Popular cryptocurrencies like Bitcoin and Ethereum are increasingly making headlines. Their crazy profitability attracts the attention of even those who have never thought about stock trading. But how can a beginner understand the intricacies of this market, make money on cryptocurrency and not lose their capital?
In this article, we will tell you in simple and understandable language about the available methods of earning on cryptocurrency that even a beginner can master. We will not delve into complex technical analysis , but will focus on practical tips and recommendations that will help you take your first steps in the cryptocurrency market. Are you ready to dive into the field of digital money and start earning? Then read on!
Content:
- A Realistic Look at What Not to Expect from Cryptocurrencies
- Register on the exchange and start earning
- Replenishing your account is the first step to profit
- Spot Trading Basics
- Try Futures Trading
- Copy trades from top traders
- Delegate the work to trading bots
- Invest in promising projects with Launchpad and Launchpool
- Megadrop – Your Chance for Free Tokens
- Conclusion
A Realistic Look at What Not to Expect from Cryptocurrencies
The first thing I want to warn all newbies about is that the cryptocurrency market is not a casino. You shouldn’t expect fabulous winnings here without the necessary knowledge and preparation. Don’t imagine it as some kind of slot machine that gives out money every time you throw your coins into it.
The market is not a casino or sports betting. Don't expect to make a quick profit. You'll only lose all your money quickly. In cryptocurrencies, anything that has the word "quick" usually refers to leverage, futures, and some additional risk you're taking on.
Using these tools, you can actually earn a lot, but you should do it consciously, understanding and accepting all the risks. Otherwise, your trading will be more like betting in a casino than really earning money in cryptocurrency.
By the way, you can earn money on the cryptocurrency market not only by trading, as beginners often think. In fact, this is the most difficult way, especially in the perspective of 3-5 years. Usually during this time, the next generation of traders goes bankrupt, and they are replaced by others who, like their predecessors, think that they are smarter, more agile and bolder. And now there are other technologies and methods of trading, but the results on average remain the same - according to various estimates, at best 3-5% of the total number of traders earn money on trading. Is there a way out of this situation? Of course.
Register on the exchange and start earning
First, you should choose a trading platform where you will invest your funds. It is not difficult to do. Just refer to the rating of the authoritative online resource CoinMarketCap. As you can see, the top three leaders in the derivatives market have not changed recently:
- Binance
- ByBit
- OKX
Let's choose Binance , especially since this platform is a leader not only in the derivatives category, but also in the spot market. Read about how to register on the Binance exchange in our article “ Registration on Binance: step-by-step instructions ”.
Replenishing your account is the first step to profit
After registering and verifying your account, you should top up your balance on Binance . This can be done in different ways, for example, through a P2P trading platform. Let us remind you that Binance P2P is a trading platform that allows you to directly exchange cryptocurrencies for fiat money and vice versa directly between users of this exchange. In this case, you can set your own exchange rate by choosing a convenient payment method. We recommend depositing funds in cryptodollars - USDT. Later, if you need another cryptocurrency, you can always exchange it at a more favorable rate than if you deposited, for example, bitcoins.
For more details on how to deposit cryptocurrency into your account using the P2P exchange service, read the article “ How to top up your balance on Binance ”. In addition to the secrets of using the P2P peer-to-peer platform, the article tells about topping up your balance from a card, the Advcash wallet, the method of topping up your Binance account through the international payment system Payeer, and much more.
Spot Trading Basics
Now it's time to talk about the most common way to earn money on cryptocurrency for beginners - spot trading. In the top menu bar of the Binance web interface, go to the section "Trade" -> "Spot".
Next we get to the trading terminal. The most important thing to pay attention to is the price. This is the most important thing you need to know first of all from the variety of statistical data. It is highlighted in color, and it is impossible not to notice it.
Also pay attention to the right panel of the trading terminal. Here you select the quote currency (the second in the pair). As you can see, the exchange offers a wide variety of coins for trading. At the time of writing the review, 416 coins were traded on the Binance spot market, which is more than enough for even the most demanding user.
Now let's see how it all works in practice. Let's say we want to buy Bitcoin. To do this, open the "Spot" panel at the bottom of the trading terminal and select the order type - Market. Next, you need to specify how many BTC coins we want to buy. This can be done in two ways:
- By selecting “Quantity” from the drop-down list. Then in this field we indicate the number of bitcoins with an accuracy of up to the fifth decimal place.
- By specifying their total cost in USDT. To do this, select “Total” from the list and specify the purchase cost in Tether. In this case, the number of bitcoin coins for this amount will be calculated automatically.
