“Boss, I’ve just transferred $200. Please check. Thanks!”
3 minutes later, I received a call. It was the boss whom I had just sent money through internet banking. There had been an issue with my bank transfer. I had keyed in a wrong amount, sending $2,000 instead of $200.
Thank goodness, he was honest. Even if he wasn’t honest, I could call the bank up to reverse the transaction.
That’s because our fiat currency system is centralized. Governments around the world have financial laws which allow one to reverse the erroneous transaction within a reasonable amount of time.
When an erroneous transaction (buying. selling, or transfering) occurs in the cryptocurrency world, it cannot be undone. This is because the world of cryptocurrency is decentralized (remember that records are sent to many computers?). There is no single organization you can call or email to reverse your transaction . Therefore, it is important to know how to transact in cryptocurrency and transfer them safely.
Buying your 1st cryptocurrency isn’t tedious or difficult. There are just a couple of things to look out for. What are they?
#1 Legitimate Exchange URL
The very first step in buying your 1st cryptocurrency is to log in to your cryptocurrency excahgne account. You got to be extra careful right from the start.
Have you received suspicious looking emails from your “bank”? Or have you received an email from a Nigerian prince wanting to share his wealth with you? I have!
When it comes to money, no one minds having more. There are scammers who clone cryptocurrency exchange websites to phish for your details, more specifically, your username and password. Scammers may even send you emails with links to their cloned cryptocurrency exchange websites.
Don’t log in to your cryptocurrency exchange account and wallet when you’re connected to someone else’s Wifi network.
Bookmark the URL of the cryptocurrency exchanges you use.
Enable 2 factor authentication (2FA). Even if you had unknowingly entered your username and password on a phishing website, the scammer still doesn’t have access to your cryptocurrency.
Write down your username and password on paper instead of storing them in your phone or computer.
A comparison of 6 popular cryptocurrency exchanges can be found here to help you in your decision. You can also find the legitimate URL to these cryptocurrency exchanges in that article.
#2 Bank Account Details
Before buying any cryptocurrency, you’ll need to deposit fiat money into the cryptocurrency exchange you’ve selected. To do so, you’ll need to link your bank account to your cryptocurrency exchange.
For a seamless bank transfer, the name which you’ve keyed in to your cryptocurrency exchange account must be the same as the one that’s reflected in your bank account.
I went through this mistake when I was starting out. Thank goodness the change of name is a simple process. You’ll just need to email the cryptocurrency exchange to request for a change.
#3 Spot Price
After logging in to your cryptocurrency exchange account and checking your name, you are ready to start buying the cryptocurrency you’ve been eyeing.
You are in the Trading or Exchange page where you see quotes and probably a chart. You see several trade options too.
If you’re using Binance International, you’d see Spot, Cross 3x, Isolated 10x. I strongly advise you to stick to Spot. Cross 3x and Isolated 10x are margin trading where your gains and losses are magnified by 3x and 10x respectively. Interest is charged every hour too.
After clicking on Spot, you’ll notice that there are 4 types of trade orders for you to choose – Limit, Market, Stop-limit, and OCO (One-Cancels-the-Other). You’ll see some of these trade order types across all cryptocurrency exchanges.
Confused? Allow me to explain the 4 types of trade orders which I use to help me maximize my profits.
A limit buy order is an order to buy a cryptocurrency for a lower price than its current market price within a specified period of time. Your limit buy order will only be filled when the price of the cryptocurrency drops to the price you’ve keyed in.
Eg. The market price of Bitcoin is $60,000. You send in a limit buy order of $59,000 to buy 1 Bitcoin which will expire at the end of the month because you expect a pullback.
When the price of Bitcoin drops to $59,000 before the end of the month, your limit buy order will be executed. You’ll own 1 Bitcoin.
A market buy order is an order to buy a cryptocurrency at its market price.
Eg. The market price of Ether (the cryptocurrency for Ethereum) is $2,000. You decide to enter a market buy order for 1 Ether because you want to buy it now. You now own 1 Ether which has been bought for $2,000.
A stop-limit buy order is an order to buy a cryptocurrency when it rises to the price you’ve set.
Eg. The market price of ADA (the cryptocurrency for Cardano) is $1.20. You enter a stop-limit buy order of $1.30 for 1 ADA as you expect a breakout in prices.
When the price of ADA rises to $1.30, your stop-limit buy order will be executed. You’ll own 1 ADA.
d) OCO (One-Cancels-the-Other)
An OCO order is made up of a pair of simultaneous orders which cancels the other if one of the orders is executed.
More specifically, an OCO buy order is made up of a limit buy order and a stop-limit buy order. This trade order type is especially useful if you wish to purchase the cryptocurrency you’ve been eyeing for either on a breakout or a pullback.
Eg. You place a OCO buy order for Bitcoin. Bitcoin is trading at $60,000.
You would want to buy Bitcoin on the breakout at $60,100 (stop-limit buy order) or at the pullback at $58,500 (limit buy order). When the price of Bitcoin pulls back to $58,500, your limit buy order will be executed while your stop-limit buy order of $60,100 will be canceled.
5 Lessons You’ve Learnt Today
#1 Always check the exchange’s URL
#2 How to enhance the security of your cryptocurrency accounts
#3 Ensure that the name you’ve submitted to the exchange is the same as the one stated in your bank account
#4 The 4 different types of buy trade orders
#5 When to use the different types of buy trade orders
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See you around!