The Secrets of Crypto Trading

Bitcoin

With the rise of Bitcoin and Ethereum to all-time highs and the rise of pumps and dumps popularized by Reddit, there are a lot of new people entering this market with the sight of quick profit and then ending up losing a lot of money. If you are a new trader or just wish to learn something new about crypto trading, here are the things I wish I knew when I started. So, let’s get straight into it. Use the table of contents to find what you like.

Disclaimer! All Binance and Coinbase links in this article are affiliate links. All the products are just my recommendations. Feel free to choose different ones. This article serves for purely educational purposes by sharing things I learned. As mentioned several times in this article, always do your own research before any purchase!

Where to start? – Crypto trading platforms

First, let’s make sure you can trade in the first place. To make this clear, you don’t need any big amounts of money to start with crypto. I know many people that started with just $10.

The easiest way to get into crypto trading is to create an account on one of the exchanges. I prefer Binance, although there are other popular exchanges like Coinbase, which is the one I started with. I eventually migrated away from Coinbase, because even though they make sure only high-quality coins are available on their site, you don’t have as much control over them and the fees are much, much higher. For some people, it’s worth it though.

Coinbase

Coinbase makes sure to curate their coins. They add only high-quality projects to their tradable assets and their entire system is set in a way where it’s better for you to invest long-term and avoid day-trading. This is done through high fees and a simple interface. Everything about their platform is done so you invest pretty much once a month and leave it to grow.

One great thing about Coinbase is their Coinbase Earn program that teaches you about crypto and then gives you free crypto for answering some simple questions about the coins. Don’t worry, they have nice tutorials that teach you everything you need to get through these. I would use Coinbase as an entry point for some free crypto. You can get quite a lot for free.

For most coins, you can earn a few dollars, usually $3-$10. There are about 17 coins that you can do educational quizzes for. That’s at least $51 for free if all quizzes are available (it may take a few days to wait in line if you’re unlucky).

If you wish to use Coinbase, use this referral link (or the one above) that lets us both earn an extra $10 if you put $100 in.

Binance

Binance is my favorite trading platform. With their extremely low fees, dozens of coins and a dizzying amount of options, you’ll find here everything you need to satisfy your trading needs. You also have full control over your trades with the ability to set up stop-losses, see minute candle graphs, mine coins and more. I would seriously need to make an entire article about this website just to describe half of these functions and I feel like this article will be long enough. Here are some things you can find on Binance.

Crypto trading options on Binance

And of course, there’s much, much more.

To make this simple, I love Binance. Low fees, lets you use a credit card to easily buy cryptocurrency, and has everything you might ever possibly need. If you use my Binance referral link, you save 10% on the trading fees.

Some crypto trading basics

I will make an article summarizing trading/crypto terms but for now, some important ones.

Candles and Graphs

If you’ve ever seen anyone trading stocks or cryptocurrency, you probably saw the weird red and green graphs with a bunch of rectangles. Here’s a 1-minute graph of a random coin.

Candle graphs in crypto trading
1 minute graph

With every graph, you can set what time you want it to represent. The picture above is a 1-minute graph. This means every rectangle, or candle, in the picture represents one minute. The green candles mean the price went up in that minute from where it started, the red candle means it went down. The thick candles show where the price started and ended, the thin lines in the candles show how far the price rose/fell in the selected time span (1 minute here).

Bullish Vs Bearsish

You might oftentimes hear terms “the market is bullish” or “the market looks bearish.” These are classic trading terms. Bullish means the market or the coin goes up, while bearish means it goes down.

HODL

HODL started as a typo on Reddit and since then became a used thing for anyone who holds their coin without any plans of selling it in a short time. It became an acronym for “Hold On for Dear Life”.

Pump & Dump

Pump and dump is a market manipulation strategy that’s yet to be illegal in crypto trading space. A large amount of people comes together and all buy the coin, making the price rise and then sell it. This is an incredibly risky strategy that cost many people a lot of money they couldn’t afford. I like to call it the fastest way to lose money.

