In this article, you will learn the basic things to help you trade successfully and securely on centralized exchange apps. Some of the tips you will learn from this tutorial article include: how to signup with any crypto exchange, how to setup 2FA for your exchange apps, different types of crypto trading (spot, margin and features trading), various ways to buy and sell cryptocurrencies, etc.
How to Sign Up with Any Exchange Platform
Before you can use any centralized exchange platform, you need to first register with the platform and then login to the account. The sign up form for any decentralized exchange is very simple.
Here are some of the things you need to put in place before sign up with an exchange platform:
- A Valid Email Address: It is recommended that you create a separate email account specially dedicated to crypto trading. Use Gmail account. Whenever you withdraw or deposit funds into your account or login from another device, you will be notified via email.
- A Strong Password: Always create a very strong password that will be hard to guess. Don’t use your phone number or date of birth. Ensure that your password contain alphabets; both lower and upper cases, numbers (0 to 9), and special characters.
- Phone Number: Most exchange platforms require that you bind a phone number to your account. This is for security purpose. You can dedicate a phone number for this purpose. But make sure that the phone number is always active.
- A Two Factor Authentication (2FA) App: 2FA adds an extra security layer to your account. This means that even if a hacker gets your phone number, username and password, the hacker cannot still login to your exchange account unless he provides a 6-digit time based passcode generated by the 2FA app. The most recommended 2FA apps are Google Authenticator and Authy. You can get them for free from Google or apple play store. How to setup your 2FA app has been explained below.
NOTE: 2FA is not required during sign up, but will be required when you wish to add an extra security layer to your apps. Meanwhile, download and install the 2FA app on your mobile device.
Once you have put all these in place, go to the exchange website to sign up with them. Follow the screen to screen instruction. It is simple. You can sign up directly from the website and then download and login through the mobile app, or you sign up through the mobile app and then login.
How to Set Two Factor Authentication (2FA) for your Exchange Apps
Two factor authentication is an extra security feature that is used to secure apps. After setting 2FA for any account, you will be required to provide a 6 digit code alongside your username and password. This 6 digit code is randomly generated by another app. The 2 most popular 2FA apps are Google Authenticator and Authy. This means that even a hacker got your username and password, without access to this randomly generated code, the hacker cannot login to your account from any device.
NOTE: It is always recommended to activate 2FA for all your exchange app. Also activate 2FA for the emails you use in signing up with the exchange platform.
To Set Up Two Factor Authentication (2FA):
- You need to download and install a 2FA app on your mobile device. The two most popular 2FA apps are Google Authenticator and Authy. You can get them for free from Google or apple play store.
- Now open the exchange app or any other app you wish to secure. Go to Settings > Google Verification or 2 Factor authentication.
- Copy the setup key from the app you wish to secure. A setup key is usually a 12 or 16 digit code that will be required by the 2FA app in order to generate the random 6 digits passcode. Write down your setup key in a safe place so that if you lose your phone, you can easily setup a new 2FA app with it. Alternatively you can chose to scan the QR code with your 2FA app.
- Now launch your 2FA app and tap the + sign to add a new account. Specify if you wish to scan a QR code or enter a setup key.
- Enter any name as the account name. You can use any name of your choice that is associated with the account you wish to secure. For example, if it is your Binance app, you can type Binance as the account name. Paste the setup key you copied from the app you wish to secure. Then click on Add.
- The 2FA app will generate a 6 digit code that is time based. Once the time elapses, a new code will be generated.
- Copy the code and go back to the app you wish to secure to confirm that everything is working fine. Paste the 6 digit code. If you got everything fine, you will get a success notification.
- So anytime you wish to login to the secured app, you must provide a 6 digit passcode from your 2FA app.
NOTE: 2FA apps are not only used to secure crypto exchanges, you can also use them to secure your social media accounts, email accounts,WordPress admin accounts, etc. The above 2FA setup guide is for Google Authenticator app. If you need a step by step guide for setting up Authy app, check this guide.
Spot Trading vs. Futures Trading vs. Margin Trading
Crypto spot trading, futures trading and margin trading are not the same. They have similarities and differences which you need to know in order to know the one to dive into.
When it comes to cryptocurrencies trading, spot trading is the most basic type of investment you can make. This essentially entails purchasing crypto such as Bitcoin and holding it until the value increases or using it to buy other altcoins that you believe may rise in value. At any point, you can decide to buy or sell any of these currencies against USDT, BTC or any other base coin (such as KCS in the case of KuCoin or BNB in the case of Binance), depending on the trends you see or the strategies that you have. Spot trades occur in the spot market and are characterized by the immediate or near-immediate delivery of the commodity, in this case cryptocurrencies.
