A Beginners Step-by-Step Guide to Trading Cryptocurrencies

Step by Step guide on buying your first cryptocurrencies

There is a lot of information on cryptocurrencies, and it can be very overwhelming. In this document I will break down the process into simple steps. At the conclusion of this document, you should understand how to register with Cryptocurrency exchanges, identify appropriate altcoins, and trade the coins on the exchanges.

Section 1 (Getting Started)

  1. Select a Fiat-to-Cryptocurrency Exchange: Fiat money is money that Government has declared to be legal tender (e.g. dollar, euro, pesos etc.). Not all exchanges accept fiat currency. Most of them only accept Bitcoin or Ethereum, but how do you get Bitcoin? That is where Fiat-to-Cryptocurrency exchanges come in. Below are four well known fiat to cryptocurrency exchanges you can start with (Coinbase is the most popular)
    1. Coinbase
    2. Gemini 
    3. Kraken
    4. Bitstamp 
  2. Once you have selected your Fiat-to-cryptocurrency exchange, the next step is to register. I will use Coinbase (the most popular) to show you how this is done.
  3. Visit coinbase.com and then click on the Sign up button
    1. Enter your name, email, and password in the fields provided

    1. Your account has been created. Check your email address for verification email.

Then click on Verify Email Address button

    1. When you click on the verify email address button, you will be taken back to Coinbase website. Now you will need to fill out the necessary security information (ie phone number, 2fa)

Enter Phone Number

You will receive a text on your phone. Type the code into the field.

    1. You are now signed up for Coinbase. Next click on Settings
    2. Setup two factor authentication by clicking on “Enable Authenticator”. This step is critical, and it adds an additional layer of security to your account. When 2 factor authentication is set up, you will be asked to enter a code generated from your authenticator. Currently your default two factor method is SMS (i.e. through text messages), but this step will change the method to authenticator. It is advisable to make this change.

You will receive a text message. Enter the number you received in your text message

The authenticator screen will show up. On this screen you will be provided with an “Authenticator Secret Code” that you will use to setup your authenticator

Appendix A

    1. You will need to download an authenticator app on your phone, and use the app to scan the bar code above, OR you can type in the “authenticator secret code”. There are three authenticator apps recommended by Coinbase
      1. Google Authenticator (https://play.google.com/store/apps/details?id=com.google.android.apps.authenticator2&hl=en)

      1. Duo Mobile


      1. Microsoft Authenticator


    1. I will use the google authenticator app in this example
When you open the app you will see authenticator codes for all your exchanges. If it is your first time opening the app, this screen will be blank Click on the plus sign. The screen below will open. Then Select “Manual Entry” or you can select scan barcode If you select manual entry, enter the “authenticator secret code” from Appendix A above in the Key field. And type an account name that can help you identify it eg “Bitgo”
    1. Now that you have setup two factor authentication, your Coinbase Registration is complete!

    1. The next step is to fund your accounts. Make sure you select the “Dashboard” Tab at the top of the screen then click on “add a payment method”

    1. You have the choice to fund your account with a bank account or credit cards. Credit Cards are immediate but the fees are the highest. Make your choice and follow the instructions

    1. Now that your account is linked, it is time to buy your first cryptocurrency.

Select the “Buy/Sell” Tab, then select the cryptocurrency you want to buy. In the screen below, Bitcoin is selected. This means we are trying to buy Bitcoin from a FIAT currency bank account. In the “payment method” field, select the bank account that you linked in the step above. Then type in the “amount” of Bitcoin that you want to buy. You can either type in the amount of bitcoin and it will calculate the dollar amount, or you can type in the dollar amount and it will calculate the number of bitcoins. (*Note* to convert back to Dollar from cryptocurrency use the “Sell” tab)

    1. Once you have bought the Bitcoin, you can click on the “accounts” tab. There (on the left) you will see all your wallets (Bitcoin, Litecoin, Ethereum and Bitcoin cash). Click on the wallet you want to look at. In the screen below the “Bitcoin wallet” has been selected, and you can see that there is a $320 transaction that is pending.

Next you should enable your Dollar wallet. The Dollar wallet is the account that holds your dollars on Coinbase. If you want to convert from cryptocurrency to Dollar without moving it back to your bank account, you can use your Dollar wallet. It makes for faster trading, and you will have higher transfer limits. The Coinbase Dollar wallet is insured by FDIC (Federal Deposit Insurance Corporation) for up to $250,000. Even if Coinbase were to fail as a business, the funds held in the custodial bank accounts could not be claimed by Coinbase or its creditors.

To setup your USD wallet you just need to click on USD wallet and fill in some identification information like name, social security number address etc.

Section 1 Summary: In the above section you learned that to get started in Crtyptocurrency trading, you need to fund an exchange that accepts Fiat currencies. You also learned that you should setup 2 factor authentication to secure your funds on this exchange. We did one example of registering and funding a Coinbase account.

Section 2 (Discovering new Coins)

There are thousands of altcoins in the ecosystem. The best way to discover them is to visit the following website:

Above is a screenshot of coinmarketcap.com. You will see a list of cryptocurrencies ranked by their market capitalization (Market Cap).

