Cryptocurrency Trading Guide
Like many things, trading cryptocurrency gets easier the more you do it. Once you spend time exploring and learning the ins and outs of the industry, you may be ready to build your crypto portfolio and find the right investments for you. Over time, you can expand your knowledge and skill set in crypto trading to enter a career in this industry. Taking courses, completing certifications, and building a proven track record of successful investments can help you land a role in helping others invest in and trade cryptocurrency.
What is cryptocurrency?
Cryptocurrency is a virtual currency designed to be secure and uninfluenced by governing bodies or third parties. This allows cryptocurrency to have a standard value regardless of the location. Many types of cryptocurrency coins are on the market, each designed to have its own benefits. There’s a good chance you’ve heard of Bitcoin and Ethereum, two of the most popular coins.
To keep transactions transparent and anonymous, cryptocurrency works on a type of technology known as a Blockchain. A blockchain is a virtual record of all transactions in the crypto space. Transactions are recorded as “blocks” that attach to previous blocks—forming a permanent record synced to all computers using the system. Blockchain tech is also used for smart contracts that execute automatically when terms are met.
What is crypto trading?
Crypto trading involves buying cryptocurrency at a certain value and selling it when its value rises. Many traders research market trends and price patterns to time entries and exits.
Cryptocurrency trading vs. cryptocurrency investing: What’s the difference?
Both involve buying at a perceived low and selling higher, but the holding period differs. Investors hold for long horizons (years to decades) and focus on fundamentals. Traders hold for shorter periods (days to months) and focus on short-term trends.
How to trade cryptocurrency
Trading is risky. Protect yourself with solid process and risk management:
1. Choose a reputable cryptocurrency exchange.
Use regulated, well-known exchanges and compare trading volume, security history, custody, and fees. Examples include Coinbase, Gemini, eToro, and Kraken—evaluate which fits your needs.
2. Create an account.
Verify identity and email address using the "One time password" (OTP) sent to your eegregistration email address
3. Deposit cryptocurrency into your account.
4. Buy, sell, and swap cryptocurrencies.
Select a coin (e.g., Bitcoin “BTC”, Ethereum “ETH”), choose an amount (you can buy fractions), and execute the trade. Later, you can sell back to fiat or swap to another coin.
5. Monitor your account and trade history.
Markets cycle through accumulation, markup, distribution, and decline. Tracking positions helps you spot patterns, manage risk, and decide when to take profits or cut losses.
6. Withdraw your cryptocurrency into a wallet.
When exiting to fiat or moving assets, use your exchange’s transfer/withdraw flows. Consider self-custody wallets for long-term storage if that matches your security needs.
Types of cryptocurrency trading
Your holding period shapes your approach—hours to months. Choose a style and build a strategy around it.
Long-term trading
Also called position trading. Positions may be held months or years. It’s generally easier to learn and more forgiving than short-term trading but still subject to macro swings and crypto’s volatility.
Short-term trading
Faster cadence, more research and screen time, higher stress. Common modes:
Day trading
Enter and exit within a day. Less exposure to overnight risk; requires focus and discipline.
Swing trading
Hold for days to weeks, targeting intermediate moves. Less intense than day trading but still strategy-driven.
What are the benefits of cryptocurrency trading?
Easy on-ramps and competitive fees on many exchanges.
Cryptographic security & immutable records enable streamlined, lower-fee transactions.
Potential for outsized returns in certain market cycles (with commensurate risk).
Some coins have capped supply, viewed by some as a hedge against inflation (not a guarantee of returns).
Crypto trading versus stock trading
Stocks represent ownership in companies; crypto assets represent network tokens with different economics.
Crypto volatility can be higher and less predictable.
Regulation of crypto varies by jurisdiction and continues to evolve.
Crypto trades 24/7; stock markets have set hours.
Many investors use broad stock indices (e.g., S&P 500) for diversified, long-term growth. Crypto offers different risk/reward dynamics—align your choice with your goals and risk tolerance.
Things to know to succeed in crypto trading
1. Timing matters.
Markets move in cycles. Study prior behavior to better time entries and exits.
2. Be patient.
Avoid hype-driven decisions. Let research and risk limits guide you.
3. Learn technical analysis.
Price structure, support/resistance, and momentum tools can inform trades.
4. Know your plan to buy and sell.
Define entries, targets, and invalidation levels before placing a trade. Stick to them.