Cryptocurrency Trading
Analyze crypto markets, execute trades, and manage positions
1. Welcome to the Crypto Trading Arena
Bitcoin's price swung from $69,000 to $15,000 in 2022—a 78% crash that wiped out billions. In crypto, fortunes are made and lost in hours. Unlike stocks, crypto markets trade 24/7 with extreme volatility. 90% of crypto traders lose money—not because crypto is bad, but because they don't understand order types, leverage, and risk management.
💰 Core Concept
Cryptocurrency trading is buying and selling digital assets on exchanges like Binance or Coinbase. The three pillars: Order types (market, limit, stop-loss), Technical analysis (charts and indicators), and Risk management (position sizing and stop-losses). Master these before touching leverage.
Understanding Crypto Infrastructure
🔑 Wallets & Custody: Your Keys, Your Coins
Before trading a single dollar, understand this: cryptocurrencies live on blockchains, not in your "wallet". A crypto wallet is software that stores your private keys—the cryptographic passwords that prove ownership of your coins. If someone steals your private key, they can drain your account in seconds. No bank will reverse the transaction. No customer support will help you. In crypto, you are your own bank.
Hot Wallets (Online)
Cold Wallets (Offline)
🚨 The Seed Phrase: Your Master Key
When you create a wallet, you receive a 12-24 word seed phrase(also called "recovery phrase"). This phrase can regenerate your private keys and restore access to all your crypto. Anyone with your seed phrase owns your crypto. Never store it digitally (no screenshots, no cloud), never share it with anyone (not even "customer support"), and never enter it on websites you don't absolutely trust.
| Security Comparison | Exchange Wallet | Hot Wallet | Cold Wallet |
|---|---|---|---|
| You control private keys | ✗ Exchange has keys | ✓ You have keys | ✓ You have keys |
| Hack risk | High (FTX, Mt. Gox) | Medium (malware risk) | Low (offline) |
| Convenience | Very high | High | Medium |
| Best for | Active trading | DeFi interactions | Long-term storage |
🏢 Exchange Types: CEX vs DEX
Cryptocurrency exchanges come in two flavors: Centralized Exchanges (CEX) like Binance and Coinbase, and Decentralized Exchanges (DEX) like Uniswap and PancakeSwap. The difference is fundamental: CEXs are companies that custody your funds (you trust them not to steal or lose your crypto), while DEXs are smart contracts on blockchains (you custody your own funds, trading directly from your wallet).
Centralized Exchanges (CEX)
Decentralized Exchanges (DEX)
💀 Exchange Hacks & Collapses: Cautionary Tales
📚 Market Types: Spot, Futures, Perpetuals
Crypto trading isn't one-size-fits-all. The three market types have different risk profiles, mechanics, and use cases. Spot trading = you own the coins. Futures = contracts with expiration dates. Perpetuals= futures with no expiration (crypto's innovation). Most traders start with spot, then graduate to perpetuals. Futures are primarily for hedging.
| Feature | Spot Trading | Futures Contracts | Perpetual Swaps |
|---|---|---|---|
| Ownership | You own actual coins | Contract to buy/sell later | Contract with no expiration |
| Leverage | None (1x only) | Up to 20-50x | Up to 100-125x |
| Expiration | Hold forever | Monthly/quarterly | Never expires |
| Funding rates | N/A | N/A | Paid every 8hrs |
| Liquidation risk | None | Yes (high leverage) | Yes (higher leverage) |
| Best for | Long-term holding | Hedging positions | Active speculation |
| Beginner friendly | ✓ Start here | Advanced | Expert only |
📖 Order Book Mechanics: How Exchanges Match Trades
When you place a trade, you're not trading with "the exchange"—you're trading with other users. The order book is a real-time list of all pending buy and sell orders. Bid = highest price buyers are willing to pay. Ask= lowest price sellers are willing to accept. The difference is the spread—your hidden cost on every market order.
