For newcomers who have just entered the cryptocurrency market, the complex concepts and volatile market often make people hesitate. In fact, the core of entering the cryptocurrency market is to grasp the basic logic and recognize the boundaries of risk. This guide uses plain language + practical scenarios to help you quickly build a cognitive framework and safely start your investment journey.
1. Core Concept: Breaking it down in 'human language', easy to understand
1. What is cryptocurrency trading?
The essence is the same as stock and real estate trading, which is to 'buy low and sell high for a profit.' However, cryptocurrencies have two unique properties: 24-hour continuous trading (no market opening and closing restrictions, can be operated anytime) and no limit on price fluctuations (it can double in a single day or lose half its value in a single day). This makes cryptocurrencies a choice with investment returns far exceeding traditional assets in recent years, but the high returns come with correspondingly amplified risks; returns are always proportional to risks.
2. Exchange: the 'trading platform' in the cryptocurrency circle
This is the official channel for buying and selling digital currencies, similar to stock trading apps like Tonghuashun and Dongfang Caifu. Beginners should prioritize well-known platforms like Binance, as these platforms have a high safety factor and strong liquidity, effectively avoiding the risk of running away; some niche currencies are only listed on small and medium exchanges, and participants need to verify the platform's qualifications beforehand, being wary of fund safety issues.
3. USDT: the 'universal intermediary' in the cryptocurrency circle
The Chinese name is Tether, a stablecoin pegged to the US dollar at a 1:1 ratio (1 USDT ≈ 1 USD), serving as a 'bridge' in cryptocurrency trading. When buying coins, you need to first convert RMB to USDT, then use USDT to purchase other digital currencies; when selling coins, you first convert digital currencies back to USDT, then exchange back to RMB. With USDT, you can freely switch between different currencies, which is the core logic of 'currency trading'.
4. Must-remember basic terminology: frequently used in practice
Terminology simplified explanations and practical suggestions for beginners
Full position / Light position / Heavy position all / Small amount / Most of the funds buy coins, new hands must choose light position, not exceeding 30% of total funds
Take profit / Stop loss, sell when target profit is achieved / sell when losses reach the limit. It is suggested to take profit at 10%-20% and stop loss at 5%-10%.
Bull market / Bear market overall rising / overall falling market. In a bull market, act less and observe more, don't chase high; in a bear market, prioritize holding USDT.
Long / Short bullish buy coins / bearish sell coins. Beginners should first practice going long; going short is more difficult and risky.
Building positions / Averaging down first buying coins / Adding to positions after a decline requires waiting for clear stop-loss signals, refuse to blindly catch falling knives
Cutting losses / Being stuck in losses to sell / Don't panic when the price continues to drop after buying, do not cut losses solely for unrealized losses, avoid emotional trading
Plunge / Rebound coin price rapidly falls / Short-term recovery after decline, do not follow the trend to sell during a plunge, do not blindly chase during a rebound, maintain rational judgment
5. Digital currencies: the 'safe option' for beginners
Refers to cryptocurrencies with high market value, wide market recognition, and strong liquidity, with two core representatives: Bitcoin (BTC) is the 'ancestor' of the cryptocurrency circle, ranked first in market value, and has relatively stable fluctuations, making it the first choice for beginners; Ethereum (ETH) ranks second, supported by practical technological applications, with outstanding long-term potential. The selection criteria are simple: prioritize cryptocurrencies in the top 10 by market value and listed on top exchanges. Low market cap 'altcoins' have a very high risk of going to zero, and beginners should be very cautious.
6. The core risk of trading cryptocurrencies: remember V God’s advice
The advice of Ethereum founder Vitalik (V God) is considered the 'life-saving mantra' in the cryptocurrency circle: never invest money you can't afford to lose! Beginners must adhere to three major taboos: do not borrow money, do not take loans, do not use credit cards for trading, especially do not touch contract trading. Cryptocurrency prices fluctuate unpredictably, possibly due to policy adjustments, market sentiment, technical issues, and may even lead to currencies going to zero. Individuals with weak risk tolerance are not suitable for participation.
