1. Basic knowledge that every beginner in the cryptocurrency world must know!
Now, more and more people are paying attention to trading cryptocurrencies, but very few truly understand it. Beginners don't know where to start, so today I will share some basic knowledge about the cryptocurrency world with them.
I will share some basic knowledge learning about the cryptocurrency world with the newcomers.
1. What is trading cryptocurrencies?
In this article, we will first talk about trading cryptocurrencies. In fact, trading cryptocurrencies is similar to trading stocks, real estate, and foreign exchange, all of which involve buying low and selling high.
This allows for profit by earning the price difference.
For example, if you think housing prices will rise, you immediately buy a house, and when prices have risen enough, you sell it for a big profit. The difference is.
Trading coins involves digital currencies, a more flexible trading mechanism (24/7 uninterrupted trading), and greater profit potential (no limit on price fluctuations).
Let digital currencies become investment targets with returns far exceeding traditional stock markets, futures markets, funds, real estate, etc.
2. What is an exchange?
The exchange is a platform for trading digital currencies, and the commonly used exchanges are Binance, OKX, and Huobi.
There are many other small exchanges, just like banks have four major banks and various other banks.
Using top-ranked exchanges has a high safety factor, allowing for secure trading. Some coins can only be purchased from specific exchanges.
3. What is USDT?
Exchanges are places used to trade Bitcoin and other digital currencies. Trading digital currencies requires a type of intermediary currency, also known as stablecoin, namely USDT.
This is also the fiat currency we use most often.
USDT, known as Tether, is a virtual currency that links cryptocurrency with fiat currency (USD) and is stored in foreign exchange reserve accounts.
It is a virtual currency supported by fiat currency. You can simply understand it as equivalent to USD.
Tether (USDT) is a token based on the stable value currency USD (USD) launched by Tether,
1 USDT = 1 dollar.
Exchanges cannot directly sell or buy virtual currencies, nor can they sell you USDT; you cannot buy from exchanges.
If you want to buy coins, you need to first buy USDT with Renminbi, and then exchange USDT for the digital currency you want to buy. If you want to sell coins.
You need to exchange your digital currency for USDT and then sell it, converting it to Renminbi. Once you have USDT, you can exchange it for
any digital currency on the exchange, which is called coin-to-coin trading.
4. Basic terminology of trading coins.
Position: Refers to the proportion of actual investment and the amount of funds invested.
Full Margin: Use all funds to buy virtual currencies.
Reduce Position: Sell part of the virtual currency but not all.
Heavy Position: A larger share of virtual currency compared to funds.
Light Position: A larger share of funds compared to virtual currency.
Empty Position: Sell all held virtual currencies and convert everything to funds.
Take Profit: After obtaining a certain profit, sell the held virtual currency to secure the profits.
Stop Loss: After a certain degree of loss, sell the held virtual currency to prevent further losses.
Bull Market: Prices continue to rise, outlook is optimistic.
Bear Market: Prices continue to fall, outlook is bleak.
Long (Going Long): Buyers believe the price will rise in the future, buy coins, and sell at a higher price after the price rises to take profits.
Short (Short Selling): The seller believes the price of the currency will fall in the future and sells a part of the currency they hold (or borrows currency from the trading platform).
Locking Position: Waiting for the price to drop to a certain level to take profits while also avoiding risks.
Build Position: Buy virtual currency.
Averaging Down: Buying virtual currency in batches, for example: first buying 1 BTC, then buying another 1 BTC.
Rebound: When the price falls sharply, it rebounds due to the rapid drop.
Consolidation (Sideways): The price fluctuation range is small, and the price is stable.
Slow Decline: The price gradually decreases.
Plunge (Waterfall): The price drops rapidly and significantly.
Cutting Loss: After buying virtual currency, if the price falls, sell the virtual currency at a loss to avoid further losses.
Or after shorting, if the price rises, buy back virtual currency at a loss.
Stuck Position: Expecting the price to rise, but after buying, the price falls, or expecting the price to fall, but after selling, the price rises.
Unwinding: After buying virtual currency, if the price falls and causes a temporary paper loss, but then the price rebounds, turning losses into profits.
Missing the Opportunity: After selling virtual currency due to a bearish outlook, the price rises, and failing to buy back in time results in lost profits.
Overbought: The price of the coin continues to rise to a certain height, buying power is basically exhausted, and the price is about to fall.
Induce Buying: The price has been consolidating for a long time, with a high possibility of falling. Most bears have sold their virtual currencies, and suddenly the bears raise the price.
It induces the bulls to think that the price will rise, causing them to buy in, resulting in the bears suppressing the price and trapping the bulls.
Squeeze: After bulls buy virtual currency, intentionally suppress the price, making bears think the price will fall, causing them to sell, resulting in a trap for the bulls.
5. What are mainstream digital currencies?
Mainstream coins are valuable coins; Bitcoin is the leader, Ethereum is the second. Some believe that only these two are mainstream digital currencies.
Others believe that only coins in the top ten market capitalization of exchanges count as mainstream digital currencies, while some think that any coin listed on mainstream exchanges counts as mainstream digital currencies.
