Recently, many newcomers have entered the crypto space, but most are still in a state of confusion. Instead of watching them stumble into traps, I’d like to organize some of my own understandings in hopes of helping friends who want to get started in crypto avoid detours.

First, let’s talk about what trading cryptocurrencies is. It’s actually very simple: buy low and sell high to profit from the price difference, similar to stock or real estate trading. The difference is that the digital currency market trades 24/7 without price fluctuation limits, which gives us more operational space and profit opportunities. Compared to traditional stock markets and futures, the return rates in the crypto market are indeed much higher.

To start trading coins, you first need to find an exchange. An exchange is a platform for trading digital currencies. Choosing a top-ranked exchange is safer and offers better liquidity. Different exchanges list different coins, so sometimes the coin you want to buy may only be available on a specific exchange.

Next, you need to understand the concept of USDT. USDT is Tether, which can be simply understood as a digital version of the US dollar, with 1 USDT pegged to 1 USD. Why do you need it? Because exchanges cannot directly buy and sell virtual currencies with RMB. Your process is: use RMB to buy USDT, then exchange USDT for the digital currency you want. When selling, you reverse the process. This process is called trading between coins.

Now, let’s talk about essential terms for beginners in crypto. Position size refers to the ratio of your invested funds to your virtual currency holdings. Full position means investing all your money into coins. Reducing position means selling part of your holdings. Going all cash means selling everything to hold cash. Heavy position and light position are relative terms, depending on whether you hold more coins or more cash.

Stop profit and stop loss are very important. The former is taking profits once a certain gain is reached, and the latter is cutting losses when the price drops to a certain level. These two concepts help you control risk. Bull market means prices are continuously rising; bear market is the opposite. Bullish traders are optimistic and buy, while bearish traders expect prices to fall and sell.

There are also other terms like building a position, adding to a position, rebound, consolidation, etc., which describe market states or trading strategies. Cutting losses means being forced to sell at a loss. Being trapped refers to buying at the wrong time and being locked in. Getting out of the trap means the price later rebounds, turning losses into gains. Missing the boat means misjudging the market and watching prices rise without buying in. Overbought and oversold are extreme states; market manipulation tactics like luring longs and luring shorts are tricks used by big players.

How are mainstream cryptocurrencies defined? Bitcoin is definitely the leader, Ethereum is second. Some say only these two are mainstream; others include the top ten by market cap; some say coins listed on major exchanges count as mainstream. My suggestion is to look at market cap rankings. The higher the rank, the higher the market recognition, liquidity, and investment value. Conversely, lower-ranked coins carry higher risks and should be approached cautiously.

It’s crucial to emphasize risk. Ethereum’s co-founder Vitalik once said the most honest advice: “Never invest money you cannot afford to lose.” I want to repeat: invest within your means. Never borrow money or take loans to trade crypto, especially with derivatives.

Speaking of derivatives, it’s important to clarify. Spot trading involves trading actual coins, while futures trading involves contracts. Simply put, futures allow you to use margin to leverage larger positions. For example, if you expect BTC to fall, you can use just 1% margin to borrow 100x leverage to short BTC. If BTC drops from $35,000 to $34,000, you can earn 100x the difference. Sounds tempting, right? But this also means your losses are amplified 100 times. Beginners should definitely avoid futures—this is not the fastest way to get rich but the fastest way to get liquidated.

To succeed in entering the crypto space, I believe there are three essential elements. First, an Android phone, which makes it easy to download various apps and manage wallets. Second, spare funds—money you don’t need in the short term—so that if you lose it, it won’t affect your life. Third, mindset—this is the most important. Crypto trading involves risks, and unstable mental states often lead to wrong decisions.

Finally, I want to say that making money in crypto is not limited to trading alone. Mining, staking, liquidity mining, participating in projects, and many other paths exist. The returns are always proportional to the investment. I hope everyone can find a way that suits them best in this market.