FOMO

Fear of Missing Out. This is a fear that usually sets in when you see the coin price rapidly rising. At this point, you start to feel like you can make a tremendous amount of money if you buy it now. This usually results in buying ‘at the top’ (when the coin is at peak price) and losing money when it dives in price.

FUD

Fear, uncertainty, doubt. This is a tactic used by people that want the coin or stock prices to go down. For example, if someone would want to buy the coin at a lower price, they’d go into forums or big groups. There, they’d spread out misinformation about the coin being a scam, making people sell due to FUD and thus driving the price down.

Market Cap

The explanation of the market cap and how to use it to your advantage needs a little more time, so I wrote a separate article about it called How to use the crypto market cap to your advantage, where I try to make it as clear as possible.

More terms will be available later in a different article.

The golden rules of crypto trading

There are some rules that every trader should follow. These are it.

Only go with what you can afford to lose

You need to understand this. Crypto trading can make you a millionaire. Chances are though that it won’t. Especially at first, when you are new and emotions move you like the wind moves a sail. Always go in with money you will not miss. Imagine this as going into a casino or betting. Sometimes it’s actually really hard to tell a difference between these things.

In short, if you put money into cryptocurrency, consider that money gone. Continue your life without reliance on it. If you need to rely on it, you shouldn’t have it in the market. Always put money into crypto trading with a mindset you can lose 100% of it. Will that affect your life in a negative way? If the answer is yes, then STAY AWAY FROM CRYPTO TRADING! It is not for everyone. Trade responsibly!

Buy low sell high

To make money, you buy only when the asset is low and sell only when it’s high. This sounds incredibly easy, but when you see the volatile market move and FUD and FOMO start to take effect, you tend to do wrong decisions. Everyone does. Just keep yourself in check and try to reduce these situations to a minimum. Keep in mind, these situations happen daily if you are trading crypto. There’s always another chance.

Diversify your portfolio

One of the most important things you can do in crypto trading is to always own more than one asset. If one asset goes down, others might stay still. This way you stabilize your portfolio and it usually leads to long-term growth. Never put all your eggs in one basket as they say. If the coin experiences a crash due to the company getting sued or the company being scammers, you lose everything.

Do your own research, pick coins you believe in and split your money this way. My portfolio currently has about 12 different coins. This entire trading thing is about minimizing your risk.

Too many coins, too little time

There are hundreds, if not thousands of crypto coins out there. It’s necessary to do research before every purchase, but how to approach this? You can’t possibly research every coin.

The best way is to find some trustworthy people. This can be on YouTube or Twitter, and see what they are doing. Perhaps you can pay a mentor or see the portfolio of someone successful in crypto trading. If they are interested in some coins, research those coins and find out why that is. If the coin speaks to you and you trust it, it might be a good idea to invest in it. What I usually do is look at their older tweets or videos and compare them to the market. Were their calls usually good? If so, then any coin they announce, I research if it could be my possible buy.

There are some basic things to look out for, but those I will try to describe in another article. Basically, you want to research what project is the coin a part of. Will people use it? Does it solve a problem? Is it a project that will be useful in a few years?

Another thing to look out for is the coin’s market cap. The lower the number of tokens/coins, the easier it is for the coin to get to a high price.

You can also use this website to see what events are coming up in the crypto world, which can help you with your financial decisions.

The Game of Percentages

A lot of people believe they should own at least one Bitcoin or one Ethereum. Especially now that they are at these giant prices. They ignore other coins because they seem too low in value. This is a mindset you have to get rid of. When you are investing, all you are interested in is the percentage. You can buy a few thousand coins worth a dollar or a few cents and end up better than if you bought one full bitcoin for the same price.

Why? Because, for a few exceptions, Bitcoin is steadily rising by a few % every day. We are talking 0.5 – 5%, sometimes more. This is absolutely great if you are in for the long-haul as there is a certain stability in this coin. To a degree, of course. First off, it is always a good idea to hold at least some of the more stable coins like Bitcoin and Ethereum. They proved themselves to be a good bet in the long run.

