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How to Trade Cryptocurrencies

  • Andrew Strogoff
    Cryptocurrency trading guide

    Eight steps to start cryptocurrency trading and how to avoid common mistakes


How to Trade Cryptocurrencies
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Almost everyone has heard about Bitcoin, altcoins and the opportunities that they offer not only to those, who own them but also to those, who speculate or invest in cryptocurrencies. The number of traders is growing every day and the beginners want to know how to trade cryptocurrencies and to earn money in this industry. We have decided to create a guide for crypto traders with a step-by-step explanation of how to begin and what to do.

Step 1. Find an exchange

Ethereum752_CCN_12.14.2017

The first thing every trader has to do before starting his or her career is to choose a place where to place orders (to buy and to sell cryptocurrencies). There are several exchanges nowadays offering services to different types of investors.


How to find a good one? We are going to write a separate guide, but here we give you some key points. What aspects are important to pay attention to before creating an account? They are the following:

  1. Reputation of an exchange. When you find one, look for more information about its activities and reputation. Read traders’ testimonials. However, do not forget, that those testimonials may be bought by exchange or its competitors.

  2. Security level. Early exchanges like MT.GOX and the others had very poor security levels allowing hackers to breach their systems and to stole traders’ money. Nowadays many websites use hot and cold wallets, multisig and other serious methods to ensure the safety of investors’ funds.

  3. Trading conditions. This is an important factor as exchanges offer different commission plans for depositing and withdrawals, as well as for inner trading transactions. Some websites have no inner commissions at all (like Cobinhood, for example).

  4. Depositing and withdrawal methods. There are two main types of exchanges. First offers Bitcoin, Ethereum and several popular coins along with fiat money. You can use banking cards and some electronic payment methods to deposit and withdraw from there. Second offers hundreds of altcoins, but as for depositing and withdrawal, you can use cryptocurrencies only.

  5. Trading platform. Some websites offer Tradingview platforms with different types of analysis tools like indicators, lines, channels, Fibo and the others. On the other hand, some exchanges offer simple and primitive trading terminals with Japanese candlesticks and timeframes. There are no analysis tools there.

  6. Order types. Professional investors prefer websites with different types of orders including limit, stop losses, take profits and the others.

  7. Verification procedure. Privacy is the key advantage of the crypto industry. However, the majority of exchanges require verification.

Recommendation:

Before you take the final decision to start trading with one or another website, try to contact their support service. Pay attention to how fast and complete the answers are.

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Step 2. Create an account

When the first step is done, meaning you have found an appropriate exchange, your next step is to create an account. Almost all exchanges have a simple sign up procedure. You need to create a login, provide an email address and a password.

Registering procedure comprises email confirmation. Some websites recommend installing two-factor authentication in order to increase account safety level.

Recommendation:

You may be asked to complete the account verification procedure in order to remove the restrictions. We strongly recommend providing the exchange with correct personal data as you will be required to send your ID documents scan copy.

Step 3. Choose your coins

Choose your coins

Bitcoin is not the only one nowadays. There are hundreds of different altcoins that you may invest in or speculate on. Professional traders advice to choose a couple of coins to start. The wide range of cryptos is good for diversification. However, beginners are recommended learning more about each asset they are going to buy, especially when they are going to invest. Why is this necessary?

First, when you plan to buy a cryptocurrency in order to hold it for a long time, you need to understand what is behind its price. Every coin is not simply a currency, but a project using some technology and offering some benefits to the users.

Ethereum, e.g., is a platform for developing decentralized applications and smart contracts. The last serve to conduct any kind of business without intermediaries. Monero is a secure and untraceable cryptocurrency, allowing users to conduct transactions with a high level of anonymity.

In order to understand whether it is a good idea to invest in this or that coin, you need to analyze whether it is promising or not. Every project has its own website and whitepaper, which are a kind of a presentation. Moreover, you can find detailed coins’ reviews on our website, which facilitates forecasting procedure.

Second, you need to compare the price of the chosen cryptocurrency with its perspectives with regard to its technology. Some coins may grow for no apparent reasons. There are risks of a pump & dump manipulations in this case. Such cryptocurrency is not for long-term investors as once manipulators reach their goals, they will dump coin and its price is likely to fall towards the initial levels (before the pump and dump strategy was launched).

As for traders who speculate on coins in short term, they also need to learn more information about the cryptocurrencies they are going to trade. However, as they buy and sell currencies within a couple of hours or days, they are better to pay more attention to technical analysis.

