Guide to Cryptocurrency

This guide is intended for newcomers to cryptocurrency. Crypto is an exciting and fast paced
arena that offers opportunities for potential profits not seen anywhere else at this time! I will
cover the basics in this guide, and walk you through what it takes to follow a call efficiently so
you can hit the ground running.

If you’re familiar with stocks and the stock market most of this will come naturally to you but let’s
first talk about exchanges.

Exchanges
There are many exchanges to choose from, and depending on where you’re located on the
globe there are benefits and disadvantages to each of them. If you’re unsure which exchanges
to choose, try and find someone in your area who’s been in crypto for a while to help you out.
The basis of an exchange is simple, this is where the actual trading takes place. This is where
you will initially transfer your fiat currency (ie. USD, CAD, JPY...) and then make your first trade!
When you’re ready to take profits made and put them back into your bank account, it’s
the same process but in reverse. You should take into account the fees an exchange has for
each transfer before making a decision on which one to use.

A note on security...
It’s best to be as secure as you can be in crypto, use passwords that are strong and unique. If
your exchange supports it, use two-factor authentication and any other security measures they
offer. It’s better to be safe than sorry. While these extra security measures can be time
consuming, it’s a small price to pay if it saves your stack one day.

Example: GDAX (Coinbase)

While all exchanges have slight differences, they all serve the same function. I will cover GDAX
(aka. Coinbase) in this section. If you’re a US customer, they are one of the more popular
exchanges in your area. They also offer a mobile app which is very similar to what I’m about to
describe.

First you’ll have to create an account, this should be straightforward. Simply go to

http://www.gdax.com/ and click “Create Account” and follow through the steps.

Once you’re set up and logged in to the website, you need to transfer fiat to GDAX so you can
purchase Cryptocurrency. Generally your two options at this point are to link a Bank Account, or
do a Bank Wire transfer. You should note that linking your bank account will allow you to
transfer funds for free, while a Bank Wire has fees involved at the time of this writing.
GDAX offers Bitcoin, Ethereum, and Litecoin in USD pairs for US customers. Which one should
you buy? You should understand that cryptocurrencies are volatile, and there are technically
good times and bad times to purchase each coin. If you’re ever unsure, only buy into a
cryptocurrency with a portion of your USD stack until you’re more confident.

In this guide, I will be using ETH/USD as our product on GDAX. You select the product in GDAX
using the drop down menu found in the top-left of the website:

For newcomers, you should be sticking to BTC/USD, ETH/USD, and LTC/USD pairs. In this
menu, you can also see the current price each coin is trading at, and the 24hr change in
percentage points.

Once you select a product, you’re ready to deposit fiat. In the top-left area of the website you
should see this:
Click “Deposit” here to deposit fiat into GDAX!

You should now see this:

You can see there is already a bank account added here. If you haven’t done this yet click
“+Add Bank Account”, and follow the steps. Notice you also have the Bank Wire option found at
the top of this section. You also see Coinbase Account, which won’t be covered here, and the
ETH Address section. You would use the ETH Address section if you have an existing wallet
with Ethereum in it that you would like to send to GDAX.

Once you have fiat in GDAX, you can buy cryptocurrency. You have two options to purchase
and sell. Market orders or Limit orders. Let’s dive into each method.

Market Orders
Market orders are the most simple method of buying and selling a product. However much you
want to buy or sell, is executed immediately against the order book. For most exchanges, there
are higher fees for using market orders rather than Limit orders.

Market buying and selling 1 ETH shown here:

Limit Orders
Limit orders are orders that do not execute immediately against the market but are rather placed
in the order book for someone else to fill.

Here’s how to place a limit order:

At it’s most basic level, this is the concept of trading! Here I am buying 1 ETH at $300, and I
could potentially sell it at $350 if the price goes up! Limit orders that are unfilled can be
cancelled at any time. Let’s talk more about the order book…

Order book
This is essentially just a list of orders people are willing to buy and sell a given product at. You
can see the order book for a given product live on GDAX. You can inspect how many coins of a
given product are being sold at a specific price. Orders can be cancelled at any time.