For example, if you want to exchange your ETH to BTC, you’d go to the ETH/BTC spot market. Once your orders are filled, your coins will be swapped instantly. Spot trading is one of the easiest ways of trading cryptocurrencies, with the least level of risk.
Note that whenever we mention cryptocurrency trading in this book, we mean crptocurrency spot trading.
In margin trading, you borrow money from an investment broker (third-party), and then use the borrowed money to buy more asset than you can normally buy on the same spot exchange, while paying daily interest fee to the lender. In effect, trading on margin amplifies results; both to the upside and the downside. You also make huge loss if the price of the asset goes south because the lender does not bear the loss with you. You still have to pay back the money you borrowed completely, plus the daily interest fee.
An exchange with margin is where you can trade with leverage, but you will pay a daily interest rate and bleed paying fees.
Margin refers to the amount of capital you commit from your own pocket. Leverage means the amount that you amplify your margin with. So, if you use 2x leverage, it means that you open a position that’s double the amount of your margin. If you use 3x leverage, you open a position that’s three times the value of your margin, etc.
Futures Contract Trading
A futures contract is a type of derivatives product that allows traders to speculate on the future price of an asset. It involves an agreement between parties to settle the transaction at a later date called the expiry date. The underlying asset for a contract like this can be any asset like cryptocurrency, commodities, stocks, and bonds. Future contracts trading is the most “advanced” type of trading.
In the Bitcoin derivatives market, Investors enter into an agreement/contract to buy Bitcoin at a predetermined price and a specified time in the future. If your guess is okay, you earn profit when the contract expires. Also, in futures trading, investors don’t own actual bitcoins, rather they trade on the speculations of the market prices of Bitcoin. Bitcoin contracts which can either be futures, perpetual contracts, swaps, or options obtain their value from the value of Bitcoin.
In futures contract trading, there’s no daily cost of interest (except in perpetual futures contracts). The futures contract will either trade at a premium or discount. When you place a trade on a futures contract, you will know exactly how much interest you will be paying over the life of the contract.
Which of the Crypto Trading Type should you go for?
As a new trader with little experience, I will recommend spot trading because it is less risky. In the case of loss, you only lose part of your capital.
Of all the three types of trades, margin trading is the most risky because in the event of loss, you will lose multiples of what a spot trader will lose, plus the daily interest fee you have to pay.
In the case of future trading, a small percentage drop in price can make you lose your entire capital if you chose a very high leverage. Also, you have to wait for the contract to expire before you can take your profit if your price guess is correct.
In summary, margin trading involves significantly more risk than spot trading. The same applies to future trading. Only experienced investors with a high tolerance for risk should consider margin and future trading.
Different Ways to Buy and Sell Cryptocurrencies
To Buy a Cryptocurrency, you have 3 main options:
- You can buy with a credit card from an exchange app. Most times, you need to complete your KYC (Know Your Customer) with the exchange platform before you can buy a crypto coin with your credit card.
- You can exchange some of the crypto coins you bought earlier for the new one you wish to buy in your exchange platform.
- You can also pay your trusted friends who are willing to sell their coin to you in your local currency. There are some other third-party sites that offer this service. But you need to be very careful. Make sure you trust the source before you make payment, else you will be scammed. If possible, look for apps that implement escrow feature so that the seller only receives your money once you have acknowledged that you have gotten the coin. You simply give them your wallet address of the coin you wish to buy.
To Sell a Cryptocurrency, you also have 3 main options:
- You can sell it through an exchange platform. If you sold it for fiat money, you can cash out the funds into your bank account. If you sold it for another cryptocurrency, you can send the coins to your personal wallet. But make sure your wallet accepts those coins before sending the coin there.
- You can sell to a friend who wants to buy the coin you wish to sell. Make sure you sell only to people you trust to avoid being scammed.
- Also, there are third-party sites that buy cryptocurrencies, especially BTC at a fixed rate.
How to Recover Coins Sent to a Wrong Address on any Blockchain Network
Most times, it is difficult or almost impossible to recover funds transferred to a wrong address or blockchain network. But in some cases, you can recover these lost funds.
Check out these helpful guides:
- How To Recover Funds Sent to a Wrong Public Address
- How to Recover Coins Sent to the Wrong Address?
- How to Recover Crypto Transferred to the Wrong Network on Binance
YouTube Tutorial Video: The Ultimate Cryptocurrency Trading Course for Beginners
You have learnt how to signup with any crypto exchange, how to setup 2FA (google authenticator and authy) for your exchange apps, spot vs. margin vs. features trading, various ways to buy and sell cryptocurrencies, etc. Feel free to apply these tips in your crypto trading and investment career. If you have any contribution or question about the topics covered in this tutorial article, feel free to drop them in the comment section below. Enjoy!
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