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Step 4. Choose your amount to invest

Before you can start trading cryptocurrencies, you need to deposit some amount of money to your trading account. How much money to invest?

It makes sense to deposit as much as you can in order to earn higher profits. However, cryptocurrency trading is risky as any other type of speculations and investments. You may have significant profits there but also lose all your money (or part of your investments).

How to choose the right amount? There are several pieces of advice. Let’s go through some of them:

  1. The easiest way to determine how much money to invest is to understand how much money you can lose without any psychological consequences. The more money you put into your trading account initially, the more you will be under psychological pressure.

  2. Determine your trading goals. Sometimes it helps traders to understand how much to deposit.

  3. Never take loans or make debts to increase the amount of your trading account. Otherwise, you risk losing not only your money but also borrowed funds that you will need to repay later.

  4. Another advice is to avoid taking money from family’s budget. Trading funds should be free of any obligations.

Step 5. Analyze charts and events

Analyze charts and events

Before you take any trading or investing decisions, take a look at the charts in order to forecast prices. There are several tools that you can use in order to understand whether to buy or to sell a coin. You need to have a strategy, which will give you nearly exact entry points.

Is it enough to simply analyze charts? Naturally, you need to combine technical analysis with fundamental forecasting method. It is better to keep your ears open as technical analysis can’t show you the drivers that make prices go in this or that direction.

When you know the reason for fluctuations and trends, you have an important information that may help you not only to forecast future directions but also to understand their lifespan.

Let’s see South Korea bans crypto exchanges. What will happen next? Bitcoin and altcoins will probably suffer significant losses as South Koreans will eventually get rid of cryptos. This decision will also be a sign of another serious cryptocurrency crisis as coins will lose their credit among newcomers.

This is just an example of exchanges work in South Korea with no limitations in the moment of writing and it is unlikely they will be closed or banned in future. However, this example is a good one as it shows how the situation may change in case of similar events.

Is it possible to trade without any analysis? If you want to exchange one crypto on another in order to use coins to buy something or for other purposes, you may skip analysis as you need crypto in the moment of buying and you will not wait until it becomes cheaper to buy or more expensive to sell.

However, if you want to make a profit by buying one coin and selling another, analysis is the key factor of success as you need to forecast future prices.

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Step 6. Diversification

No matter what you are going to do – investing or trading, diversification is the key to successful market operations. What does it mean “to diversify”? When you buy one coin, you risk losing all your investments or a part of your funds in case if the price of this crypto falls down. When you buy several coins simultaneously, those risks are distributed between all your portfolio.

In case all coins fall down, you will lose all your investments or a part of your funds. However, if several coins hold their positions and even grow at the same time when the others fall down, you have a chance not only to save your money but even to make profits.

Diversification is rather hard as you need not only to buy different assets but look for the currency pairs that have no correlation (or minimum correlation). Otherwise, there is no sense in such activity. Let’s say you buy some amount of Bitcoin and Litecoin, two currencies that have almost 100 percent correlation meaning BTC and LTC have the same trends. When Bitcoin goes upwards, Litecoin follows it and vice versa, when BTC/USD falls down, LTC/USD does the same.

It makes no sense to buy both currencies to create a portfolio as they go in one direction in the majority of cases. Therefore, you need to find such cryptos that have no connection between each other.

Step 7. How much to invest in a single position

Before you place an order, you need to calculate you single position amount. Many beginners having no skills or experience in cryptocurrency trading, put all their money into trading. Let’s say they have $1,000; they buy Bitcoin for $1,000 leaving no money in reserve.

This is a very poor money management strategy as when you invest all your funds in one single position, you leave no reserve behind you. If there is other interesting opportunity, you will have no money to open position.

It is better to trade using less than 5% of all your funds as this strategy reduces risks. Additionally, you have a reserve, which may be used later when other trading opportunities arise. Let’s say you have deposited $2,000 to your trading account. The amount of a single investment may be $100 in this case.

Why is it necessary to follow money management rules? They make a trader more disciplined and help to protect an investor from higher risks. Money management is a very important point, which is described in one of our next lessons.

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Step 8. Choose your order type

Several exchanges offer different types of orders nowadays. In addition to market orders, you may use the following types:

  1. Limit Order.

  2. Stop Market.

  3. Stop Limit Order.

  4. Trailing Stop.

  5. Fill or Kill.

  6. One Cancels Other.

Let’s describe all of them. Market order is the simplest way of cryptocurrency trading as you buy an asset at its current market price. Let’s say you want to buy Bitcoin. Its current price is $8,000. This price meets your requirements and you place market order. The system automatically matches orders and the transaction is conducted instantly.

