First steps in Crypto
Cryptocurrency trading - or trading of digital assets - implies selling, buying, or holding cryptocurrencies like Bitcoin (XBT), Ethereum (ETH), and others with the goal to profit from the further short or long term fluctuations of their market prices. While trading, you can exchange fiat money for cryptocurrency or one cryptocurrency for another, for instance, Ethereum (ETH) to Bitcoin (XBT).
Step 1
Choosing your best fit
Many exchanges you would come across are localized, therefore supporting only a selected number of fiat currencies.
The very first step to digital trading is finding a Bitcoin exchange or a crypto exchange platform supporting your preferred/local fiat currency.
Besides, while the exchange you choose should be licensed and regulated, all support different approaches with various deposit and withdrawal methods, fees and trading commissions, and a fluctuating Bitcoin price.
Step 2
Cryptocurrency purchase
After choosing your most preferred crypto exchange platform, it's time to go through the authorization process and get your Bitcoin address set. Don't fear if the exchange asks you to verify your identity. This is a standard procedure called KYC or Know Your Customer, and it helps minimize any potential fraud.
After the KYC is complete and you are verified , you should be allowed to deposit money to your newly set account and finally buy some Bitcoin, or a part of it.
Yes, you don't have to buy a whole Bitcoin at once, you can purchase parts of the coin as 1 Bitcoin consists of 1 million Satoshis.
Purchase, exchange
Quote currency
The quote currency, or "counter currency," is the second currency in both a direct and indirect pair. For instance, in the pair XBT/EUR, EUR would be the quote currency.
Order options. Minimum order size
Each tradable currency has a minimum order size. Each order placed with a volume below the minimum order size is automatically declined.
Market order type
A market order is a buy or sell order at the current best average market price.
Market Maker
A maker is a limit order that implies selling or buying stock at a specific price or better. It's not matched with existing orders on the order book immediately. Makers add liquidity to the order book.
Market Taker
A taker is a market or limit order that is matched with existing orders on the order book immediately. All market orders are considered a taker. Takers remove liquidity from the order book.
Order statuses
Open order
While trading, you will come across two types of open orders "touched" and "untouched". Don't let them confuse you. A "touched" open order is partially filled, and an "untouched" open order is an unfilled order.
Closed order
A "closed" order is an order that has been completed.
Cancelled order
An order is considered canceled if it has been completely withdrawn from the order book. An order can be withdrawn at any stage - touched or untouched.
Filled order
"Fill" is the term used to complete the order to trade a cryptocurrency. An order can be "partially" or "fully" filled. To fill a buy or sell order means to match it with one or more orders of the opposing type. Ex., if a seller places an order for a specific price and the buyer agrees to it - the order is considered filled, where the "fill" is the price. Buy orders are filled by matching with sell orders; sell orders are filled by matching with buy orders.
Order books
Order book
A maker is a limit order that implies selling or buying stock at a specific price or better. It's not matched with existing orders on the order book immediately. Makers add liquidity to the order book.
Ask
The best potential price the seller is willing to trade at. Listed on the sell side of the order book
Bid
The best potential price the buyer is willing to trade at. Listed on the buy side of the order book
Bid/Ask depth
The Bid/Ask Depth shows the collective amount of buy and sell orders at any chosen price. The bid depth showcases the collective volume of current buy orders on the book at the selected price or higher, while the ask depth showcases the collective amount of current sell orders on the book at that price or lower.
Bid/Ask spread
A Bid-Ask Spread shows how far the lowest market ask price (the lowest price the seller is willing to accept for an asset) deviates from the highest market bid price (the highest price the buyer agrees to pay for that same asset).