Market Cap = Circulating supply * Price

Circulating supply is the amount of coins in circulation.

You can click on the currency name to get more information about it. I have clicked on Ripple in the example below. You can see the price charts when you select the “Charts” Tab.

Next click on the “Markets tab”, the source column will tell you which exchanges have these coins available for purchase. In the screenshot below you can see that Ripple is available for purchase on exchanges Binance, Bittrex, HitBTC, Poloniex and many others. Therefore if you want to buy Ripple you need to create an account on any of these exchanges.

Section 2 Summary: In this section you learned how to discover new altcoins and where you can purchase them.

Section 3 (Trading altCoins)

Bitcoin is the original cryptocurrency. It is the first, and every coin that came after it are referred to as altCoins, i.e. an alternative to Bitcoin. We already showed you how you can buy Ethereum, Litecoin and Bitcoin Cash. They are all available on Coinbase, but for all the others, you will have to use alternative Cryptocurrency exchanges. In the last section, I showed you how to find out which exchanges they are available on. So in this section I am going to show you how to buy the coins. Below is a list of some of the most popular exchanges for buying Altcoins

Binance is one of the most popular exchanges for buying altcoins, so I will use it as an example, but you can repeat these steps for most of the others.

  1. Go to Binance
  2. Click on Register button, then fill in the information below

  1. Check your email for a new message from Binance. Click on the “verify email” button in the email message.

  1. Once you log on, you will be told to sign up for 2 factor authentication. I have already shown you how to do this on Coinbase. The process is the same on Binance.

Next you have to fund the exchange. Click on funds>Deposits Withdrawals

  1. You will see a list of cryptocurrencies, and next to them there will be two buttons. Deposit and Withdrawal. Click on the deposit button to deposit funds into Binance. The withdrawal button is to take your coins out of Binance.

Click on Deposit. Then copy the address in the BTC Deposit Address field. This is your bitcoin address on Binance. You can now send your bitcoin from Coinbase to this address.

Go back to Coinbase then click on the Accounts tab and then BTC Wallet. A “Send BTC” window should open. Paste the Binance address into the recipient field. Then enter the amount of BTC you want to send, and then hit the continue button. In the next window you will confirm the payment, and the money will be sent over to Binance.

Depending on the congestion of the network, it should take no more than 20mins for the bitcoin to be sent over. When it arrives in Binance, the “Total Balance” of Bitcoin will change to the amount you have sent over.

Now that you have funded your Binance account with BTC, you can now use the BTC to buy alt coins. Click on the Exchange tab and then Advanced. This will take you to the trading platform.

Click on the drop down highlighted in yellow, you will see a list of all the alt coins you can buy with your BTC. There is also the option to buy altcoins with Ethereum (ETH), USDT and BNB currencies. In the example below we have selected Ripple (XRP)

Once you select the altcoin you want to buy, all the data you will need to perform this transaction will pop up

  1. Section A is the price chart, it tells how the price of ripple has moved relative to the price of bitcoin. The chart above is set to 2h bars, which means every 2 hours a new price Bar will appear. The pink bars are bars that opened on a high and closed on a low (ie the price went down) and the green bars represent the price going up
  2. Section B is the volume and it tells you the amount of transactions that happened for each bar.
  3. Section C are the sell orders for this currency
  4. Section D are the buy orders for this currency

At the bottom of the screen there are two more sections. This is the section we will use for buying and selling the Altcoins. You can buy XRP and Sell XRP with this field.

Whether you buy or sell there are only 3 types of orders you can do

  • Limit Order: In a limit order you enter the BTC price you want to buy XRP at, and the amount of XRP you want to buy, then click Buy. This will establish a limit order. If that price is ever reached your order will be filled.
  • Market Order: Use this option if you want to buy XRP immediately at the current market price. Just click on the Market tab, then enter the amount you want to buy or sell. You don’t need to enter a price. Percentages are a fast way of entering the amount, if you click on 100% you are saying, use all my Bitcoin to buy the XRP, if you click on 50% you are saying use 50% of my bitcoin to buy XRP etc.
  • Stop-Limit Order: Traders use stop-limit orders to protect themselves in case the price falls. Example, if you bought XRP at the price of .00015, you may put a stop-limit at .00010. If the price falls to .00010, the system would automatically sell your position for you.

Section 3 Summary: In this section I have shown you how to:

  1. Register with exchanges to trade Altcoins
  2. How to fund these exchanges
  3. How to withdraw coins from these exchanges
  4. How to trade for more altcoins

Section 4 (Tracking your portfolio)

We have funded our numerous accounts and bought a number of different altcoins. The final step is to track the portfolio. Exchanges like Binance only tell you how much your entire holding has grown, it is not very good about telling you how each trade has grown overtime. The best way to track all your trades is to use a tracking application. There are many out there, but here are a few of the ones I know about:

Usually these applications have an API that directly pulls trade data from your cryptocurrency exchange. Some of them require you to manually type in the trades and prices, while others allow you to upload an excel extract from the different exchanges. Look through the different sites and find the one that works best for you.

And that’s it! Now you know everything you need in order to start trading cryptocurrencies! Remember you can lose all your money with the wrong decisions, make sure you do your research and keep your exchanges and wallets secure!!!