Catalog / Cryptocurrency Investing & Trading Cheatsheet
Cryptocurrency Investing & Trading Cheatsheet
A comprehensive cheat sheet covering essential concepts, strategies, and tools for cryptocurrency investing and trading. This guide provides insights into market analysis, risk management, and popular trading platforms to help navigate the crypto landscape.
Core Concepts
Cryptocurrency Basics
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Cryptocurrency: Digital or virtual currency secured by cryptography, making it nearly impossible to counterfeit or double-spend. Blockchain: A decentralized, distributed, and public digital ledger used to record transactions across many computers so that the record cannot be altered retroactively without the alteration of all subsequent blocks. |
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Decentralization: The process by which control is transferred from a single point to a distributed network. Mining: The process of verifying and adding new transaction records to a public ledger (blockchain). |
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Wallet: A digital wallet used to store, send, and receive cryptocurrency. Private Key: A secret key that allows you to access and manage your cryptocurrency. Keep this safe! |
Key Metrics
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Market Capitalization: |
Total value of a cryptocurrency in circulation. Formula: Current Price x Circulating Supply |
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Trading Volume: |
The total amount of a cryptocurrency traded in a specific period. High volume indicates high interest. |
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Circulating Supply: |
The number of cryptocurrency coins or tokens that are publicly available and in circulation. |
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Total Supply: |
The total number of coins or tokens that currently exist, including those held by the company, locked, or reserved. |
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Max Supply: |
The maximum number of coins or tokens that will ever exist. |
Types of Cryptocurrencies
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Bitcoin (BTC): The first and most well-known cryptocurrency, functioning as a decentralized digital currency. |
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Ethereum (ETH): A platform that enables the creation of decentralized applications (dApps) and smart contracts. |
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Altcoins: Cryptocurrencies other than Bitcoin. Examples include Litecoin (LTC), Ripple (XRP), and Cardano (ADA). |
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Stablecoins: Cryptocurrencies designed to maintain a stable value, often pegged to a fiat currency like the US dollar (e.g., USDT, USDC). |
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DeFi Tokens: Tokens associated with decentralized finance (DeFi) projects, offering services like lending, borrowing, and trading (e.g., UNI, AAVE). |
Trading Strategies
Technical Analysis
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Technical Analysis (TA): Analyzing statistical trends gathered from trading activity, such as price movement and volume. Key Tools:
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Fundamental Analysis
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Fundamental Analysis (FA): Evaluating the intrinsic value of a cryptocurrency by examining factors such as the project’s technology, team, use case, and adoption rate. Key Factors:
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Common Trading Strategies
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Day Trading: |
Buying and selling cryptocurrencies within the same day to profit from small price movements. |
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Swing Trading: |
Holding cryptocurrencies for several days or weeks to profit from short-term price swings. |
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Long-Term Investing (HODLing): |
Holding cryptocurrencies for the long term, based on the belief that their value will increase over time. |
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Scalping: |
Making multiple trades in a short period to profit from very small price changes. |
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Arbitrage: |
Taking advantage of price differences for the same cryptocurrency on different exchanges. |
Risk Management
Risk Assessment
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Volatility: Cryptocurrencies are highly volatile, meaning their prices can fluctuate significantly in short periods. Liquidity: Some cryptocurrencies have low liquidity, making it difficult to buy or sell them without affecting the price. Regulatory Risk: Changes in regulations can impact the legality and value of cryptocurrencies. |
Risk Mitigation Strategies
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Diversification: |
Spreading investments across multiple cryptocurrencies to reduce the impact of any single asset’s performance. |
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Stop-Loss Orders: |
Setting an order to automatically sell a cryptocurrency if it reaches a certain price, limiting potential losses. |
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Take-Profit Orders: |
Setting an order to automatically sell a cryptocurrency when it reaches a desired profit level. |
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Position Sizing: |
Determining the appropriate amount of capital to allocate to each trade based on risk tolerance and account size. |
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Due Diligence: |
Thoroughly researching and understanding the cryptocurrencies you invest in. |
Security Practices
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Use Strong Passwords: Create unique, complex passwords for all cryptocurrency-related accounts. Enable Two-Factor Authentication (2FA): Add an extra layer of security to your accounts using authentication apps or hardware tokens. Store Cryptocurrency in Cold Storage: Keep a significant portion of your cryptocurrency in offline wallets (hardware or paper wallets) to protect against hacking. |
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Be Wary of Phishing: Watch out for fake emails, websites, and messages that attempt to steal your personal information or cryptocurrency. Keep Software Updated: Regularly update your wallet software, operating system, and antivirus software to protect against vulnerabilities. |
Trading Platforms & Tools
Popular Exchanges
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Centralized Exchanges (CEX):
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Decentralized Exchanges (DEX):
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Trading Tools
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TradingView: |
A charting and social networking platform used by traders to analyze price movements and share ideas. |
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CoinMarketCap: |
A website that tracks the prices, market capitalization, and other data for various cryptocurrencies. |
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CoinGecko: |
Similar to CoinMarketCap, providing comprehensive data and analysis on cryptocurrencies. |
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Crypto Portfolio Trackers: |
Apps and websites that allow you to track the performance of your cryptocurrency investments. |
Order Types
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Market Order: An order to buy or sell a cryptocurrency immediately at the best available price. Limit Order: An order to buy or sell a cryptocurrency at a specific price or better. Stop Order: An order to buy or sell a cryptocurrency when the price reaches a certain level. |