Limit orders are executed at the desired or better price. This one is a bit harder as you need to forecast not only the market but whether the price is going to reach your Limit Order level as well (otherwise, you will not be able to open a position).

How does it work? Let’s say, Bitcoin price is $8,500. You want to buy BTC/USD but think that its price will fall down towards $8,000 before going higher. You can place a Limit Order in this case at $8,000 in order to “catch” the best possible price.

What will be next? Let’s see BTC/USD’s price falls down to $8,000. You Limit Order is executed and you are in the market. In case if the price falls to fall down to $8,000, your Limit Order will be suspended until the price touches the level.

Stop Limit Orders are used when the market volatility is high. Let’s assume you want to buy BTC/USD. The price currently is at $8,000. You think that Bitcoin is able to fall significantly during the next fork. However, you don’t want to sell it now as it has perspectives to grow as well. What to do next?

You may place Stop Limit Order at $7,000 for example. If the price reaches this level, Stop Limit Order will become a simple Limit Order (sell). The same thing for situations when the price goes upwards. You can place an appropriate Stop Limit Order to buy an asset if the price starts an uptrend.

Those Stop Limit Orders are especially useful in situations when you work with levels meaning you think that BTC/USD will break through the next resistance level for instance. However, there is no entry point currently. You want to open a position only when the price jumps over the resistance line. You need to place a Stop Limit Order above this level.

Stop Loss Order is designed to reduce traders’ risks. When you place it at a certain level, you want your position to be automatically closed there. Stop Loss Orders are tools of risk management. Let’s assume you have placed a BTC/USD buy order at $8,000 meaning you think the currency pair is going to grow. In order to protect your position, you place also a Stop Loss Order at $7,500. If the price goes downwards and reaches $7,500, your position will be closed automatically. You lose $500 in this case, but if the price continues to fall down, your Stop Loss Order prevents you from further losses.

Trailing Stops is a kind of Stop Loss Order. It varies from standard SL as it will follow the price at a certain set distance once placed.

Fill or Kill is a Limit Order, which his to be completely done or canceled.

OCO (One cancels Other) allows placing a couple of orders. If one of them is done, another cancels automatically.

Conclusion

We have described the main steps of cryptocurrency trading. They are very important as trading success comprises many aspects including the right choice of exchange, analysis, rules of money and risk management.

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DOBI Trade Review: Safe Cryptocurrency Exchange or House of Cards?

  • Alex Morris
    ⭐ Features

    Under the veneer of a safe exchange, DOBI Trade hides inflated trading volumes that need a more thorough review. Read our review to find out how safe DOBI Trade is


DOBI Trade Review: Safe Cryptocurrency Exchange or House of Cards?
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DOBI Trade General Information

DOBI Trade is a little-known Chinese exchange that started operating in May 2018. Apart from its website, the exchange also has an Android app.  

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Unlike major crypto-to-crypto exchanges, DOBI Trade only features a small number of cryptocurrencies, but new coins are being constantly added there. This digital asset trading platform has rather strict listing rules to ensure investor protection. Its listing conditions include regulatory compliance, a certain degree of innovativeness, and an active user base. On Oct. 24, for instance, DOBI Trade also listed the TaTaTu coin embraced by Hollywood’s A-lister Johnny Depp. As U.Today reported earlier, the superstar has joined a Blockchain startup in order to democratize the movie industry.

Still, while having very little assets, DOBI Trade trumps many major exchanges by the level of liquidity — this is the 5th biggest exchange in the world by daily trading volumes. Anyway, this is a rather questionable success which many experts believe to be a direct result of wash trading.

Apart from being a cryptocurrency exchange, DOBI Trade is also a cryptocurrency ATM manufacturer and even presented mining watches. Shenzhen, its parent company, puts emphasis on empowering financial technology services with the help of Blockchain technology.  
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With that being said, DOBI Trade remains just a little-known Chinese cryptocurrency exchange, and it has an abysmal 28 rating on scamadviser.com which analyzes ownership details, the location of the site, popularity, and so on. Hence, U.Today will help you determine whether DOBI Trade is really worth your attention.