Just understand, there are other coins that can rise 10-20% a day that are worth a few cents. With new coins entering the crypto market every day, there’s a dizzying amount of potential to make a profit. With the right research of course. For example, SUSHI has been steadily rising since the 4th of November 2020. That is pretty much 3000% over the last three months as seen on this graph.

SUSHI/USDT crypto trading graph
Date of this screenshot is 3rd of February for the pairing of SUSHI/USDT. The market might’ve changed since then.

This means if you’ve bought 100 SUSHI coins worth $0.5 on 4th of November (so pretty much spend $50), they would now have a value of $1500. I don’t know where it will move next. Always do your own research.

The Important Difference between Loss and Gain

People look at the graphs going down and think, “It’s down just 50%. That means I’ll just have to find some other coin that will grow 50% and I’m back.” You could not be further from the truth. The percentage is hard to wrap your head around when applied to the real world, so I will give you an example. If you lose 50%, you need to gain 100% back. This is because your entire portfolio lost half of its value. Let’s say it dropped from $10 to $5. Since what you are gaining from now on is calculated from your current position, 50% of $5 is $2.5. That means to get back up, you need another $2.5, thus 100% in total. Here’s a simplified quick overview from Bogleheads Wiki.

The loss and gain table

If the value changes byGetting back to the
initial value requires a
-100%
-90%900%
-80%400%
-70%233%
-60%150%
-50%100%
-40%67%
-30%43%
-20%25%
-10%11%
0%0%
This is your most important helper in trading. Try to memorize some of it or have this link always in one of your tabs.

Go to the link above the table for a more detailed version.

When to buy and sell?

Finally, the simplest question. When to buy and sell? Since the crypto markets are very volatile, you oftentimes see a coin going up by tens or hundreds of percent in a few minutes or hours. Do not get swayed into buying! It is really easy to feel the FOMO taking over, but you have to understand that these things are happening daily in the crypto trading market.

Always buy the coin you researched (to know if it’s not falling due to the company being scammers or being sued) and one that looks as if it won’t go any lower. In other words, if it looks bearish. The lower you buy the coin, the more you reduce the risk of losing money. This is because there are always some people that hold it, making the possible floor higher. Then, it’s just a question of time when it rises above the purchase point.

These things are still hard to predict, but you will learn in time how to spot the good trades.

To learn how to sell the coin in a safe way, where you still have a profit, head to the next part.

Crypto trading with stop-loss

As I mentioned many times, and I’ll say it again, cryptocurrency can be a very volatile thing. One moment you’re going up, the next everything crashes down. A good investor knows when to pull out from the trade. When you are investing, always set up your stop-loss. What is a stop-loss? It’s a sort of a trigger that puts your coin on sale if the price of it drops or reaches a set amount.

For example, let’s say you are buying a coin like SUSHI, which I mentioned above. You know it’s going up and you hope it will go up further. You put all your capital in it (please never do that) and you go to sleep. In the morning, you wake up to -50%. This scenario happened to me before I knew about the stop-loss.

What you want to do is always set a stop-loss to a certain percentage below the current price. Some people set 3%, some 5%. As the price rises, you raise the stop-loss so it’s always 3% behind. This way, you will always have profit, even if the market decides to panic sell. And the worst you can lose from the start is 3%. This still can add up to a lot, see the table above. This is not a bulletproof method.

Here’s an example of how to set up a stop-loss on Binance. The trigger is a little higher, so you can be put into the order book in time to sell. You probably can set the limit the same as the stop, but I wouldn’t risk it due to possible delay.

Setting a stop-loss

Predictions graphs, trading patterns and what to look for

Another thing that crypto traders will try to make you aware of are trading patterns. Humans are really good at seeing patterns where there are none. There are so many market patterns by now, that for every move, you’ll find a pattern. The problem is, all these are retroactive. They can’t predict the future. People try to act like they do, but they don’t. In short, every pattern is correct… until it isn’t.