For example, by using CoinGecko, we can see the market capitalization rankings of related coins. Mainstream coins rank high, such as Bitcoin's market capitalization firmly holding the top position.
Generally speaking, currencies with higher market capitalization rankings are more recognized in the market, have good liquidity, and have high investment value.
Conversely, currencies with lower market capitalization rankings are less recognized, have poor liquidity, and thus carry higher investment risks, so users are advised to invest cautiously.
6. Risks of trading coins
In the investment of cryptocurrencies, the most sensible advice may come from Ethereum founder Vitalik Buterin.
That is, do not invest any money you cannot afford to lose. Again, I remind all novices to act with caution.
It is recommended not to borrow money, take loans, mortgage, or use credit cards to participate in this type of investment, especially when trading contracts.
7. Contract trading methods.
Coin-to-coin trading belongs to spot trading. To make money in a rising or falling market, one must engage in contract trading.
Contract trading, as opposed to spot trading, belongs to futures trading, meaning that the objects of these transactions are standardized contracts.
You can pay a certain percentage of the margin and borrow some digital currency, choosing to go long in a bullish market.
In a bearish market or when shorting, you can also trade both ways, opening both long and short positions to hedge risks.
Therefore, through contract trading, one can profit regardless of whether the market is rising or falling, greatly increasing the utilization rate of funds.
The margin payment ratio corresponds to different leverage. For example, if you predict a bearish outlook for BTC and want to open a short position of 100 BTC.
You only need to pay a minimum margin of 1%, which is 1 BTC, to borrow 100 BTC, which is a leverage of 100 times.
This is equivalent to using 1 BTC of funds to leverage 100 BTC in profits. After borrowing, you immediately sell and wait for the price to drop. If BTC falls from $35,000 to
$34,000, you immediately buy back 100 BTC and return it to the platform, you will gain (35,000 - 34,000) * 100 = 00000 USD profit.
If you do not engage in contract trading, you cannot profit from this drop, and if you do not use 100 times leverage, you cannot achieve 100 times the profit.
This is what a contract is.
Newbies should not trade contracts! Newbies should not trade contracts! Newbies should not trade contracts! Important things should be stated three times!
Contracts may seem like the fastest way to get rich, but they are definitely not the safest route. The 'fast' mentioned here
often means getting close to liquidation or bankruptcy quickly, rather than getting close to financial freedom quickly.
8. Three essential elements for trading coins.
1. An Android phone. (Android is more convenient, while Apple is prone to losing certificates) An Android phone is essential for playing projects.
II. Spare money. Money that is not urgently needed recently does not affect quality of life.
III. Mindset. Trading coins carries risks; those who are overly anxious should not participate.
The crypto space is not just about trading coins to make money; there are countless paths to explore, and returns are always proportional to investment.
I hope both you and I can gain something in the crypto space.
II. Basic knowledge of the crypto world illustrated.
The crypto space refers to the trading market and community of digital currencies, the most famous being Bitcoin. For those new to the crypto space,
it is very important to understand some basic knowledge. This article will introduce some basic knowledge of the crypto space through illustrations.
1. What is Bitcoin?
Bitcoin is a decentralized digital currency supported by the Bitcoin blockchain network. It is designed not to rely on any financial institution.
It has high security and anonymity.
2. What is blockchain?
Blockchain is the foundational technology for Bitcoin and other cryptocurrencies, functioning as a decentralized distributed ledger. It records all transaction information.
And ensures data security and accuracy through encryption and consensus mechanisms.
3. What is an exchange?
An exchange is a trading platform for digital currencies, allowing users to trade different digital currencies. You can buy or sell Bitcoin through the exchange.
and other digital currencies.
4. What is a wallet?
A wallet is a tool used to store and manage digital currencies. It can be a software wallet, hardware wallet, or online wallet. Users can
Use the wallet to send and receive digital currencies and view balances and transaction history.
5. What is mining?
Mining is the process of verifying and processing Bitcoin transactions by solving complex mathematical problems. Miners maintain
the Bitcoin network and receive a certain amount of Bitcoin as a reward.
6. What is ICO?
ICO (Initial Coin Offering) is a crowdfunding model where businesses or projects issue new digital currencies to raise funds.
Investors can purchase these newly issued digital currencies and expect their value to rise in the future.
7. What is a white paper?
A white paper is a detailed project introduction and planning document, usually published by the digital currency project team.
It includes information about the project's goals, technical architecture, business model, etc., helping investors understand the project's potential and feasibility.
8. What is market capitalization?
Market capitalization refers to the total market value of a digital currency, which is the current price of the digital currency multiplied by its total issuance.
Market capitalization can reflect a digital currency's standing and influence in the market.
I hope the above simple illustrations can help everyone quickly understand the basic knowledge of the crypto space. Before entering the crypto space.
Be sure to prepare adequately and assess risks, invest cautiously.
The crypto space is a field full of opportunities and risks. Only by continuously learning and accumulating knowledge can one participate better.$BTC
