Crypto for beginners: a plain-English guide
Last updated
Short answer: before you put money into crypto, learn the difference between owning a coin and trading a contract on it, learn how to keep coins safe from scams and failed exchanges, and add up the fees. Practise with pretend money first. Of 510 strategies we tested on crypto pairs, none passed our luck check, so treat any crypto signal as unproven.
What is crypto trading?
Crypto, short for cryptocurrency, is a digital asset such as Bitcoin that is recorded on a public ledger instead of at a bank. Crypto trades all day, every day, and moves further in a day than most shares. Trading it means buying and selling to profit from those moves. That gives luck more room to look like skill, and it costs fees every time.
Buying coins versus betting on them
Owning a coin and holding a perpetual contract are different things. A perpetual contract is a bet on the price, usually with borrowed money, and it can be closed out if the price moves against you. The buying coins versus betting on them module compares the two, shows how to work out a liquidation price before you open a position, and adds up the full cost of a leveraged trade. Read about leverage and the funding rate first.
Keeping crypto safe
Crypto adds risks that shares mostly do not: scams, fake apps, phishing and lost access to a wallet. The crypto safety module has six lessons on:
- Seed phrases, hardware wallets and the one rule that stops most thefts.
- How crypto investment scams work.
- Phishing, fake apps, address poisoning and token approvals.
- Choosing an exchange, and what happens when one fails. In Australia that includes what AUSTRAC registration covers and what it does not.
- Locking down your accounts with 2FA, and SIM swaps.
- New tokens, rug pulls and exits you cannot use.
Who holds your coins matters too. The lesson who holds your crypto tells apart coins kept on an exchange, coins you hold yourself and a stablecoin.
Costs and tax
Every trade pays trading costs: exchange fees, the bid-ask spread and slippage. Small costs add up fast if you trade often. Tax rules depend on where you live, and the tax basics module explains why, in general terms. For your own situation, ask a registered tax agent.
Do crypto strategies work?
We backtested 510 strategies on crypto pairs, after costs, against an equal-weight benchmark that pays none. 94 finished ahead of it on the point estimate and 13 of those had an unadjusted p-value under 0.05, but none met the corrected bar once we allowed for how many we tried. The median strategy returned 50.6 percentage points a year less than the benchmark. That is in-sample and not a promise. The tests are on the crypto results page and the plain-English version is does technical analysis work?
A sensible order to learn it in
- Read the crypto section of the beginner's guide and the full guide to starting trading.
- Do the crypto safety module before you send money anywhere.
- Learn the coins versus contracts module before you touch leverage.
- Practise with pretend money in the free paper trading simulator. How paper trading works.
- Decide the most you will lose on one trade before you start. See position sizing.
Score a coin free
Tickfloor's score reads ten common chart checks on a coin and shows where they agree and disagree. It describes the chart today. It is not a tip. You get 3 free scores a day with a free account. No card. Try a free score.
Questions
How do I start with crypto as a beginner?
Learn first, with no money in play. Understand the difference between owning a coin and trading a contract on it, learn how wallets and exchanges hold your coins, and learn the common scams. Then, if you decide to buy, use a registered exchange and start with an amount you could lose without harm.
Is crypto safe for beginners?
It carries real risks that shares mostly do not: scams, fake apps, drained wallets, exchanges that fail and tokens you cannot sell. Prices also move a lot in a day. The safety module covers each of these, and none of it is a promise that you will avoid loss.
What is the difference between buying crypto and trading it?
Buying means owning the coin. Trading usually means opening and closing positions to profit from price moves, often with borrowed money through contracts that can be liquidated, which means closed out by the exchange when your losses grow too big. Owning a coin cannot be liquidated; a leveraged position can.
Do crypto trading strategies work?
In our backtests, none passed. Of 510 strategies tested on crypto pairs, 94 finished ahead of the benchmark on the point estimate, and none met the corrected bar once luck was allowed for. This is in-sample, from past data, and not a promise.
Where can I practise crypto trading without risk?
A paper trading simulator lets you place pretend trades on replayed candles. Tickfloor's practice simulator is free on a free account, with 5 minutes a day.
General information, not personal advice. Tickfloor does not hold a financial services licence.