OK, so by now, you’ve probably got a pretty good understanding of how crypto works, the basics and why it might be worth investing. So now for the fun bit actually making a trade.
But if you’ve already downloaded a crypto trading app or visited a crypto exchange website, you’ll have noticed that trading crypto isn’t exactly a walk in the park. Sure, Some apps are easy to use (Coinbase for example) but they tend to have the highest fees to use. The ones that provide the lowest fees (Binance) can be extremely complicated. Even if you’re using a beginner app, how do you know you’re getting the right price? What if you can’t buy your crypto of choice with GBP? Should you keep your crypto in your wallet or should you be investing it? We break these down and more in this article, so read on cheapskates!
“Right now Bitcoin feels like the Internet before the browser”
As always, the following is not financial advice, read our disclaimer
For the purposes of this article, we’re going to assume you are using binance to conduct all of your trades (scroll to the bottom of this article to sign up to binance and get 10% off all trade fees!) but you can apply the same tips and strategies to any trading app, though the wording and exact functions might work a little different.’
Making a trade
OK, so first things first, we need to walk through how to buy a crypto coin. Sounds pretty simple right? Just buy BTC or whatever coin you want with a debit card? Not quite. Crypto trading doesn’t work in quite the same way as buying stocks and shares and instead is more like exchanging currency at the foreign exchange – the difference is that the price is live and usually changing by the second. To complicate matters, some crypto currencies can be exchanged with your local currency, but not all. Many popular coins like BTC and eth will usually have a GBP (and USD) pairing, but many won’t. In this case, once you’ve deposited your local currency into your account, you’ll need to search which currencies you can exchange into the currency you’re trying to purchase and change your local currency into that intermediary currency first. For example, you can’t convert ALGO (algorand) with GBP directly, but it does convert with BTC. So you could first convert your GBP into BTC and then your BTC into ALGO. Easy. Sort of.
What we do
We use the binance platform to trade and hold all of our crypto currency. The good news is, binance have their own currencies (namely BNB and BUSD) Practically all crypto currencies can be bought through the binance platform using one of these coins and what’s more – using them to trade is fee free. We prefer to convert our GBP straight to BNB when we deposit so its ready to trade when we need it.
Ok, but once I’ve worked out a pairing, I’m good to go right?
Well…… almost. When you execute a trade, you’ll be asked what type of trade you want to conduct. For the purposes of this article, we’re just going to talk about ‘market’ orders and ‘limit’ orders. If you’re new to crypto, ignore everything else.
This one’s the simplest form of trade. When you conduct a market order, you purchase the currency you want at the exchange rate at that exact moment in time. The rate of exchange is changing every second as people buy and sell. With a market trade. You’re committing to trading the currency at the advertised price. Broadly speaking, you know where you stand with this type of order. Note though that because the price fluctuates, at the exact moment you trade, the trade may cost you slightly more or less than what you thought.
A limit trade is just that, a limit you set on the price you’re willing to buy or sell for. For example, if you want to buy BNB coin but it’s currently selling at $350, and you think it could dip as low as $320, you could make a limit order of $320 so that if the price hits that point, your trade executes. Of course, there’s always the risk here that it never hits that point again.
What we do
As a general rule, we keep an eye on prices and place market orders when we want to buy, but when the price has been noticeably volatile (as it has been lately), we have regularly submitted limit orders in an attempt to capture a potential short dip in a coins price overnight.
Cool, so what now?
Once you’ve made that first trade, the currency you bought will sit in your ‘wallet’ on your chosen app, just like an online bank account. Fingers crossed, the value of that currency will increase in value. But there is more you can do before putting it in the hands of the gods. many apps will allow you to earn interest in your new currency. We go into greater detail on the fam different ways you can earn on your crypto layer in this series, but if you’re using Binance or Coinbase, it’s worth checking to see if they have a savings account for your new cryptocurrency. If they do, it means you could earn some additional interest on top. Nice!
Thanks for reading! Head on over to our investing section HERE to see what else we’re investing in or click ‘next article’ below. In our next instalment, we talk through some of the most famous currencies, the currencies we personally invest in and why we do!
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