7. Contract trading: an absolute no-go for beginners
Contracts belong to futures trading, and can amplify profits through 'leverage' (e.g., 100x leverage = 1 yuan of funds triggering 100 yuan of profit), which seems like a 'shortcut to wealth', but is actually a 'fast track to liquidation'. ⚠️ Triple warning: beginners should not play with contracts! Beginners should not play with contracts! Beginners should not play with contracts! Data shows that over 90% of beginners will incur losses due to leveraged amplification, liquidating and exiting in a short time, treating contracts as an entry course is equivalent to directly giving up on the path of cryptocurrency investment.
8. The three essential elements for beginners
Tools: Preferably use Android phones as they are more convenient to operate; iOS systems can easily face certificate issues.
Funds: Only use idle money that you won't need in the near future and that does not affect your life; it is recommended not to exceed 10% of your total assets.
Mindset: Reject greed and panic, do not be proud when making profits, and do not lose confidence when incurring losses. A mindset of being overly concerned about gains and losses will directly lead to operational errors, which is a 'taboo' in cryptocurrency investment.
II. Key foundational knowledge points: ultra-simplified interpretation
1. Bitcoin (BTC)
The 'ancestor' of decentralized digital currencies, with a total limit of 21 million coins by 2140, no central authority for regulation, can be exchanged for various national currencies, strong security and anonymity, is the 'hard currency' of the cryptocurrency circle.
2. Blockchain
The underlying technology of digital currencies, equivalent to 'decentralized public ledger', records all transaction information, ensuring that data cannot be tampered with through encryption and consensus mechanisms, and is the core support for the security of digital currencies.
3. Wallet
Tools for storing and managing digital currencies (similar to bank cards), divided into software wallets (mobile apps, convenient), hardware wallets (physical devices, highest security), online wallets (web-based, slightly higher risk). Beginners can start with software wallets.
4. Mining
The process of verifying Bitcoin transactions and maintaining network security through computer computing power, successful mining can earn Bitcoin rewards. However, the threshold for mining is currently very high, requiring professional equipment and high electricity costs, with almost no profits for personal participation, beginners need not pay attention.
5. ICO
A crowdfunding model for issuing new tokens by project parties (similar to stock IPO), but many ICO projects are 'air coins', which raise money and then run away. Beginners should absolutely not participate in any ICO projects.
6. White paper
The project's official documentation, which includes core information such as project goals, technical architecture, and business models, is a key basis for judging whether a project is reliable. Absolutely do not invest in projects whose white papers you do not understand.
7. Market value
The calculation method is 'current price × total issuance', which is the core indicator for measuring a cryptocurrency's market position. The higher the market value, the stronger the liquidity and security of the cryptocurrency, and the relatively lower the investment risk.
Finally: the core principles for beginners
Opportunities and risks coexist in the cryptocurrency circle. Entry is not a 'gamble', but a long-term practice based on rational understanding. Remember the three core principles: learn more, invest less, control risks.
The correct path for beginners: first grasp the basic concepts → register on top exchanges → small-scale trial spot trading → accumulate practical experience → then consider advanced operations. Always remember, do not invest in currencies you do not understand, do not take risks beyond your capability, and maintain a cautious and respectful attitude to go further in the cryptocurrency circle.
There has never been a myth of 'guaranteed profits and no losses' in the cryptocurrency circle, only the survival rule of 'knowledge and action in unity.' May you grow in learning, reap in rationality, avoid traps, and seize real opportunities.
I am Little Egg Tart, a professional analyst and teacher, a mentor and friend on your investment journey! As an analyst, the most basic thing is to help everyone make money. I will help you solve confusion and position issues, speaking with strength. When you are lost and don't know what to do, follow Little Egg Tart, and Little Egg Tart will point you in the right direction #美联储降息 $BTC