Setting up a DOBI Trade Account

Creating an Account

Obviously, the first thing that you want to do is to create a new account with this website. Click the “Register” button at the top right corner of the screen to see a pop-up registration form where you have to enter your email address and come up with a secure password. Alternatively, you can register with your phone number. Once you’ve done that, make sure to open your confirmation letter with a link.
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After successfully completing the registration process and logging in to your account, you can see the home page of this exchange. The interface of DOBI Trade doesn’t have any special features that are worth pointing out — it looks like an armada of other fledgling Chinese exchanges that struggle to find their niche in the maturing market. Nevertheless, it is worth mentioning that the site is quite informative: the front page features all the recent announcements above the chart with the latest price swings. However, all the guides that are present on the site are written in broken English which is hardly understandable.

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Security

Now that we’ve covered the process of creation of an account, let’s have a look at some major security features offered by DOBI Trade. They do not require you to enable 2FA authentication, but you can enable this function in the account settings. Before that, you have to install Google Authenticator, a multifactor mobile app that generates timed codes for every log-in attempt.  
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To enjoy all the functions of the exchange, you also have to complete the know-your-customer (KYC) verification procedure. It’s a mandatory rule for all regulatory compliant exchanges that help to prevent many cases of money laundering, terrorist funding, and other illicit practices. All newly registered users have to verify their identity by uploading a photo of their passport (both front and back). The following types of documents are accepted on DOBI Trade.

  • The Chinese Mainland ID Card (for the residents of China)  

  • Passport or Foreign ID Card (for foreign users)

  • Driver’s license

Just like any other exchanges, the user who wants to get their identity verified has to hold a photo together with a piece of paper that shows the address of the exchange (dobitrade.com).

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NB: DOBI exchange usually approves accounts in 24 hours.

Those who want to engage in trading on the DOBI trade exchange have to set a trading password. Go to “My Account” and click “Set” in the corresponding section. This is an extra security measure that will help to enhance the protection of your funds.  

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Adding payment methods

DOBI Trade is a crypto-to-crypto trading platform, which essentially means that debit card payments are not allowed there. First, you have to purchase Bitcoin (or any other digital asset) on Coinbase or any other fiat-to-crypto exchange, and then you can deposit money here.

Depositing and sending cryptocurrency   

In order to deposit money, you have to go to your account setting and choose the “Deposit” option. In the newly opened window, you have to choose the currency you need in order to generate the corresponding wallet address (not all cryptocurrencies are available for payments at the moment). This is the address of the recipient that you have to enter in your cryptocurrency wallet from where you are planning to transfer the earlier specified amount of funds. It could be any fiat-to-crypto exchange where you have already bought cryptocurrency with fiat money or a cryptocurrency wallet. Once you’ve sent the money, it will be automatically deposited to your DOBI Trade account.        

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In order to send funds to your wallet, simply choose the “Withdraw” section that is situated right below the previous one. The modus operandi is similar — pick the coin that you want to withdraw and then specify the amount of payment that has to be sent to your wallet.

NB: It is mandatory to undergo the verification process if you want to withdraw funds (the detailed instruction has been given above). On top of that, you also have to set a trading password.   

How to Use DOBI Trade

Now, we will review the main page of DOBI Trade, trying to determine its main feature. The home page features all the following sections.

  • OTC (over-the-counter trading)

  • Exchange (the actual cryptocurrency exchange where you can purchase and sell cryptocurrencies)

  • User Guide (the instructions about how to use this platform)

  • Announcement (the most recent news and upgrades)

  • About Us (guides and more information pertaining to the modus operandi of the exchange)

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Their OTC trading platform is designed for purchasing cryptocurrencies with fiat money (you can also deposit cryptocurrencies). The list of available fiat currencies includes the Chinese Yuan (CNY), the Indonesian Rupiah (IDR), the Malaysian Ringgit (MYR), and the Thai Baht (THB). Similarly to peer-to-peer exchanges in the likes of Paxos and LocalBitcoins, you simply post your offer with detailed instructions. Neither the US dollar nor Euro is accepted there, so it is obviously not suitable for US traders. Hence, the website is Chinese-only, but those who still need to use this service can always resort to Google Translate. If you are interested in their over-the-counter trading solution, follow this detailed instruction which has been outlined on the DOBI Trade official Medium blog.       

In order to start trading, you have to choose the “Exchange” section. Similarly to any other cryptocurrency exchanges, it features a TradingView-powered candlestick chart that displays most recent price fluctuations. It offers many drawing tools for high-profile traders to perform an in-depth technical analysis, such as the Shiff pitchfork and the Gann Box, a rather powerful instrument for detecting recurring price cycles. Your trading history is displayed right below the graph.

