My Diamond Rules for Cryptocurrency Trading for Beginners: Where to Buy, What to Buy, How to Buy, When to Buy, When to Sell, and How Much You Can Make. Let's begin. This article does not bear financial responsibility for your actions. I do not give financial advice, but only share my opinion.
What is cryptocurrency?
Cryptocurrency is a digital or virtual form of money that uses cryptography to secure transactions and control the issuance of new units. Unlike traditional currencies (dollar, euro, ruble), cryptocurrency is decentralized and is not controlled by central banks or government agencies.
Blockchain is the main technology that cryptocurrencies run on. It is a distributed ledger containing information about all transactions conducted on the network. Once a transaction is recorded, it is cryptographically protected, making the data virtually immutable and tamper-proof.
The popularity of cryptocurrencies is largely due to bloggers who talk about big money and how easy it is to earn extra funds. However, the risks are often overlooked. Below is a video where I managed to earn an additional 5% to my position in a couple of seconds.
It is important to note: this was my third take. Before that, I lost twice, a total of about 6%. So the main conclusion is that there is no easy money here. But you can still make money. Read on.
The best crypto for beginners
There are thousands of cryptocurrencies on the market, but some of them remain leaders for years. Let's take a look at the top 5 largest cryptocurrencies by capitalization:
Bitcoin (BTC) is the first and the most famous cryptocurrency, created in 2009 by a person (or group of people) under the pseudonym Satoshi Nakamoto. BTC is used as a store of value, analogous to “digital gold”.
Ethereum (ETH) is the second most popular cryptocurrency, launched in 2015. Ethereum differs from Bitcoin in that it supports smart contracts - programmable contracts that automatically fulfill the conditions laid down in them. This technology is the basis of many decentralized applications (DApps).
Tether (USDT) - the largest stablecoin backed by traditional currencies (mainly the U.S. dollar). It is used as a store of value and is convenient for trading on crypto exchanges.
BNB (Binance Coin) is a token of the Binance ecosystem, one of the largest crypto exchanges in the world. BNB is used to pay commissions on the exchange, as well as in various crypto projects, including DeFi and NFT.
Solana (SOL) is a blockchain platform that competes with Ethereum due to its high transaction processing speed and low fees. SOL is used in DeFi applications, NFT and gaming projects.
Coins that are worth buying are those cryptocurrencies that have strong technology and good marketing. But the most important thing is to find a good point of purchase and a profitable point of sale.
Why cryptocurrencies are popular?
Decentralization - no intermediaries such as banks and payment systems.
Anonymity - in most networks, users are not tied to personal data.
Transparency - all transactions are stored on the blockchain and available for viewing.
Growth in value - many cryptocurrencies increase in value over time, which attracts investors.
Cryptocurrency is not just digital money, but an entire ecosystem that is changing the financial system. However, before you start investing in or using cryptocurrencies, it is important to understand their features, risks and opportunities.
What are the types of cryptocurrencies?
The cryptocurrency market includes thousands of projects, but they can be divided into a few key categories based on functionality and purpose. Let's take a look at the main types of cryptocurrencies, including fundamental projects, second-tier solutions, DeFi, DEX, AI tokens and memcoins.
Today's crypto market offers different types of assets, from fundamental blockchains and second-tier solutions to DeFi, AI and memcoins. Each type of cryptocurrency serves a different function, and understanding their differences will help investors and users get a better understanding of the digital asset world.
1. Fundamental projects (L1 - Layer 1)
Fundamental cryptocurrency projects are Layer 1 (L1) blockchains that provide the foundation for the entire ecosystem. They function as the infrastructure upon which other cryptocurrency solutions are built.
Examples of L1 projects:
Bitcoin (BTC) is the first and most trusted cryptocurrency to use the Proof-of-Work (PoW)
Ethereum (ETH) - the largest blockchain for smart contracts using Proof-of-Stake (PoS).
Solana (SOL) - a high-speed blockchain with low fees, popular among DeFi and NFT projects.