Then click on the “Buy BTC” button.
After we have opened a trade, information about it will appear in the “Trading history” tab. Here its main parameters are indicated, and you can set the period for which the trading history is displayed.
Over time, when the price of the coin we bought rises, we can sell it at a profit by performing the reverse procedure: select the desired asset, order type - Market, specify the amount (it can be set using the slider) and click the “Sell BTC” button.
That's it. We got our first profit from the first method of earning on cryptocurrency. By repeating these actions many times on different coins, you can earn on the exchange rate growth of coins in the medium term. After you learn how to do this, you will have two ways:
- Increase your investment horizon to several years and switch your trading to passive mode, buying coins for a portion (20-30%) of your main income.
- Increase risks by switching to short-term futures trading with leverage. We'll tell you what this is below.
Try Futures Trading
When trading futures, you will essentially be doing the same thing as on the spot market - buying and selling your favorite bitcoin or any other cryptocurrency, but with the so-called "leverage" - using money borrowed from the exchange. After which, having a conditional $100 on your account, you will be able to open deals for $1000, i.e. 10 times larger.
Thus, you will be able to earn profit not from your initial $100, but from $1000, having paid the exchange for this “targeted loan” some ridiculous 5% per annum. This is such an insignificant amount per day that it can be practically ignored. As before, you will pay the exchange only a small commission for opening and closing transactions. In futures trading, the danger lies not in the exchange commissions, but in the “leverage” itself. Because, as you can easily guess, as the potential earnings increase, so do the risks.
Let's return to our example. Taking 10x leverage, you will make a profit not from $100, but from $1000. However, the losses will also increase 10 times. If at some point your money is not enough to maintain an open position, it will be forcibly liquidated by the exchange with a loss. Therefore, futures are a rather dangerous instrument, especially for beginners. Only traders who have learned to make a stable profit on the spot market can use it.
However, futures also have undeniable advantages. One of them is the ability to “short” – earn on a decrease in the price of an asset. Considering that in futures trading we borrow money from the exchange, we have additional opportunities that allow us to earn even on a decrease in prices.
However, before doing this, it is worth carefully analyzing the main trend that has developed in the cryptocurrency market. By opening a sell position (“short”), we are, in fact, going against the long-term market trend. To do this, there must be very strong arguments. However, the best advice of all times is to trade with the trend: if the market is growing, buy, if it is falling, open short positions, but remember that the market can recover very quickly.
Therefore, always use protective stop orders in trading, and remember: a priori, markets grow more often than they fall. Of course, with corrections, flat, but in the long term they usually grow.
To start trading futures, go to the “Trade” menu and select “Margin”.
This will open the margin trading tab. Note the “5x” icon that appears next to the SOL/USDT currency pair ticker. This means that leverage of 1:5 is available for this pair.
Further, the process of opening transactions is similar to the spot market.
Copy trades from top traders
Now let's talk about a tool that a beginner should definitely pay attention to - copy trading, the essence of which comes down to copying the deals of successful traders. With this tool, you can entrust your funds to other people to manage. But don't worry. In fact, even after activating this service, your funds will still remain on your balance and they will not be transferred to anyone. This tool was created by the exchange itself and it completely controls it.
To open the Copy Trading section, open the “Trade” menu and click on the “Copy Trading” menu item, as shown in the screenshot above. This will open a page with offers from professional traders. At the top of the page, there is a “Futures/Spot” switch, which you can use to select the section of the exchange you are interested in for trading.
Below in the “List of Portfolios” section you can select the period for evaluating the results of the presented strategies by various parameters: Profit & Loss, ROI, Maximum Drawdown, Total Assets Under Management, Number of Traders Copying the Strategy, Profit & Loss of Copying Traders, Sharpe Ratio.
However, when choosing a trader whose trades you are going to copy, always remember that capital growth in the past does not guarantee growth in the future. In addition, it is very important at what point you launched copy trading on your account. During a period of general bullish growth, when no matter where you poke your finger on the chart, you will make a profit, or during the so-called “crypto winter”, when all crypto assets fall in price or, at best, are traded in narrow ranges.
Delegate the work to trading bots
In the “Trading Bots” section, you can set up your own trading robot, which will open trades for you and bring you profit even when you are busy with your own affairs or even sleeping.
In the trading bots section, you can select the strategy by which the robot will make trades.
However, in most cases, the essence of trading with bots is banal - buy an asset cheaper and sell it more expensive. It is very tempting to subscribe to some of them and make a profit on full autopilot.
