Practical Strategies for Trading Cryptocurrencies from Scratch

What you need to know before you start

Cryptocurrency trading is the buying and selling of digital assets with the aim of generating profits. Unlike traditional markets, the crypto space never sleeps: it operates 24 hours a day, 7 days a week, offering constant opportunities but also risks of extreme volatility.

For beginners who want to venture into cryptocurrency trading, it is essential to understand that this market does not wait for anyone. Before making your first trade, you need to:

• Learn fundamental concepts (trading pairs, types of orders, volatility)
• Select a reliable and secure platform
• Understand your risk limits and initial capital
• Master at least one basic strategy

First steps to get started

1. Access to a trading platform

Look for a cryptocurrency exchange that is reliable, with a proven track record, solid security, and good customer service. Most beginners start with centralized exchanges because they are more intuitive. As you gain experience in cryptocurrency trading, you can explore decentralized alternatives.

2. Create your account and verification

Once you select your platform, registering involves email, password, and acceptance of terms. Most require identity verification (KYC) with valid documents and proof of residence.

3. Fund your account

Deposit fiat currency via bank transfer, wire, or credit card. If you already have cryptocurrencies, you can transfer them directly. Critical Warning: always send to the correct address (Bitcoin to Bitcoin address, Ethereum to Ethereum address, etc.). A mistake can be irreversible.

Key concepts for trading

Understanding Trading Pairs

Cryptocurrencies are traded in pairs: BTC/USDT, ETH/BTC, etc. The first asset is the one you buy or sell, the second is the quote currency.

• Crypto-fiat pairs: Bitcoin against EUR or USD. If BTC is priced at 92,175 EUR, you need that amount to buy 1 BTC. You can even buy 0.001 BTC.
• Crypto-Crypto Pairs: two cryptocurrencies, such as ETH/BTC. If ETH is priced at 0.02285 BTC, you would spend that for one unit of Ethereum.

The order book

It is the real-time record of buy orders (bid) and sell orders (ask). Buy orders are sorted from highest to lowest price, and sell orders from lowest to highest. It gives you a snapshot of supply and demand at different levels.

Fundamental order types

Market Order: The fastest. You buy or sell immediately at the best available price. If Bitcoin is quoted with a bid of 100,000 USD and an ask of 100,100 USD, a market buy order is executed at 100,100 USD, and a sell order at 100,000 USD.

Limit Order: Buy or sell at a specific price or better. Slower but gives you control. If Bitcoin is quoted at 100,000 USD but you want to buy it at 98,000 USD or less, you set a limit order. If it drops to your price, it executes; if not, it remains pending.

The main trading strategies

Every trader is unique. Instead of copying others, develop your own system and constantly improve it. A journal recording each trade (logic, decisions, results) is invaluable.

Day trading

You enter and exit positions on the same day, depending on technical analysis. It can be profitable but is stressful, time-consuming, and not recommended for beginners. It requires constant attention and quick decisions.

Swing trading

You hold positions for days to months, taking advantage of trends. It is more beginner-friendly than day trading because it avoids constant stress and does not require full-time dedication. You balance opportunities with a manageable pace.

Scalping

You operate in very short frames (minutes or seconds), trying to capture small fluctuations. You use technical analysis to exploit bid-ask spreads and market inefficiencies. Margins are tight, so many scalpers trade large volumes or dozens of trades to accumulate profits. Not for beginners.

HODLing: the passive strategy

It is not active trading, but rather long-term investment. You buy and hold cryptocurrencies for months or years, trusting in the overall market growth. It is the least stressful option and ideal if you believe in the long-term potential of an asset and can tolerate short-term fluctuations. It requires patience, but can yield substantial returns, especially if you own Bitcoin.

Analysis tools for trading

Technical analysis: reading charts

Candle charts: represent the price over specific periods. Each candle shows four data (OHLC):

• Opening: first price of the period
• Maximum: highest price reached
• Minimum: lowest price reached
• Close: last price of the period

A 1-hour chart shows one-hour candles each; a 1-day chart shows daily candles, etc.

Support and Resistance:

• Support is a “floor” level where historically the price bounces up (buyers intervene)
• Resistance is a “ceiling” level where the price bounces down as ( sellers intervene )

Technical Indicators: Trend Lines, Moving Averages, Bollinger Bands, Ichimoku Clouds, Fibonacci Retracements. These reveal patterns and signal entry or exit opportunities based on current market conditions.

Fundamental analysis: valuing projects

Determine the intrinsic value by researching the technology, equipment, use cases, and viability of the project. In cryptocurrency trading, include:

• Underlying blockchain technology and planned updates
• Development team and its background
• Real use cases and current adoption
• Tokenomics ( distribution, supply, inflation )
• On-chain data ( active addresses, transaction volume )
• Project news and roadmap
• Community and developer activity

How to Protect Your Capital: Risk Management

It is the pillar of successful long-term trading. Various approaches:

1. Limit what you risk

Never trade more than you can afford to lose completely. Use Stop Loss orders to close positions with limited losses when a trade goes wrong. Use Take Profit to secure gains when it goes well.

2. Exit plan

Always plan for the worst-case scenario. An exit strategy is essential. It's easy to get carried away by euphoria in bull markets, but having a prior plan avoids emotional decisions. Set maximum tolerable loss limits. As a rule: plan your trade and then trade your plan. Stick to it.

3. Diversification

Distribute your capital among several assets in appropriate sizes. Constantly rebalance your portfolio to avoid over-concentrating in any single asset. This minimizes total losses if an asset falls drastically.

4. Coverage ( for advanced operators )

Take positions in related assets that move in the opposite direction to your main position, offsetting potential losses. Example: if you hold 10,000 USD in Bitcoin and fear a drop, buy a put option that allows you to sell your BTC for 100,000 USD in weeks. If it drops to 80,000 USD, you exercise the option and sell for 100,000 USD, significantly reducing losses. If it doesn't drop, you only lose the premium paid while still benefiting from the rise of your long position.

Final thoughts on cryptocurrency trading

Markets are unpredictable; the crypto space is particularly volatile. But with continuous learning, you can improve as a trader. Always prioritize risk management. Stay informed about developments in the crypto space, constantly refine your skills, and adapt your strategies as necessary.

The path of cryptocurrency trading is not guaranteed, but by focusing on disciplined education, controlled experience, and constant adaptation, you maximize the chances of sustainable success.