Avalanche (AVAX) - a platform for fast and scalable development of decentralized applications (DApps).
Polkadot (DOT) - a blockchain that connects different networks and allows them to exchange data.
2. Layer 2 solutions (L2 - Layer 2)
L2 (Layer 2) projects run on top of the underlying blockchains (L1) and improve their speed by reducing fees and scaling the network.
Examples of L2 projects:
Polygon (MATIC) - a network that speeds up Ethereum and reduces transaction costs.
Optimism (OP) and Arbitrum (ARB) - Rollups technologies that enable faster and cheaper transactions while remaining part of the Ethereum ecosystem.
StarkNet (STRK) - uses ZK-Rollups to make Ethereum more scalable.
Lightning Network (BTC) - Layer 2 solution for Bitcoin that speeds up payments and reduces fees.
3. DeFi (Decentralized finance)
DeFi projects create an alternative to traditional financial services: loans, deposits, exchanges and insurance, but without intermediaries.
Examples of DeFi projects:
Aave (AAVE) - a cryptocurrency lending and borrowing platform.
MakerDAO (MKR, DAI) - creator of the cryptocurrency-backed DAI
Curve (CRV) - a decentralized steiblecoin exchange with minimal fees.
Compound (COMP) - a credit DeFi protocol that allows for passive income.
4. DEX (Decentralized exchanges)
DEX (Decentralized Exchange) are cryptocurrency exchanges that operate without intermediaries, allowing users to exchange tokens directly through smart contracts.
Popular DEX platforms:
Uniswap (UNI) - the largest decentralized exchange on Ethereum.
PancakeSwap (CAKE) - DEX on Binance Smart Chain with low commissions.
dYdX (DYDX) - an exchange for margin trading without KYC and intermediaries.
Jupiter (JUP) - the leading DEX platform in Solana ecosystem.
5. AI-tokens (Cryptocurrencies for artificial intelligence)
Blockchain is being used extensively in artificial intelligence (AI), creating secure and decentralized solutions for storing and processing data.
Popular AI tokens:
Render (Render) - a platform for distributed graphics processing using blockchain.
AI (FET) - a project that creates autonomous AI agents to automate business processes.
AI-based cryptocurrencies are among the most promising. Such digital assets can provide good income if the entry point is right. I recommend paying attention to Render.
6. Meme Coins
Memcoins are cryptocurrencies created from internet memes, often without a strong technological foundation but with a powerful community.
Popular memcoins:
Dogecoin (DOGE) - the most famous memcoin, created as a joke, but has become a serious asset.
Shiba Inu (SHIB) - DOGE competitor developing its own ecosystem.
Pepe (PEPE) is a memcoin that will gain popularity in 2023.
Bonk (BONK) - a memcoin on the Solana blockchain supported by an active community.
Best crypto analysis tools
To successfully work with cryptocurrencies, it is essential not only to understand their types, but also to analyze the market. There are dozens of analytical platforms that help track prices, trading volumes, liquidity, capital flows and other metrics. Let's take a look at the most popular platforms and see in which cases they will be most useful.
1. CoinMarketCap
CoinMarketCap – is the premier market data aggregator. The most popular site for tracking cryptocurrency prices, capitalization and trading volumes. It is a basic tool for assessing the market value of cryptocurrency and its dynamics. Suitable for quick analysis of assets, their capitalization and identification of general trends.
Main Functions:
Real-time monitoring of cryptocurrency prices.
Rating of cryptocurrencies by capitalization.
Information about exchanges and trading volumes.
Tracking of historical data and charts.
ICO Calendar tab for finding new projects.
2. CoinGecko
CoinGecko – is an alternative to CoinMarketCap with additional metrics. A platform similar to CoinMarketCap, but with deeper analysis of onchain data and DeFi projects. CoinGecko is convenient for more detailed analysis of projects, especially in the field of DeFi and NFT, as well as for checking developer activity.