Bot trading statistics can be ranked by different indicators: ROI, PNL, by the number of connected accounts, etc. In general, bot trading is a very interesting topic, especially for beginners who have not yet had time to develop their own strategy or for some other reasons have not yet started trading independently.
The advantage of bots is that, having come up with a strategy, you can test it, for example, in the TradingView terminal. After that, you will understand how profitable it is and how your capital would change over a long period of time. In this regard, we can confidently say that trading bots have enough advantages, most of which are revealed if you seriously engage in them.
However, we would like to warn you that you should not use standard trading bots offered by the exchange itself, with the exception of the grid bot for trading on the spot market. According to our estimates, it deserves attention. For example, if the price of bitcoin decreases, it will buy it directly to your wallet (unlike a futures contract). Accordingly, if the BTC/USDT quotes decrease, you will earn Bitcoins, and if this pair grows, you will earn USDT.
Thus, a trader earns profit simply on the fluctuation of the BTC/USDT pair quotes, without analyzing or forecasting the market. With this approach, the risks are minimal, since it is simply impossible to catch the liquidation of positions in such trading. Because if Bitcoin falls sharply in price, the bot will simply buy more BTC, and when it starts to grow, you will earn more USDT. This is an excellent solution for those who prefer passive investments in Bitcoin or Ethereum for the long term.
Invest in promising projects with Launchpad and Launchpool
Sure, automated trading is as beautiful as dew at dawn, but what if you don't have enough capital to launch algo trading? There is a way out. And it's connected with the possibility of buying tokens on the Binance exchange before they are listed on the exchange.
How does it work? Binance has two platforms: Launchpad and Launchpool. Both of them allow you to raise funds for new cryptocurrency projects. However, despite the similarities, there are significant differences between them.
The first thing to remember is that Launchpad offers tokens of projects that are already in circulation, while Launchpool allows anyone to participate in a crypto project in its early stages before it launches by locking funds (usually BNB or other tokens supported by the project) in a liquidity pool for a certain period of time. In return, they receive project tokens proportional to the amount contributed and the time of locking.
There are also differences in the participation mechanism itself between these two platforms. For example, on the Launchpad platform, users essentially participate in a lottery to buy tokens at a fixed price, while Launchpool participants are guaranteed to receive tokens in proportion to the amount contributed to the liquidity pool and the blocking period. Thus, thanks to Launchpool, a user can earn money by blocking assets without buying them.
How to get to these platforms? In the top menu “More” there is a section “Launchpool”. Click on it.
A platform with tokens of promising projects will open before us.
Available projects will be listed here, and liquidity pools for blocking participants' funds will be indicated. For example, in the IO project, which ended on June 11, 2024, it was possible to participate by blocking your FDUSD or BNB coins.
Megadrop – Your Chance for Free Tokens
Everything that was mentioned above: trading, bots, copy trading, of course, everything is very interesting and deserves the closest attention, but all this requires an initial investment of at least $500 to $1000. But what to do if you are a complete beginner and have no money at all?
The Binance exchange has another cool tool for buying tokens before they are listed on the exchange - Megadrop. This is another form of participation in the distribution of tokens and airdrops. Only in this service, unlike Launchpad and Launchpool, the platform combines the functionality of Binance Earn and Binance Web3 Wallet.
With Megadrop, users will be able to subscribe to coins with a fixed placement period, complete tasks, and receive certain token rewards based on the points they earn. The idea is to get early access to projects on the Web3 platform that have not even started trading on the exchange yet.
How does it work? First, go to the “Earn” menu and select a coin with a fixed placement period.
Let's say we chose BNB. The longer our lock period, the more BNB we get.
At the same time, for each blocked BNB we will be awarded points. The more points we have, the more rewards we will receive in the Megadrop service. These rewards can be in the form of new cryptocurrencies or some other bonuses.
Conclusion
Finally, we advise all newcomers to gradually begin to understand what is happening on the market. Only in this case will it be possible to really earn money on cryptocurrency. Keep track of what new coins appear, what problems they solve and what challenges exist in principle on the crypto market.
Having studied a specific project and understood its advantages and prospects, you will be able to buy its coins on the market and sell them in a few years with great profit for yourself. And this is just the beginning. The cryptocurrency market is still very young and is at the very beginning of its long journey. Now is the best time to start earning on cryptocurrency.
By investing time in learning about cryptocurrencies, you not only open up new opportunities for yourself, but also increase your chances of success. Be persistent, patient, and you will definitely achieve your goals. We wish everyone successful investments!
See also:
How to buy cryptocurrency for rubles or dollars
Is cryptocurrency necessary in the modern world?
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