Order Book Structure
How Orders Execute
Liquidity & Slippage
Liquidity = how much volume sits in the order book. High liquidity (BTC/USDT on Binance) = tight spreads, minimal slippage. Low liquidity (obscure altcoin) = wide spreads, massive slippage. On illiquid pairs, a $10,000 market order might move the price 5%—you'll pay way more than the displayed price.
📊 Interactive: Order Types
Market Order
✅ Executes instantly at current price ($50,000)
❌ You pay the spread + taker fees (0.2%)
⚠️ In volatile markets, you might get filled at a worse price than expected (slippage)
The Math of Leverage & Liquidation
⚡ Leverage Mechanics: Amplifying Gains & Losses
Leverage lets you control a larger position than your account balance. At 10x leverage, $1,000 controls $10,000 worth of Bitcoin. The exchange lends you $9,000. Sounds amazing, right? Here's the catch: leverage amplifies losses equally. A 10% price move against you at 10x leverage = 100% loss (total wipeout). At 20x, just 5% move = liquidation. 80% of leveraged traders get liquidated. This isn't a game—it's math.
📐 The Leverage Formula
| Leverage | % Move to Liquidate | $1K Controls | Potential Profit (10% up) | Risk Level |
|---|---|---|---|---|
| 1x | 100% (impossible) | $1,000 | $100 (10%) | ✅ Safe |
| 3x | ~33% | $3,000 | $300 (30%) | ⚠ Moderate |
| 5x | ~20% | $5,000 | $500 (50%) | ⚠ High |
| 10x | ~10% | $10,000 | $1,000 (100%) | 🚨 Very High |
| 20x | ~5% | $20,000 | $2,000 (200%) | 💀 Extreme |
| 50x | ~2% | $50,000 | $5,000 (500%) | 💀 Suicidal |
| 100x | ~1% | $100,000 | $10,000 (1000%) | 💀 Pure Gambling |
💀 Liquidation Price Calculation
Liquidation happens when your position loses enough value that your margin is wiped out. The exchange automatically closes your position to prevent you from owing them money. The liquidation price depends on your entry price, leverage, and position direction (long vs short). Once price hits liquidation, you lose 100% of your margin instantly. No warning. No second chance.
📐 Liquidation Formulas
⚠ Real-World Liquidation Factors
📊 Cross Margin vs Isolated Margin
When trading with leverage, you choose between cross margin(entire account balance used as collateral) or isolated margin(only allocated margin at risk). Cross margin prevents liquidation by drawing from your full balance, but one bad trade can wipe your entire account. Isolated margin limits damage to the allocated amount, but you'll get liquidated faster. Most beginners should use isolated margin.
Cross Margin Mode
Isolated Margin Mode
🌊 Cascading Liquidations & Market Crashes
Cascading liquidations are crypto's version of a market panic. Here's how they unfold: Price drops 5% → traders with 20x leverage get liquidated → exchange sells their positions (market orders) → price drops another 3% → traders with 10x leverage get liquidated → more selling → price drops 5% more → even 5x traders liquidated. This feedback loop can crash prices 30-50% in hours, then recover just as fast once liquidations clear.
💥 May 19, 2021: The $10 Billion Liquidation
🪙 LUNA Death Spiral (May 2022): Leverage's Final Boss
Terra (LUNA) went from $116 to $0.0001 in 5 days—a 99.9999% crash. This wasn't a cascade—it was an algorithmic death spiral. UST (Terra's stablecoin) de-pegged → panic selling → LUNA minted infinitely to restore peg → hyperinflation → more panic → infinite supply → price → 0. Leveraged traders were liquidated within hours. Even spot holders lost everything. $45 billion wiped out. Lesson: Leverage on algorithmic stablecoins = Russian roulette.
💼 Interactive: Position Size Calculator
⚡ Interactive: Leverage Trading
Reading Price Action & Chart Patterns
🕯️ Candlestick Anatomy & Psychology
Every candlestick tells a story of battle between buyers and sellers. A green (bullish) candle means buyers won—price closed higher than it opened. A red (bearish) candle means sellers won—price closed lower. But it's not just color that matters. The size of the body and wicks reveals market psychology—fear, greed, indecision, and momentum.
