Crypto Trading Basics
Trading crypto is different from investing: it is about short-term price movements, not long-term holding. This guide covers order types, position sizing, risk management, and the common mistakes beginners make.
Order Types Every Trader Should Know
- Market order — Buys or sells immediately at the best available price. Fast, but you may pay a small slippage on volatile markets.
- Limit order — Executes only at your chosen price or better. Gives you control but may never fill if the price never reaches your level.
- Stop-loss — Automatically sells at a price below your entry to cap your loss. Essential for risk management.
- Take-profit — Automatically sells at a price above your entry to lock in gains.
Position Sizing
Position sizing is the single most important risk skill. A common rule is the 1% rule: never risk more than 1% of your account on a single trade. If your account is $1,000, that means a maximum loss of $10 per trade. This keeps a losing streak from blowing up your account.
Risk Management Rules
- Set a stop-loss on every trade before you enter.
- Never trade money you cannot afford to lose.
- Do not use heavy leverage; liquidation can happen in an instant.
- Diversify across a few assets rather than betting everything on one.
- Take profits on the way up — do not let winners turn into losers.
Common Beginner Mistakes
- FOMO buying after a coin has already pumped.
- No stop-loss, then holding through a long drawdown.
- Overtrading — paying fees on too many small trades.
- Chasing shill coins and tips from strangers.
- Letting one winning trade inflate your confidence.