A lot of patterns also serve as self-fulfilling prophecy. Once enough people start seeing patters and they all believe the next step will follow in accordance to them, they might act in a way that will force that movement. In other words, they complete the pattern. So, to some degree they can work, but I wouldn’t bet my money on it.

If you want to see some patterns and learn them for whatever reason, just search up “market patterns”. Pinterest has tons of them for every minute move.

Crypto trading patterns

What you want to do is find news about the coin. These can be the company that owns the coin partnering with someone, releasing a new tech, or being part of some event. This news can signal a good time to buy something. It means the company is active in its pursuit of growth. Transparency is key! A lot of companies have their own Twitter. If a company is silent, that’s a red flag.

Price change, order book, resistances and supports

Even though I said patterns are not worth looking at, one thing that is very real is the resistance. These are certain prices that the coin has trouble getting through. The perfect example can be the All-Time High (or ATH) price of the coin is usually a strong resistance. What does this mean?

When you are buying or selling a coin, you can do so through market buy (which buys the coin for the closest price in the order book) or you can set a limit buy/sell. Limit buy/sell is a price for which you are willing to buy or sell your assets. Once you set that price, it will be put into the order book. The order book looks like this.

Crypto trading order book
Binance order book

Quick explanation of the order book

The order book shows usually three columns. First, the price for which people are offering to buy or sell the coin. Second, the amount of how many assets/coins you can buy/sell for this price and the total amount in the cryptocurrency you are trading in. For example, the first line in the picture above shows that someone wants to sell 760 REEFs for 0.0272237 USDT which equals a total of 20.700120 USDT (760*0.272237).

So, if I’d want to sell my REEF immediately, I’d look for how much people are buying it for, see that the top price is 0.027213 USDT, and set that as my limit sell. Doing so, the order would get immediately filled. If I’d want to make more money, I’d set it somewhere higher, let’s say 0.0273 USDT. If I set my limit sell to this price, I’ll have to wait until all the other orders up to 0.0273 get sold.

Resistances

As you can see, to sell 0.0273, people have to buy all the previous ones. This can go really fast, or really slow if there’s a certain resistance. The resistance can be seen in the order book as those big red lines. Many people want to sell the coin at that price and the price won’t go higher until people buy it for that price. Here in the picture above, the biggest resistance is at 0.02722 with almost 160,000 REEF. Unless enough people buy all of it, the price will resist any upward trend. These resistances can be set at ATH or at any good looking price, where people want to make money.

Let’s say 100,000 people feel like they won’t see the coin rise over the price of 1$ since it never rose over that. And so they set their sell order to that price. One day, they wake up to money in their account because the price reached that amount.

Crypto trading order book
Binance order book posted again for quick reference.

Supports

Supports (also called buy walls) work the same way as resistances, just the other way around. There might be a lot of people that want to buy the coin because they see the upward movement or they just like the price. This means the price of the coin won’t fall under the set price until all of these orders are filled. In the image above, you can see that for the price to fall under 0.027210 USDT, people have to sell around 170,000 reef coins for these prices to fall under it. That is 32,719 REEFs for 0.027213 USDT and 145,833 REEFs for 0.027210USDT.

What to make of it?

Some supports or resistances in crypto trading can be in amounts of millions upon millions of coins. If you see an order book with tons of sell orders in and just a few buy orders, it’s pretty safe to say there’s a low chance that the price will move up as it just needs too much buying power. Unless there’s enough hype around it of course, but even then it’s risky. Usually, I tend to not expect the price to rise. But, just like everyone, I’ve been wrong many times.

On the other hand, if you see the exact opposite, it can be a good sign to buy in.

Emotions, and personal examples of FOMO

Trading is one of the worst things to put your emotions into. This is where you need to turn off the part of your brain that makes you excited or scared of missing out on stuff. The more you learn to eliminate these emotions while trading, the better.

