the two can be executed. In the execution of either the stop limit or limit order, the other automatically gets cancel.
Like Stop Limit order, you use OCO order to minimize losses but unlike Stop Limit order you can place two orders simultaneously; your limit order which should be your take profit and your Stop Limit as your Stop Loss in case of a decline below your entry price.
COMMON MISTAKES TO AVOID AS A BEGINNER TRADER
Risking More Than you can Afford to Lose
Only risk an amount of money you can afford to loose in order to enable you have a sound mental disposition to make good decisions while trading. A lot of newbies run into frustration after losing so much money from the market.
Trading Pump and Dump Markets
This markets are highly manipulated. Most persons who trade on this kind of market are just seeking for quick profits so they sell off quickly and if you’re not fast with the trend, you’ll be badly wounded on this market.
Wanting to make all the Profits before exiting the market
Don’t be greedy! If you have made profit from a trade, you don’t need to wait to make all the profits before exiting, sell off the trade, except you’re holding for a long period of time.
Trading Without Using Proper Stop loss
Chances are that a trade may not go as expected but reverses, without a proper stop loss you stand the risk of loosing your capital on that trade if the market dumps massively. The buttom line is that always use proper stop loss to safeguard your trade from bigger losses.
Not Setting Clear Trading Plan
A clear trading plan should guide you on how to diversify your trading portfolio, your risk to reward ratio and your do’s and don’t. Strict adherence should be giving to them if you want to trade successfully.
FOMO and FUD
The Fear of Missing out (FOMO) and Fear of Uncertainty and Doubt
(FUD) is undoubtedly the two emotional setbacks the beginner trader is likely to face.
As a beginner trader, you can easily be carried away by the feeling of “missing out” to buy the peak of a market. The danger of this is that you might end up catching a falling knife.
On the other hand, the fear of uncertainty and doubt will constrain you from taking action. You’ll only make profit when you are able to cautiously risk your money in the market.
Not Investing in your Education
To trade successfully on any financial market, you need some level of education which requires your investment in personal research or tutoring.
Joining a Crypto Community like Crypto Arena Africa gives you an opportunity to learn more about crypto trading, Blockchain technology and a lots more.
Most beginner traders who skip this step end up learning it the hard way in the market.
I hope that you found this article very valuable and useful to your Crypto Journey as a beginner trader. If you do, don’t fail to give a clap for this piece and leave a comment below.