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Meanwhile, you can see detailed information about the most recent price swings at the top of the screen after choosing a necessary trading pair in a drop-down window. There are three base currencies — BTC, ETH, and DOB — that form trading pairs with all available assets. According to CoinMarketCap, the EOS/BTC and ETH/BTC pairs are responsible for almost half of the exchange’s daily trading volume.
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Purchasing Cryptocurrency

If you want to purchase cryptocurrencies, pay attention to the “Buy & Sell” section at the right bottom of the page. Once you’ve chosen the trading pair you need, simply fill out the form with necessary information. First, you have to specify the price at which you want to purchase the currency and then enter the number of coins. Once you’ve created an order, you have to wait until it gets executed. The list of all orders is displayed on the right.
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DOBI Trade Fees

The Chinese exchange has the following fee structure:

Type of transaction  

BTC  Market

ETH  Market

NEW  Market

DOB  Market     

Buy

0.1 percent

0.1 percent

0.3 percent

0.2 percent

Sale

0.1 percent

0.1 percent

0.3 percent

0.2 percent

When it comes to DOBI Trade’s fee structure there is no differentiation between market makers and takers. Instead, there is a flat fee that is set at 0.3 percent. Notably, the exchange doesn’t charge any fees for deposits but has a 0.5 percent fee for withdrawals (in any currency).   

Transaction Limits & Liquidity

There are withdrawal limits in place, but the DOBI Trade guides do not specify what maximum amount of payments can be sent to a user’s wallet. In case the user exceeds these laminations, the funds are checked manually, and the withdrawal might be delayed.     

Customer support

According to their official website, they do have customer support, but you have to wait for the reply for up to three days. Hence, there is not much to be said about their customer support since it is clearly very slow. All the help requests should be sent to the exchange’s official email address — [email protected].       

Pros: Does It Bring Anything New to the Table?

Let’s jump into all the major advantages of this exchange.

  1. High level of security. DOBI Trade allegedly offers top-notch anti-fraud technologies and innovative encryption techniques. Moreover, they have strict verification rules.

  2. Liquidity. The exchange boasts a global user base and high trading volumes. However, this claim is rather misleading (U.Today will later explain why its gargantuan trading volumes shouldn’t be taken seriously).

  3. A high speed of payments. DOBI Trade claims that is it able to process up to 10,000 transactions per second.  

  4. Numerous partnerships. The fledgling Chinese exchange is trying to gain traction by teaming up with numerous Blockchain startups. One of its most recent deals was sealed with AirWallet, a decentralized wallet application. DOBI Trade has also partnered with a Chinese technology company Chuangyu which aims to propel the growth of the burgeoning Blockchain industry.

Cons: Suspicious Trading Activity and More

DOBI Trade, the exchange which at the time of writing this article only has 629 subscribers on Twitter, has recently made it to the list of top five biggest exchanges by trading volume, surpassing Huobi by about five mln. The website traffic also doesn’t help — it has an Alexa rank of 47,318 with Indian traders allegedly being its core audience. Of course, these are clear indicators of inflated trading volumes.

Similarly to BitForex and FCoin, DOBI Trade is artificially increasing its trading volumes by means of offering transaction mining rewards. Critics believe that such a controversial practice is a salient example of wash trading — when the same asset is traded multiple times to somehow inflate market activity.

On that metric, DOBI Trade, BitForex and Liquid stand out as having reported transactions many times larger than website visits (see the above chart for more details),” – Bloomberg.

In fact, DOBI Trade goes as far as surpassing all other platforms by wash trading, as the graph below shows.

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DOBI Trade has also recently made headlines because of skyrocketing Litecoin volumes on this exchange: DOBI Trade alone was responsible for 26 percent of its daily trading activity. For comparison, only a minuscule 1.6 percent of Litecoin trade was recorded on Coinbase Pro, the most popular cryptocurrency exchanges in the world. Really makes you think!  

Other major minuses of DOBI Trade include:

  • relatively high fees (as mentioned above, there is a 30 percent flat fee);

  • broken English (some of their guides are hardly readable while the OTC section doesn’t support the English language at all);

  • a small number of coins;

  • poor customer support.   

Conclusion

Any good things about DOBI Trade are easily outshined by its rampant wash trading the purpose of which is to lure gullible investors. While the exchange does offer high liquidity, it is not trusted enough to be your primal choice for a cryptocurrency trading platform since this relatively young Chinese trading platform doesn’t bring anything particularly new to the table. Our consensus is that unless you want to become their 630th subscriber on Twitter, there are far better choices.

Cover image via u.today
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