Why? Because if you are scared that you will miss out on something big, you tend to buy at the moment where you will most probably lose money. And if you are excited about something, you might not sell when you are still in profit.

Trust me, both happened to me way too many times when I started. I bought in on GRT when it was at $0.12, pretty much at the very beginning and then I got so excited. I decided to put my entire portfolio into it when it was at $0.71. Of course, if you look at the graph of GRT below, you can see I put this money in at the very top.

And so, instead of earning enough money to buy a house with, I suddenly lost money on the best trade of my life. I sold the next day at $0.56. Since I added my entire portfolio into it, the loss was way more than it would be otherwise. I even tried riding the waves by day trading, only to lose more.

Candle graph of crypto trades showing rise and fall of GRT
1 day graph of GRT/USDT

What could I have done better in retrospect?

I could’ve done a few things:

  1. Not putting in more money when I already had a good profit. This was the worst thing I did. It sounds stupid, but I know a lot of people that did the same thing in their crypto trading journey. Look at the recent $GME failure. A lot of people bought in more at the top, thinking it will go higher, hyped up by their favorite YouTubers. Then once the price starts going down, the denial sets in and you keep believing that it will go up. Only it doesn’t.
  2. I should’ve set-up a stop-loss. But, back then, I didn’t even know what a stop-loss was. This is pretty much the reason why am I making this article, as these are the tips I would’ve wanted to know when I started. I lost my money because I had to go to sleep since I worked the next day and the thing was only going up. Let’s say it was a rough morning.
  3. I could’ve taken out some profit. When you are in as much profit as I was (around 300%) it’s better to take out the money you started with so you are sure no matter what happens, you are in profit.
  4. Another thing I could’ve done was to avoid the day trading after. Once I saw I was losing money, a better plan would have been to sell immediately and slowly get back up with other long-term trades.
  5. And the last possible choice was that I could’ve held on to the coin. Holding (or HODLing) a bag of coins you bought at the top is risky. This is because it might take months or even years for the coin to get back up to where you bought it.

    Still, if I had waited two months with GRT (which is not unrealistic as it’s a good project), I would’ve had my money back two months later as it reached $1.05. That means I would have all my money back and be in profit. Still, holding bags if you bought at the top is risky. You should understand you might never get that money back.

If you are sure these things won’t happen to you, all I can say is greed is stronger than you think and you have to train yourself to overcome it.

The danger of newly listed coins

Almost every day, new coins get listed on the market or exchanges. These listings oftentimes look like an easy way to gain money. You look up nearly every coin and can see that it is rising after launch. This can be misleading and can pretty much be the same as Pump and Dump groups, about which I have an article on, called Crypto Pump Groups – The Fastest Way To Lose Money. Pretty much you buy in the coin and so do thousands of other people because they believe the project can only go up.

$REEF the perfect example

What no one tells you is, that there are also early investors that bought in the coin before it was put on the market. They just wait a few seconds and sell their investments for profit, because the price tends to skyrocket. Then, it drops. I’ll use the launch of $REEF as an example. This launch had a nice countdown even on their page. So how did it go when they listed on Binance?

Crypto trading candle graph showing the disasterous launch of REEF
1 day graph of $REEF

You might be wondering why is it so small, the entire graph with that one spike. That is the launch day of Reef. My friend and I were excited about this coin. Great technology, transparent company, CEO that knows what he’s talking about. It had all the good signs. What we didn’t count on was the fact that there will be hundreds of thousands of people, way richer than us.

The launch was a disaster. The servers had so much traffic I couldn’t buy-in. When I did, I got in at $0.16. Then, I tried to sell, but couldn’t, because my order was processing. So the coin rose to $0.3 and plummeted down to $0.1 and int finished at $0.022 by the end of the day.

Currently, I am HODLing the coin, and even bought in some more as I still believe it’s a great project, but I might never get that amount of money back. I tried other coin launches and except for GRT, they all went the same way.