While this example of GDAX was brief it should give you the basic concept of an exchange. If
you have further questions you can refer to GDAX Support or ask for help.
Example: Bittrex
Bittrex is one of the most used exchanges if you’re wanting to trade altcoins. They have the
highest number of altcoins of all exchanges at this time. Bittrex is where the majority of altcoin
calls are made. Let’s look at how to use Bittrex…

First off, you need an account. This is fairly straight forward. Go to http://www.bittrex.com/ and
click “Login” in the top-right, then click “Sign Up” and follow the steps.

For basic users of the service, the only way to access Bittrex is to send a cryptocurrency to the
exchange to trade with.

Example: Sending ETH from GDAX to Bittrex

Let’s send some Ethereum from GDAX to Bittrex to trade with.

Select the ETH/USD product in GDAX, and click the Withdraw button. Then select the ETH
Address section at the top of the Withdraw pop-up:

Enter the amount of ETH you’d like to send to your Bittrex ETH wallet address. How do we find
that?

Log into Bittrex, select Wallets in the top-right, in the Search box enter “ETH” and this is what
you should see:
Be careful when selecting your wallet here. If for example you sent Ethereum from GDAX to an
Ethereum Classic wallet, the funds sent would be lost. If you’re unsure, ask for help. Each coin
is different, they are not interchangeable when sending from one wallet to another.

Since I’m adding Ethereum to this wallet, click the “+” Icon on the left side here, you should now
see this:
This is the address you will put into the GDAX withdraw section. Copy and paste it, and then
double check to make sure they match in both places. If you get the address wrong, your
funds will be lost.

Transfer times
Each coin is different and depending on a number of variables, the range of time it will take for
your Ethereum in this case to be sent from one wallet to another will vary. Typically this never
takes more than 30 minutes for any coin but can sometimes take as much as 1-2 hours.
Generally Bitcoin will have the longest transfer times, while Ethereum and Litecoin are relatively
faster than Bitcoin. Don’t panic if you don’t see your coins transfer right away! Be patient,
eventually your funds will show up in your desired wallet. You can check the status once it
shows up on the Wallets page on Bittrex under “Pending Deposits”

Now you’re ready to trade on Bittrex.

USDT (Tether)
You can not buy and sell coins on Bittrex with fiat pairs with a basic account. (ie. ETH/USD like
GDAX) However, a coin called USDT is available on Bittrex in this case. This should be used if
you want to stay out of the market without transferring your funds back to GDAX (or the fiat
exchange you’re using). This is a topic in itself, I suggest you read more about what Tether is
technically and how it operates if you’re going to use it for an extended period of time. It’s
generally accepted that it’s not as safe as selling a coin into fiat on exchanges that support it.
There are pros/cons for each situation which won’t be covered here.

If you wanted to transfer your ETH into USDT on Bittrex, you would go to the Bittrex Home page
by clicking the Bittrex logo in the top-right of the website and scroll down to the “USDT Markets”
section and select “USDT-ETH”. More on how to use this area of the website later to make
trades.

Now that you’reset up with Bittrex, I want to walk you through a trade based on a call. However,
before I do that, I need to talk about charting.

Charting
One of the most important things in trading is being able to read a chart. I won’t go in depth into
advanced technical analysis here, I will simply cover the basics.

Trading View
Trading View, http://www.tradingview.com/ is the de facto standard when it comes to charting
these days. You will find many exchanges and other trading related websites around the web
using their platform. Most people use them. You should too if you’re serious about trading. The
site is constantly improving and they add new features all the time. They have paid plans for
their service but the core functionality is free.

Navigation
To go over what I’ll be covering, you will need an account. Go to http://www.tradingview.com/
and click “Join for Free”, follow the steps to get signed up.
Let’s go over how to open the BTCUSD chart on Trading View. Go to
http://www.tradingview.com/chart/ This is what you’ll see:

This can be very overwhelming at first but let’s break it down together. On the left side you have
the drawing tools. The main portion of the screen is the actual chart, to the right of that you see
the DOM (Depth of Market) section, I recommend closing this as you can make no use of it. To
the right of that you have a popout menu based on the icons you select from the rightmost side.
The watch list (top-right) is selected by default, is extremely useful and is what you will typically
have open the most.