Main Functions:
Ranking of cryptocurrencies by capitalization.
NFT and DeFi section with project data.
Evaluation of developer activity on GitHub.
Tracking social trends and mentions of cryptocurrencies.
3. Coinglass
Coinglass – analysis of liquidations and open positions. A platform for monitoring liquidations, open position volume and market sentiment.
Coinglass is a great tool for traders to help analyze the liquidations and direction of major players' positions.
CryptoQuant – advanced onchain analysis and metrics for trading. A platform that provides detailed onchain analytics, including the movements of major players.
CryptoQuant is useful for analyzing onchain data, identifying the actions of large investors and predicting potential market movements.
DropsTab – tracking tokens and upcoming launches. A platform useful for finding new tokens and studying market trends.
DropsTab is indispensable for investors looking for new promising projects and tokens at early stages.
Main Functions:
Monitoring of new tokens and upcoming launches.
Price history of tokens since their introduction.
Market analysis taking into account various factors.
How to trade cryptocurrency: key rules
Cryptocurrency trading is carried out on specialized platforms - cryptocurrency exchanges. They provide access to various digital assets, trading tools and liquidity.
Cryptocurrency exchanges are divided into two types:
Centralized (CEX) - controlled by a private company, requires user verification. Examples: Binance, Bybit, OKX.
Decentralized (DEX) - work on smart contracts, do not require registration. Examples: Uniswap, Curve, dYdX.
Centralized exchanges are better suited for novice traders, as they offer user-friendly interfaces, customer support and higher liquidity. Let's take a look at the three largest platforms.
Basic trading principles
Trading on crypto exchanges is based on several key mechanisms:
Spot trading - buying and selling cryptocurrency at the current market price. Suitable for long-term investment.
Futures and options - contracts to buy/sell cryptocurrencies in the future. Allows you to make money on market movements without buying the real asset.
Margin trading - the ability to trade with borrowed funds, increasing both potential profits and risks.
P2P trading - buying and selling of cryptocurrency directly between users with the possibility to pay with fiat money.
Staking and lending - passive earnings from storing and lending coins.
Each of these tools requires an understanding of the market and a risk management strategy.
Fear and Greed
My experience tells me: you need to buy when everyone is selling, and sell when everyone is buying. How to determine this moment? It is much easier than it seems. There is an indicator that reflects the mood of the market - fear and greed index.
You can make it a rule: buy when the market is in the zone of extreme fear, and sell when the indicator shows extreme greed.
Risks of cryptocurrency trading
While the cryptocurrency market offers high earning opportunities, it also comes with serious risks:
High volatility - prices can change by tens of percent per day.
Position liquidation - when leverage is used, the risk of capital loss increases.
Regulatory risks - governments of different countries may impose restrictions on cryptocurrency trading.
Security - storing funds on an exchange can be vulnerable to hacking, so it is important to use cold wallets.
Income Prospects
Earning money on cryptocurrency is possible both on long-term investments and active trading. The main market cycles worth considering:
Bitcoin halving is an event in which the reward for mining a bitcoin block is halved. It occurs every four years and results in a shortage of new coins, which historically provokes price increases.
Altcoin season - a period when altcoins (other than bitcoin) show strong growth, often outperforming BTC. Occurs after a significant rise in bitcoin, when investors start looking for more profitable assets.
Bull and bear market - alternating phases of crypto market growth and decline. Investors try to buy assets in a bear market (on drawdowns) and fix profits in a bull market.
Centralized exchanges are better suited for novice traders, as they offer user-friendly interfaces, customer support and higher liquidity. Let's take a look at the three largest platforms.
6 Diamond Rules for Crypto Beginners
1. Where to Buy Cryptocurrency
The first thing to consider is where it's best to buy cryptocurrency. I recommend looking at top-tier crypto exchanges like Binance, Bybit, and Kraken. These platforms offer high liquidity and have earned a certain level of trust in the market.
