Cryptocurrency trading requires understanding price mechanics, market structure, and risk management. Whether you're using a centralized exchange or a decentralized platform, mastering order types and liquidity is essential before you risk capital.
Market vs Limit Orders
Traders execute orders based on the desired speed and price control.
| Order Type | Description | Best For |
|---|---|---|
| Market Order | Executes instantly at current market price | Speed over price accuracy |
| Limit Order | Executes only when price reaches your set level | Precision and controlled entry/exit |
Understanding Liquidity
Liquidity represents how easily a crypto asset can be bought or sold without significant price impact. Higher liquidity means smoother trading and stable pricing.
- High liquidity = tighter spreads + faster execution
- Low liquidity = price slippage + volatility spikes
Risk Management Fundamentals
Successful traders focus on capital preservation. Discipline matters more than predicting price movements.
- Use stop-loss orders to limit downside
- Size positions based on risk tolerance
- Do not invest funds needed urgently
- Avoid impulsive trading behavior
Common Beginner Mistakes
• Entering trades with no strategy
• FOMO buying after huge price pumps
• Trading illiquid assets
• Overleveraging on futures markets
• Ignoring security and best practices
