Becoming A Deadly Trader
Your New Career Awaits You
Chapter 2
Exchanges
In order for you to start trading crypto with real money, you have to purchase crypto and open an account with a crypto exchange. An exchange provides traders with access to a trading platform that enables them to buy and sell digital currencies. Opening an account with a crypto exchange is similar to opening a bank account. Some require paperwork and steps such as identity verification. The whole process can take a few days depending on who you decide to go through. That said, if you’re just looking to test the waters, some crypto exchanges offer paper trading accounts that require minimal information to open. TradingView now offers demo accounts. A paper trading account or practice account allows you to get set up and practice trading until you’re ready to get started with real money. Take note this is good for strategy building but will not train you for emotional management (which we will cover later.)
Purchasing crypto can be done directly from some exchanges or purchased from a number of other sources and then sent to an exchange trading wallet. I personally have used Crypto.com to purchase Bitcoin and other crypto currencies to trade with and some to hold long term. You can use other sources like cashapp, Coinbase, or even go to a local Bitcoin ATM and buy Bitcoin directly with cash. Most places you purchase Bitcoin from may require some form of identification, and that is normal. Just be sure you are only giving your information to someone you trust.
If you are trying to purchase or trade cryptocurrency from a restricted country, there are a few extreme steps you must take. If you want to trade on an exchange that has KYC (know your customer) verification that means all your cryptocurrency purchases will be tracked and linked back to your identity. In the US for example, the Federal government wants to know everybody who purchased cryptocurrency and how much they purchased, etc. That’s bullshit. The purpose of cryptocurrency (namely Bitcoin) is to take back our financial freedom. Tyrannical governments will try to track your cryptocurrency and then tax your capital gains. If you want to play by the rules, then just keep buying and trading on Coinbase pro or Crypto.com. However, if you want to keep your cryptocurrency holdings from your government authorities like a sensible person, you will send them to a different unverified exchange to trade them.
This is not necessary. You can keep trading on the exchange you are verified on if you wish. Just know that you can also buy them from the exchange you are verified on and then send them to an exchange that is unverified to mask your true net worth. This is what I do and what I recommend. There will come a time when governments try to get into our crypto accounts and attempt to force exchanges to halt trading/withdrawals etc.
Ultimately, it is your responsibility to choose a source to obtain crypto from and an exchange to trade on. If you are already using an exchange and a trading software, skip to the next page, “Technical Analysis” to start learning analytical methods. If you already have an exchange but do not have a trading software, skip to “Introduction to 3commas” to learn how this trading software can maximize your profits. Otherwise, keep reading this section to know what to look for when choosing an exchange that is right for you.
Security
There are a lot of things you want to consider when selecting an exchange to trade with; the number one priority when choosing a crypto exchange is a high level of security. At the end of the day, you want your money to be safely deposited with an exchange that has many security measures. Some good safety measures are: Two-Factor Authentication, PIN protection, log in verification codes via email or text. There are other additional safety measures that exist for different exchanges, and you may want more or less security depending upon how much you will be trading with.
Transaction Costs
Let’s talk about transaction costs. The biggest transaction costs in crypto trading come in the form of commissions or the dealing spread. Every time you execute a trade you will pay either a fixed commission on the trade or you will pay via the exchange’s bid/ask spread. Commissions and spreads are how crypto exchanges earn a profit on their business. Typically, exchanges can be categorized as having three types of spread/commission structures – fixed spreads, variable spreads, and commissions only.
- Fixed spreads are commissions paid on a fixed spread between the ask price and the bid price.
- With variable spreads, the spread between the ask and bid prices can change according to the demand for the currency in the market. Under this model, the spread often widens when there is greater volatility in the market, such as when news events are expected that might provoke price movements.
- Exchanges that only charge you commissions tend to take a small percentage built into the wider spread. In this case, the broker takes the percentage that could amount to only a fraction of a percentage. The broker then leaves the remainder of the spread to a larger market maker with which he’s working. This type of commission can allow traders in some cases to pay a lower cost to make a trade on a given currency pair.