Exchange
Date
Users
Binance
2017
240 mln
Coinbase
2012
108 mln
Bybit
2018
60 mln
OKX
2017
20 mln
Kraken
2011
10 mln
My advice: don’t store large sums on a single exchange—instead, spread your funds across multiple platforms. Keep in mind that no exchange can guarantee 100% security of your assets. Below, you'll find a comparison table to help you decide which exchange is best for opening an account.
2. Which Cryptocurrency to Buy
If you're new to crypto, understanding the technology and individual projects can be overwhelming. At this stage, it’s better to focus on the most reliable and popular coins in the top 10–20 by market capitalization. These projects usually have strong teams, robust technology, and broad market recognition.
Let’s say you have $1,000. You can allocate this amount across top-10 coins as shown in the table below. This is a conservative strategy that provides better resistance to volatility and offers solid potential upside if the market grows.
Coin
%
Amount($)
Bitcoin
40
400
Ethereum
30
300
XRP
5
50
BNB
5
50
Solana
5
50
Dogecoin
5
50
TRON
5
50
Cardano
5
50
The more you invest in low-cap coins, the higher your potential return — but the risk also increases dramatically, including the possibility of losing your entire investment.
3. How to Buy Cryptocurrency
You can buy crypto directly on an exchange. First, you'll need to deposit fiat currency (USD, EUR, GBP, UAH, etc.), then exchange it for crypto on the spot market.
Keep in mind:
The crypto market is highly volatile, and prices can stay low for extended periods.
Never invest more than you can afford to lose.
Limit your crypto investments to no more than 10% of your free capital.
And my diamond rule: buy in portions. Split your budget into three parts and buy each time the market drops by 10–20%. This strategy gives you a much better average entry price.
4. When to Buy Cryptocurrency
If the media is full of hype and wild predictions about crypto going to the moon — it’s usually a bad time to buy. At that moment, you’ll likely experience FOMO (fear of missing out) and may make emotional decisions. But that’s exactly when you shouldn't buy.
On the contrary, the best time to buy is when everyone is fearful, the market is in a slump, and no one’s talking about bullish scenarios. Since this can be hard to sense intuitively, use the Fear and Greed Index as a guide. A value between 10–20 is a great buying zone. Anything below 10 is potentially an amazing opportunity. If the index is high — wait for better prices.
5. When to Sell Cryptocurrency
As you might guess, it’s best to sell near the top, but predicting the exact peak is nearly impossible — especially for beginners. That’s where the Fear and Greed Index comes in again. When the index goes above 70, it’s time to start taking profits. Do it gradually: sell 20–25% of your portfolio for every 5-point increase in the index. This approach helps you lock in gains without stressing about missing the absolute top. And here’s another golden rule: buy and sell in portions.
6. How Much Can You Earn on Cryptocurrency
Crypto can bring massive profits — but you can also lose everything. Coins with small market caps can deliver 10,000%+ returns, but they come with huge risk. The key is to balance safe and risky assets. A well-structured portfolio can realistically earn 50% to 300%. Aggressive strategies can push that to 500–1000%, but they require patience and strong risk management.
Always remember: only invest money you’re willing to lose and that you don’t need to touch for 6–18 months. With this mindset, your chances of success in crypto investing increase dramatically.
Top 3 CEX where you can buy crypto
1. Binance
Binance – is a leading cryptocurrency exchange founded in 2017 by Changpeng Zhao. It offers a wide range of trading opportunities and tools for both beginners and experienced traders.
Benefits:
Huge selection of assets (more than 350 coins and tokens).
Low commissions: 0.1% on spot, discounts are possible when paying with BNB token.
High liquidity and reliability.
Support for P2P trading, futures, options, staking and other instruments.
The best option for traders who want to work with a large number of assets and a variety of trading strategies.
2. Bybit
Bybit – is a crypto exchange launched in 2018, which quickly gained popularity among traders due to the convenience of working with derivatives and high speed of order execution.