Watchlist
You can customize your watch list to only show entries that you want to see. It also helps to
keep an eye on how markets are moving without having each chart in view as you can see
current value and 24hr changes from the watchlist directly. To remove a chart from your
watchlist, simply hover your mouse over the chart you wish to delete and click the red “X” that
pops up:
Let’s delete all of the default entries here and add BTCUSD. To add a coin to the watchlist, type
into the box with the label “Add Symbol” in the top-right of the website, type in “BTCUSD”:
Wow, that’s a lot of exchanges to choose from! You’re usually just going to select the exchange
that you’re trading with. I believe this list is sorted by trading volume. Let’s select BTCUSD -
BITSTAMP here. Our watchlist now looks like this:
You can add as many entries in this list as you want. Like I said earlier, it’s a great tool to keep
an eye on the coins you’re interested in at a glance and it’s easy to select the chart you want to
view from this list as well.

Candles and Candle Intervals

By default, Trading View shows you what’s called a 1 day chart, where the candles are drawn
using the trading data that occurred over an entire day. You can change the interval using a tool
at the top of the screen:
Which candle interval do you choose? A lot of people use many in a trading session, some
people stick to 1 hour candles and nothing else… This will become more clear as you gain
experience. The rule of thumb for newcomers is to select a candle based on how long you want
to be in a trade for. For shorter trades, use shorter intervals, for longer term trades, use longer
intervals. 1hr is the most common. Let’s select 1hr here and zoom in a little.

OHLC (Open, High, Low, Close)

You will notice as you move your mouse across the chart the values of OHLC will change at the
top of your chart. These are the 4 points of data which essentially draw each candle.

Open/Close
These are the prices at which the candle opened and closed at the beginning and end of the
duration. This forms what’s called the “body” of the candle. If the price closes above the open
price, the candle will be green. If the price closes below the open price, the candle will be red.

High/Low
These are the two extremes that the coin was traded at during the duration of the candle. These
can potentially form what are called the “wicks” of a candle. These are the parts of the candle
that extend out of the body of the candle. It indicates that the price went to a certain point, but
went back before the duration of the candle ended. Not all candles have wicks.

Volume
Volume is shown at the bottom of the chart in a bar graph format by default, and is also
calculated based on the candle interval. It’s simply how many units were traded during the
interval. The colour of the volume bar is based on the colour of the candle. You will notice a
yellow line that moves across the volume bars, this is the moving average of volume over the
last 20 bars by default. Generally speaking, if you see a volume bar move past the moving
average, you will see price action which can be seen in the corresponding candle.

Candles and volume are simple on the surface, but the combination of reading specific
candle intervals, as well as the form and volume for each candle is something that will
take many months or even years to master. There are professional traders who use nothing
but candles and volume to trade. All indicators are based off of these two indicators.
Trend lines
Okay, enough about candles! Let’s do some Technical Analysis. Let’s start with Trend Lines.
There are no rules here, only guidelines. If you can see a trend line, chances are someone else
can. As you draw them more and more, you’ll find out what works and what doesn’t. Generally I
don’t want a line to cross through any significant candle body’s or wicks.

I’ll draw a strong one now. Select the Line tool on the left side: Click your first point to start
drawing, move your mouse and click again to select your end point.

If you can spot trends early, the best trades are made when the price gets close to them.

Let’s look at that trend line a little more in depth:

Neat, eh? See how the candles bounced off of the trend line many times? This is called Support
and Resistance.