No matter what kind of trader you are, like it or not, you will always be subject to transaction costs. Every time you enter a trade, you will have to pay a fee, so it’s natural to look for the most affordable and cheapest rates. That said, even though using an exchange with competitive spreads will effectively help your bottom line, you do not want to sacrifice joining an exchange with poor execution or one that is less safe for the sake of lower transaction costs. Make sure you know how tight your spreads must be (based on your trading strategy) so that you can review available options. There should be a healthy balance between transaction costs and other criteria that you consider important when comparing exchanges.
Leverage
We touched on leverage earlier and will touch on it again later. Leverage is the loan provided by the exchange that can be used to open significantly larger trades than your account would allow. For example, by applying a x50 leverage, a trader with an account size of $1,000 can hold a position of $50,000. Leverage can magnify gains on winning trades, but it will also magnify losses on losing trades.
Crypto exchanges offer a varying assortment of leverage caps, and these caps are based on the amount of crypto each exchange has staked. For example, when trading BTC/USDT on Binance’s exchange, the maximum allowable leverage is x125. Some exchanges can offer leverages up to x1000.
If you apply our risk management rules in your trading, you will be fine signing up to an exchange that only offers x25 leverage. If you are a beginner, using high leverage on your trades will blow your account quicker than it will make you a millionaire.
Deposits and Withdrawals
Every crypto exchange has their own policy in regard to depositing and withdrawing funds. It’s important that you understand this policy to avoid any confusion or delay in setting up your trading account or withdrawing funds when you need to.
To open and fund a live account, an exchange may allow you to deposit funds directly to a wallet address; they may also accept credit card, wire transfer, PayPal, business or personal checks, or a host of other options.
Withdrawing funds can typically be done using similar methods as depositing funds. Keep in mind that there may be withdrawal fees or other fees that apply. In addition, you may have to wait a few business days before the withdrawal request is processed. Make sure that both the deposit and withdrawal policy of the exchange you choose is in line with your expectations.
Customer Support
A great crypto exchange should also have great customer support. Being able to reach your exchange’s support team when you need to is a must. This is particularly true if you’re a beginner trader that requires some guidance during the early stages of your learning curve. It can be very frustrating to be on hold for long periods of time or worse not be able to contact your exchange directly when you have a question or require immediate attention.
When choosing the “best” crypto exchange you should only consider those that have 24 hours a day, 7 days a week support. In addition, if English is not your primary language, then you may want to find an exchange that offers support in your first language.
You should expect your exchange to be accessible to you and assist you in any manner related to their service or platform. Remember you are the exchange’s customer and you should be able to get the assistance that you require in an acceptable period of time.
Recommendations
When choosing a crypto exchange, the most important thing is not to end up at a dishonest one. Take your time when choosing, the trading opportunities are not going anywhere. There are hundreds of exchanges out there, so if you don’t like the one you have now, you can always leave and look for something better. Learning how to choose a crypto exchange takes some skill and practice. Use this section of the guide as a reference whenever you have questions about the selection process. Go through the steps we described and your odds of finding a good exchange increase significantly. Having said that, here are some of my exchange recommendations:
Restrictions
If you are living in a non-restricted country, you can disregard this next part.
If you are living inside a restricted country like the USA, then you will be limited to a few exchanges because the country wants to keep their financial chains imposed upon you. I recommend you choose an exchange to get verified on (such as crypto.com) to buy your cryptocurrency, then you can send it to an unverified account later. If you want to use 3commas automated trading services, and you wish to trade on Binance for example (which is the number one exchange by volume) or access any other website that the US restricts users from accessing for that matter – simply download a VPN or virtual protected network to mask your identity. I use “Private Internet Access” VPN services.
After you download and enable your new VPN, create a new encrypted email address with ProtonMail so you can keep your correspondence safe. You can now use this new ProtonMail email address to register for Binance and 3commas without anyone knowing your business. Very simple. Simply send the coins you wish to trade from your verified account to your unverified account.
