Crypto Basics Concepts

For newcomers, grasping the fundamentals of Bitcoin trading becomes significantly more manageable when instruction begins with the basic principles of Bitcoin itself. By establishing this foundational knowledge, subsequent, more complex concepts are assimilated more smoothly, as the new Bitcoin trader will have already internalized the core ideas before progressing to advanced topics.

The bitcoin basics that traders should learn first before starting are:

What is BTCUSD Crypto?

Bitcoin is the simultaneous buying and selling of one financial instrument for another. Bitcoin traders buy & sell for speculation purpose and for the purpose of trying to make a profit. Bitcoin traders will buy bitcoin that they think will appreciate in value & sell bitcoin which they think will depreciate in value.

Profitable Bitcoin trading hinges on acquiring crypto assets when their value is perceived as low and divesting when their value appears inflated. This fundamental principle underpins all Bitcoin trading. For newcomers aspiring to excel in BTC/USD trading, mastering the art of purchasing underpriced crypto instruments and selling those that are overpriced is crucial. A common failing among many Bitcoin traders is to act contrary to the prevailing market trend, buying assets when they are already overvalued - believing the upward momentum will continue - and selling assets when they are undervalued, fearing further declines.

Just like in the stock market, good traders buy stocks when the stock bitcoin price is low and sell stocks when the stock bitcoin price is high. Traders should use and stick to this same idea when they trade bitcoin.

What is Bitcoin Crypto?

Bitcoin trading is the simultaneous exchange of one financial instrument for another, for this reason bitcoin is traded in symbols known as crypto trading instruments.

What is a Bitcoin Quote?

Since cryptocurrency instruments are traded using symbols, the actual exchange price for bitcoin is determined by the prevailing bitcoin quote.

BTC USD Crypto is quoted in the format of decimal places.

What's a Pip?

Crypto currencies use decimal points in their prices. The second-to-last decimal is called a pip, and it's the smallest movement used to figure out profit and loss.

A pip refers to the Bitcoin Price Interest Point: it signifies a one-point movement in the Bitcoin quote.

What is a Lot?

Bitcoin trades in lots. Mini lots are smaller parts of standard lots. Micro lots break down mini ones further for crypto trades.

What is Bitcoin Leverage?

Because not many traders can afford to trade the standard contracts which require a lot of money to trade, there's bitcoin leverage in Bitcoin which means that traders can borrow money and use the borrowed money to make trade positions with. Here's an example with leverage. A leverage of 5:1 lets a trader with $10,000 borrow up to five times that amount. So, after using the 5:1 crypto leverage option, you'd have a total of $50,000 to trade with. This leverage is what makes Bitcoin accessible to retail bitcoin traders because retail traders can start & begin with little capital of their own & use bitcoin leverage to borrow the rest of funds required for trading. Money that the trader deposits is referred to as a bitcoin trader’s margin & a btc usd trader can continue to borrow money using this leverage as long as they have the required margin in their trading account. This is why the online traders must have the required account balance in their account to open the trade transactions they want to.

What is BTCUSD Trading Margin?

Margin is the specific amount of money that a trader is required to put aside in order to continue holding an opened/executed bitcoin leveraged trade. Margin also can be presented as the deposit a bitcoin trader is required to maintain so that to keep the open trades. This margin is a percent of account equity that has to be placed aside & allocated as the margin deposit for the open positions which are held by a bitcoin trader.

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