Support and Resistance

One of the strongest factors in trading. It takes practice to have the confidence to buy on trend
lines but like I mentioned earlier, the best positions can be opened here. Support and resistance
exists in all trends. In up or down trends, you should draw lines like I drew above. When a trend
line (support/resist line) is broken, support becomes resistance, and resistance becomes
support. When the market is moving horizontally, you can still define support and resistance --
it’s just a bit harder to do. Here’s an example from Mind Trader:
This was one of his calls actually. In this case, he called to buy above $7230 for a target of
$7670 (This image shows how the call played out). His relevant Support and Resistance is
shown here with the green rectangles drawn. All on a horizontal plane.

If you bought in above $7230 and the price crossed down below $7230 for an extended period
of time, you may want to exit the call without seeing profit and wait for the next call if there was
no stop loss given in the call.

Indicators
It is wise for newcomers to use at least 1 indicator along with reading candles and volume.

In the call Mind Trader made above, he was using the RSI (Relative Strength Index) indicator. It
is a very powerful indicator and one that is used commonly amongst traders. It shows how much
strength is in each price movement.

How to add an indicator to a chart

Click on the “Indicators” button at the top of Trading View, and search for an indicator. Let’s type
in “RSI”:
Click on “Relative Strength Index” here under “Built-ins”...

Sometimes the price will move upwards but the RSI indicator won’t move up with it. This is
called divergence, and is an early warning indicator that a trend is about to reverse directions.
Here’s a simple example:
This is called divergence. It means that the strength behind the uptrend in price is running out of
steam and will reverse soon. You can see here the resulting drop in price that occurred after the
fact.

Further research
There are many other indicators and strategies on how to use them. These help us along our
trading journey. If you’re interested in an indicator, it’s best to find a book on it and read through
it. Each indicator is quite powerful and once you master at least one of them, you will be well on
your way to becoming a master trader. Take a look at Stochastic RSI, divergence works on that
indicator as well. It can be used well in shorter timeframes to spot potential trend reversals.

Bittrex
Bittrex is a fairly simple website, but it has a large number of alt coins to trade with. Let’s go
through a call made by Mind Trader on Bittrex together.
Here’s the call:

Okay, I can discern a lot of information from this chart. First off you need to look at the pair and
which exchange it is being called on. In this case it’s on Bittrex and the pair is NEO/BTC. You
need BTC to trade this, so if you don’t have any Bitcoin at this time, you would need to buy
some on Bittrex or move some to Bittrex. He shows his support and resistance zones here
using red rectangles, furthermore at each point he is writing a value for each of them.
Buy Above 5120 Target 1 5800
Stop loss 4870 Target 2 6400
Note that in this case the price is currently below 5120. You need to wait here and see if the
price goes above 5120. The rule of thumb here is to wait for at least two 15min candles to
close above buy above price. If that happens, you should enter the trade and buy a position
somewhere above 5120. Once you enter, you should set a stop loss of 4870 into Bittrex, and
watch and wait for the price to move towards the target. If it moves down, you are then taking a
static loss set at the stop loss point.

Navigation
Open up the Bittrex website and go to the home page, you need to find the NEO/BTC page on
Bittrex. Search for NEO under Bitcoin Markets:
Be careful here to select the right one. You don’t want NeosCoin, you want NEO. Select BTC-
NEO here. Here’s the page that comes up:

At first glance, this can seem overwhelming but soon it will become second nature to you. You
have a simple chart that Bittrex is drawing. This chart is not Trading View based! You should
ignore this Bittrex chart and use Trading View to view the NEO/BTC chart in this case.
(Add it to your watchlist while you’re in the trade!) You also see some information about NEO on
the right, Last price bought/sold, Volume in Bitcoin, Bid, Ask, 24h high/low… This will become
useful as you progress, for now you should ignore it and focus on the call that was made.
Trading Section

This is the section I will focus on mainly. One thing to note about Bittrex is they do not have
support for Market Orders like GDAX does. You can only place limit orders on Bittrex.

Orderbook Section

Here you can see the order book. You can actually use this section to enter a position, more on
that later...

Orders Section

This is where your limit and conditional orders will show up. (More on conditional orders later)
Sometimes you will need to cancel an order, you can use the “X” on the right side of this area to
cancel individual orders.
Market History Section

This is a list that shows each trade that is executed on the order book as they happen. You
don’t need to pay a lot of attention to this.