Candle Components
Interpreting Patterns
Key Single Patterns
Multi-Candle Reversal Patterns
📏 Support & Resistance: Where Price Battles Occur
Support is a price level where buying pressure overcomes selling pressure (price bounces). Resistance is where selling overcomes buying (price rejects). These aren't magical lines—they're psychological zones where traders cluster orders. Round numbers ($50K, $100K) act as strong SR because humans like round numbers. Previous highs/lows also act as SR because traders remember those levels.
Support Characteristics
Resistance Characteristics
Types of Support/Resistance
⚠ Support/Resistance Fake-Outs
Not every touch is a trade. False breakouts(fake-outs) happen when price briefly breaks S/R, triggers stop-losses, then reverses. This is called "stop-loss hunting"—whales intentionally push price through key levels to liquidate retail traders, then buy the panic selling.
📊 Chart Patterns: Price Footprints of Big Money
Chart patterns aren't magic—they're visual representations of institutional accumulation and distribution. When whales accumulate (buy slowly to avoid spiking price), charts form bases. When they distribute (sell slowly), charts form tops. Retail traders see patterns. Smart money sees order flow, liquidity, and sentiment.
🔺 Continuation Patterns (Trend Continues)
🔄 Reversal Patterns (Trend Changes)
📈 Bitcoin 2021 Bull Run: Pattern Recognition in Action
📉 Moving Averages & Trend Following
Moving averages (MA) smooth out price noise to reveal the trend. The 50-day MA = short-term trend. The 200-day MA = long-term trend. When price is above both MAs = bull market. Below both = bear market. The magic happens when fast MA crosses slow MA—these "crossovers" signal major trend changes.
🟢 Golden Cross (Buy Signal)
🔴 Death Cross (Sell Signal)
⚙ How to Use Moving Averages
⚠ Volume Confirms Everything
Volume precedes price—this is a golden rule. Breakouts, reversals, and trends are only valid if accompanied by volume. Low volume = weak move, likely fake-out. High volume = conviction, likely sustainable.
3. Reading the Charts
📈 Interactive: Candlestick Chart
🔍 Interactive: Technical Indicators
Moving Average (MA)
Averages price over X periods to smooth out noise. When price is above MA = uptrend. Below MA = downtrend. When fast MA crosses above slow MA = bullish signal.
4. Market Sentiment & Volatility
📊 Interactive: Market Sentiment
Sideways Market Strategies
⚡ Interactive: Volatility Impact
💸 Interactive: Trading Fees
5. Key Takeaways
Always Use Stop-Losses
Every trade needs a stop-loss. Risk 1-2% of your account per trade maximum. A single trade without a stop-loss can blow your entire account in a flash crash. Professional traders risk small and win big.
Leverage is a Double-Edged Sword
At 10x leverage, a 10% move against you = liquidation. At 20x, just 5%. Most traders who use high leverage get liquidated within weeks. Start with 1-3x leverage max until you're consistently profitable.
Master Order Types
Market orders = instant but expensive. Limit orders = cheaper but might not fill. Stop-loss orders = automatic exit at your chosen price. Use limit orders for entries, market orders only for emergencies.
Learn to Read Charts
Candlesticks show price action. Green = buyers won, red = sellers won. Moving averages show trend. RSI shows overbought/oversold. Volume confirms momentum. Don't trade based on one indicator—combine them.
Adapt to Market Conditions
Bull market = buy dips. Bear market = short rallies or stay cash. Sideways = range trading. Don't use the same strategy in all conditions. The market changes—your approach must change too.
Fees Add Up Fast
Trading fees, funding rates, and slippage eat profits. A 0.3% round-trip fee means you need 0.3% profit just to break even. Day traders can lose 10%+ annually to fees alone. Use maker orders and trade less frequently.