Aftermath

Needless to say, the company is not at fault here. Yet, people still went to every social media and called them scammers and a scam project. What they don’t realize, is that by doing this, they are digging themselves even deeper in their hole. For the price of the coin to rise, it needs to have a good media presence. If anyone googles Reef and finds a bunch of people calling it a scam, they will not add it to their portfolio. Luckily for Reef, it’s been getting some nice positive attention lately, so maybe I’ll see my money back one day.

What to do instead?

The safest bet with new coins is to always to wait until their price fluctuation calms down. When there’s not enough buying volume, it means the price will be pretty much stable at this point (or at least more stable). With Reef, this took about three weeks, with some coins it can be a day. That’s usually when I like to buy in as any buzz around the coin can mean the price going up.

Example of success

You can find a lot of people that do crypto trading full-time on Twitter. A lot of the time, these people will share their progress or coins they are betting on. One of such great examples is Lisa N Edwards, who seems to be very successful in her trading habits. She also encourages a lot of the trading habits I mentioned above, such as not betting on new coins because they are unpredictable, setting up a stop-loss with every trade and raising it as the price goes up, and doing her research about next possible coins. She is also using a lot of pattern readings, which I am not a fan of, but her results seem to be really good.

One of her followers @rippleitinNZ recently posted a tweet of their weekly crypto trading summary based on Lisa’s charts. Let’s just say it’s stunning what you can do with a good stop-loss and research.

If you’d like to get the spreadsheet @rippleitinNZ created – and it is a wonderful tool – then you can check this folder for the newest version and download it. Please, if you’ll use it, go to @rippleitinNZ‘s Twitter and send a big thanks their way. They put a lot of work into it, so let them know you like it. Examples of how to use it can be seen in the tweet above.

Be patient and ZOOM OUT!

As the last thing, I would like to say just… zoom out. In crypto trading, everything is happening so fast. You see these massive changes every day. While other markets grow a few % a year and saving accounts give you 0.7% a year, you can have changes in crypto that move in tens or hundreds of percent every day. It is very enticing to just put in that 1-minute graph and look for a quick way to earn money.

Please don’t do this. You need to know exactly what you are doing for this to be successful and most people don’t. There’s no reason you will be different unless you spend a lot of time learning from your mistakes. I’ll tell you the most important secret. The markets are steadily rising with the economy. Cryptocurrency is getting more and more popular.

If you’d put a blindfold on and threw darts into random biggest cryptocurrencies and invest in them, chances are you will be in profit by the end of the year. Practice patience and learn to zoom out. Sometimes the growth is not obvious in a 1-minute graph.

Summary

Well, this article turned out longer than I expected. I put quite a lot of research into this and halfway through I realized this would need more than one article. But, since I would like people to have this article saved and refer to it when they need it, I put most stuff into this one.

Either way, I hope you enjoyed this article. I know not many people read this far but if you did and you still don’t understand something, let me know in the comment below and I’ll try to answer it. If you liked what you’ve read, I hope you stick around as I’ll post more similar articles in the future. I wish you good trades and have a wonderful rest of the day!

I started my side hustling journey after joining my first job and thinking, there has to be more to life than the work, eat, sleep, cycle. There has to be a way that I can do something myself that I will be proud of. And from that day on, I tried dozens of different hobbies and side hustles. Now I'm sharing what I've learned. Contact: pete@sidehustling.tips

2 thoughts on “The Secrets of Crypto Trading

  1. Brilliant article and really helpfull! I am pretty new to all this and have been following Lisa on twitter recently ….attempting the 1000 to 1 million challenge and learning as I go!!! 🤷‍♂️ But of course making mistakes 😬

    1. Mistakes are how we learn. I lost a dizzying amount of money in my first 3 months. Luckily it was money I didn’t necessarily need. I am finally in the profit after doing what I wrote in this article, basically got back 450%. Just avoid pump groups, diversify your portfolio and set up stop-losses. Those are the 3 main things. Then try to follow the rest. I’m really glad you liked the article. If you’ll have any questions send them here or DM me on Twitter @S_HustlingTips.

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