My Order History Section

This section shows us our past trades made on this pair. It is helpful to see exactly what price
and time your position was opened or closed, and it also shows the fees involved in each trade.
Looks like I’ve made a few trades on this pair a while ago.

Entering a Trade
From the call above you know the following:
Enter Above 5120 Target 1 5800
Stop loss 4870 Target 2 6400

Let’s assume you observed two 15 minute candles close above the buy in price of 5120.
Time to buy!

There are two ways to enter. The first method takes longer than the second method but may get
you a slightly better position. The second method leaves us with a slightly less desirable
position but you are able to open a position in a very short time frame.

The first method is simply placing a limit order. The ideal entry using a limit order is for the
price to come down and hit your buy in the order book, with the hopes of the price
moving up soon after you open your position. Let’s say you want to place an order to buy
0.2 BTC worth of NEO at 5150. Here’s how to place such an order:

You would then hit “+ Buy Neo” and confirm your order in the next dialog box. Your order will be
placed on the order books and you will have to watch the price move to hit your order. You can
see now how this takes time, patience and a bit of calculation/luck.

What if the price is moving around too much to place limit orders effectively? You can use
option two, where you can buy or sell against orders in the order book individually! If you focus
on the Order Book Section, here’s how:

Place your mouse over an order on the Ask side since you want to buy NEO. Click the blue icon
with the arrow, and it will bring up a confirmation confirming your order. This is a very fast
method but there is a downside, you are going to commit yourself to that entire order in the
orderbook. The ask/size/total/sum is non-negotiable. Choose carefully! This can also be an
effective method to exit your position once you’re ready to take profits.
Newcomers should stick with limit orders. It’s a skill in itself to enter a position, and will
take practice to become efficient at.

Stop loss
This is important. Now that you realize how tricky it can be to enter a position, exiting in a panic
is far less fun. Use stop losses! You know from the call that Mind Trader called a stop loss of
4870. Here’s how to set up a stop loss order on Bittrex:

You have to set the Sell type to “Conditional”, this expands this area. This is tricky so make sure
you understand each step. Let’s assume you purchased 40 NEO earlier…

What you’re telling Bittrex to do once you execute this order is this:
If the price hits a level of 0.004871, Bittrex will automatically place an order to sell 40 NEO for
0.004870.

That way, Bittrex will trigger the limit order just before the price hits the stop loss.

This is also helpful if you’re going to be away from your computer for a while and can’t watch the
charts, you won’t have to worry about the price falling fast and losing your investment. Your risk
is locked in when you use stop losses, apply them and never change them after you set
them! Sometimes a stop loss will be hit and your position will close and the price will climb up
and hit the target. It’s best not to worry about this and move on.
Once you see the price start moving up well above your buy in, you will have to remove your
conditional stop loss order using the Orders Section of the trading page before you can place a
new limit order at the target.

It is best to never set your target exactly on the target that is called! Many people see the same
target and sometimes a price will touch the target only for a few minutes. Unless your order was
one of the first in the order book, your order may not get hit. Remember that for the price to rise,
all sell orders in the order book at a given price have to be filled. Set your limit orders for
profit just below the target in the call to be sure they get hit!

If two targets are called, exit 50% or more of your position at the first target, and the remainder
at the second target.

Let’s see how Mind Traders call played out:

First target hit! You would ideally have 50% or more of your position closed in this case. If
you’ve followed the entire guide, you know about Support and Resistance, you can say that at
this point NEO/BTC has resistance at 5800. Watch carefully. If it’s going to hit the second target,
it have to cross that 5800 level and hold above it to see the next target!

Conclusion
Things move fast in crypto, sometimes you will lose on calls. If you have a stop loss in place you
shouldn’t have to worry too much. If you get into a bad call with a bad entry, don’t get hung up
on it. Take your loss in these cases, however big or small, and move on to the next trade. The
goal is to win more than you lose.
Happy trading! :)