How to Trade on a Crypto Exchange: A Step-by-Step Guide

Crypto trading on an exchange can feel a bit overwhelming at first, like staring at a dashboard full of charts and numbers that might as well be alien code. But once you get the hang of it, it’s actually pretty straightforward and even kinda fun.

This step-by-step guide walks through every essential step: creating an account, completing KYC verification, placing the first trade with confidence, and managing a portfolio to avoid unwanted volatility. Clear, straightforward, and designed to get up and running fast.

Whether you are new to cryptocurrencies or an experienced investor aiming to refine your trading approach, this guide is designed to suit all levels of expertise. It simplifies the complexities of crypto trading, transforming it from a challenging endeavor into a structured and comprehensible process. Let us begin.

How Should You Use a Cryptocurrency Exchange?

Now that you understand what crypto trading involves, let’s explore how to use a cryptocurrency exchange effectively.

1. To Buy Cryptocurrency with Fiat Currency

• If you want to buy Bitcoin by using fiat currency, then you should compare various platforms to find out which one offers the best service for you.
• The first step is to register an account on the platform by providing personal details, such as name, email address, phone number, and proof of identification, as requested by the company.
• The second step would be to navigate and select Bitcoin as the cryptocurrency you want to purchase. Then, you need to select the payment currency (USD or your preferred currency) and specify the amount you want to spend.
• The third step would be to select the payment method, such as bank transfer or credit card payment. You need to enter the payment details, such as routing and account number if you are opting for a bank transfer, or the card number if you are paying by credit or debit card.
• Once it is done, review your transaction details, which include the fees that will apply and the amount of Bitcoin you will purchase. If you are okay with the details, then on the buy screen, click ‘Buy BTC’.
• After verifying the details and confirming the transaction is being processed, Bitcoin will be deposited into the trader’s wallet. However, one should note that the brokers will automatically send the Bitcoin, which is purchased to the external wallet address if you have nominated them.

2. To Buy Cryptocurrency with Digital Currency

• If you have Bitcoin and want to exchange it for other cryptocurrencies, such as Ethereum, follow these steps to place a trade on a centralized cryptocurrency exchange.
• The first step is to compare cryptocurrency trading platforms to find the one that offers the best service for you. The next step is to register an account on the platform by providing personal details and proof of identification.
• After registering an account, you need to log in and locate the Bitcoin wallet address required. You can use this address to transfer the bitcoin you want to trade using an external wallet.
• The next step would be to navigate to the exchange or trading page. You need to search for the currency pair you want to trade and start.
• The next step would be to choose the type of order you want to place in the buy field, indicating whether it is a limit order or a market order. You need to enter the transaction details, such as the amount of Bitcoin you want to spend. If you are placing a limit order, then you need to add your requested Ethereum price.
• The final step would be to review the transaction, which includes checking the rate and any applicable trading fees. Then, you need to click on ‘Buy ETH’. When the transaction has been processed, the Ethereum you have purchased will be deposited into the exchange wallet specified by the trader.
• If you are using a decentralized cryptocurrency exchange, the process may differ. You need to link the wallet to your bank account, and you will be able to trade directly from wallet to wallet, eliminating the requirement to deposit funds on a cryptocurrency exchange.

3. To Sell Cryptocurrency and Withdraw Your Funds

• If a customer wants to sell cryptocurrency on the cryptocurrency exchange, they need to follow the steps –
• The first step is to log in to their account and locate the Bitcoin wallet address. By using this address, they can transfer the Bitcoin they want to trade from an external wallet.
• The next step would be to navigate the trading or exchange page. You need to search for the currency pairs that you want to trade, for example, BTC/ETH or BTC/USD.
• By adding the details in the Sell field, you need to include the transaction details, depending on the platform you are using. You might be able to sell at a market rate, or you can place a limit order for the price you desire.
• The next step would be to review the transaction, which includes checking the exchange rate and any applicable fees, and then clicking on ‘Sell BTC’.
• When the transaction has been processed, the purchased currency will be deposited into your exchange wallet. You can withdraw those funds from your exchange account, but the process you need to follow will depend on whether you have purchased fiat currency for a cryptocurrency.
• If you have purchased the fiat currency, you can use the ‘Withdraw USD’ option from your trading account dashboard. Then, you need to select your payment method. If you prefer a bank transfer or PayPal transaction, please provide all the required account details so that the payment can be processed.
• If you want to purchase cryptocurrency, you need to set up a secure wallet where you can store your coins. You can copy the wallet address, log in to your account, and select the currency you want to transfer. Finally, double-check that you are sending the funds to the correct wallet before proceeding with the transaction.

How to Pay for the Cryptocurrency You Have Purchased?

To pay for the cryptocurrency you have purchased, you need to deposit funds on the best cryptocurrency exchange. Moreover, the payment methods accepted by the exchange may differ; you should check and ensure the platform supports your preferred payment method before signing up. A few of them accept all types of deposit methods, which include the following:

• Bank Transfers
• Credit and Debit Cards
• Paypal, Neteller, Skrill
• Cryptocurrency Transfers
• Cash Deposits
• Prepaid Cards
• Payid
• Wire Transfers
• Other Online Payment Services

Bitcoin Trading Process

• Comparing exchanges for finalizing the best one
• Registering for an account on the platform requires providing personal details and proof of ID
• Navigate your way to the “Buy” screen
• Select Bitcoin as the cryptocurrency you want to buy
• Selecting your payment currency
• Select your payment method, such as credit card, debit card, or bank transfer
• Enter your payment details, including your account and routing number if sending a bank account transfer or your card number and CVV if paying by debit card
• Proceed by clicking on “Buy BTC”

Once the transaction is processed, the BTC will be deposited into your wallet. For depositing funds on your cryptocurrency exchange. To get started, you can choose from various deposit methods like a credit card, debit card, PayPal, cash deposits, bank account transfers, wire transfers, cryptocurrency transfers, prepaid cards, and several more.

Trading Fees Associated with Cryptocurrency Exchange

• One of the most important features to check out on an exchange is the trading fees. Fees are often overlooked by users, especially short-term traders, which can erode their profits if not managed effectively. Furthermore, various types of fees are associated with the cryptocurrency exchange. Some of them are –
• Trading fees refer to the fees charged for every trade placed on the exchange. The costs are automatically deducted from the balance, making it difficult to check the actual amount, as most trading occurs on crypto-to-crypto pairs.
• Withdrawal fees are deducted from the trader’s overall balance when they initiate the withdrawal process, either through a user’s bank account or to an external cryptocurrency wallet. Both process carries a different set of fees.
• A few exchanges, such as Binance, Huobi, and Bitfinex, among others, offer discounts on trading fees when traders use their exchange’s native token. It is highly advisable to look at the fee structure of a crypto exchange before you plan to start trading.

Conclusion

Choosing the best exchange primarily depends on your location and specific needs. Other important considerations include understanding whether you have fiat currencies to purchase crypto coins, or if you wish to engage in margin trading or short-selling currencies. There are also specialized exchanges that help you trade particular coins found only on those platforms.

In this industry, hacking can occur at any time, so as a precaution, it is advisable to use a secure wallet that allows you to store multiple cryptocurrencies and control your private keys. As we know, the cryptocurrency market is ever-growing. The competition is ever-increasing. We will regularly update this list to ensure it remains current with the market.