Introduction to a Real Exchange
You are free to use the guidelines above to find an exchange that suits you. For instructional purposes, we will review Binance. Binance is the exchange most traders use. The exchange is up to date with important announcements and has excellent security measures. Binance lists a lot of cryptocurrency pairs to choose from. This means you will have many trading opportunities. In order to trade with real money, you can open an account with Binance or Binance.us (for American traders). Again, there are other exchanges out there and if you do not choose Binance that is fine. This section will tell you how to set up a Binance account if you do not have one. Later we will also learn how to integrate Binance with a trading software called 3commas that will help us be more profitable in our trading. If you already have an account with an exchange, skip ahead to “Introduction to 3commas” to learn how the trading software will help you be more profitable.
Creating a Binance Account
In this section you will learn how to create an account with Binance. It should be pretty easy to do yourself—I’m only including this part to make it easier should you have any troubles. This is what the sign-up page should look like.
Once you input your email and choose a password, you will have to verify the email address you have chosen via confirmation email. When you get logged in, you will have a lot of places to navigate. I will show you the basics. Honestly, even though we are using Binance as our exchange, we will be using 3commas to trade through Binance via API integration, and I will show you how to set this up as well. It is important however, that you understand how to get around your new exchange and use its basic features.
In the tabs provided, you can see that you have the options to buy crypto, view the markets, trade crypto, view derivatives, view finances, view your wallet, view your orders, and see your notifications.
Funding Your Binance Account
In the “Buy Crypto” tab, you have several options to deposit money to your exchange, and each one has its own set up process. You can choose from bank deposit, credit/debit card transfer, P2P, or third-party payments. These are some of the ways to fund your account. (If you are accessing Binance from a restricted country then you can only deposit by sending cryptocurrency.)
Another way you can fund your account is by sending crypto you already own from another wallet address to your new binance wallet address. When you are trying to transfer crypto, be sure you have the proper coin and network selected. You also need to make sure you have the wallet address typed correctly in order to avoid losing your crypto.
On the “Wallet” tab drop down, select “Overview” to see all your available balances. It will display all available wallets, even if there are no coins in them.
From the “Overview” screen, you can select “Deposit” to fund your account, “Withdraw” to extract funds from your account, or “Transfer” to change funds from your “spot” wallet to your “margin” or “futures” wallets.
Depositing funds is easier than withdrawing funds from Binance. Withdrawing funds usually has more security measures to ensure that nobody has gained access to your account. When withdrawing funds, you may be asked to enable two factor authentication, or for an email or phone verification code.
Trading on Binance
Now that you have funds on your Binance account, you probably would like to start trading with them. After all, that is why you purchased this course, to learn how to trade. While this next section will cover the physical “how to trade” it will not cover the analytical “how to trade,” meaning you will learn how to initiate a trade but without any chart analysis. You will learn how to read and understand market charts and their patterns in the next chapter marked “Technical Analysis.”
At the home page from the tabs along the top screen we reviewed earlier, you can select “Trade” to see a drop-down menu of your trading options. You are going to become a pro trader, so you want to select the “Advanced” option to start learning with all the tools available.
You should end up seeing something like this. This might seem like a lot of information. Don’t worry, you will learn about everything on this page.
This next photo is the same photo, except numbered to give an explanation of each piece of information.
- The currency pair. This is the pair you have selected and are about to make a trade in. You can change this by selecting the drop down arrow after the currency pair. In this area, you can also see the current price traded, the 24 hour change in price, the 24 hour high and low, and the 24 hour volume .
- The wallet selection. This is where you will choose to trade funds from your spot wallet or from your other wallets. Make sure you have chosen the proper wallet.
- The time frames and chart selections. Here, you can select the timeframe you want to trade on. Selecting different time frames will display the candlestick information in different smaller or larger time frame models. Here, you can also select a chart to use to display information.
- The candlesticks. This is the base for all price action information. Candlesticks carry a great amount of information and need to be analyzed carefully before committing your funds to a trade.
- The order book. This is where you can view the limit buy and sell orders other traders have placed for the given currency pair.
- The order terminal. This is where you can buy and sell crypto currencies with crypto you have in your exchange wallets. You can execute a limit or market order, and view your available assets for the given currency pair.
- Your orders. Here you can see your open orders (if you have any), your order history, trade history, and funds.