How to Buy Cryptocurrency as a Beginner? Complete Trading Guide and Precautions

In recent years, the virtual currency market has been booming, and more and more people are eager to enter and try. However, for beginners, questions such as how to purchase virtual currencies, choose the right platform, and understand different trading methods are often confusing. This article will break down the entire process of buying virtual currencies, from basic procedures to advanced strategies.

Five Basic Steps to Buying Virtual Currencies

No matter which trading platform you choose, the logic of purchasing virtual currencies is generally the same. Differences mainly lie in transaction fees, supported currencies, deposit and withdrawal methods, and other aspects.

Step 1: Choose a Trading Platform — Different platforms have different features; some focus on spot trading, others on derivatives. Select based on your investment goals.

Step 2: Complete Identity Verification — Most legitimate platforms require KYC (Know Your Customer) verification, which is a basic compliance requirement.

Step 3: Deposit Funds — Funds can be added via bank transfer, credit card, online banking, etc. Most exchanges support directly purchasing stablecoins with fiat currency, then exchanging for other crypto assets.

Step 4: Start Trading — After successful deposit, you can place orders to buy, trade, or participate in advanced operations like margin trading.

Step 5: Withdraw Funds — After profits or reaching your goal, you can convert assets into stablecoins or withdraw directly to your bank account.

Comparison of Virtual Currency Purchase Channels in Taiwan

For users in Taiwan, the main purchase channels are as follows:

Advantages and Limitations of Local Exchanges

Taiwan has some local trading platforms offering direct NTD deposits and withdrawals, supporting ATM, online banking, convenience store payments, and other recharge methods, which are friendly to beginners. These platforms were mostly established around 2017-2018 and have several years of operational experience.

However, local platforms typically have fewer trading pairs, higher fees (maker fees often between 0.05%-0.1%, taker fees between 0.1%-0.2%), and less trading depth compared to international major platforms. If you only want to buy small amounts of Bitcoin for long-term holding, these platforms are sufficient; but for frequent trading or trading less common coins, your options will be limited.

Features of International Exchanges

Top global trading platforms usually have the following features:

• Rich trading pairs (often over 400)
• Lower fees (standard fees for regular users below 0.1%)
• Deep liquidity and fast order execution
• Diverse product lines, including spot, futures, OTC, NFTs, etc.
• Large user base from around the world

However, verification processes on international platforms are often more complex, and the variety of products requires a learning curve for beginners. Some large-scale platforms may be overwhelming initially, requiring time to understand their features.

In-Depth Comparison of Virtual Currency Purchase Methods

There are mainly three ways to buy virtual currencies, each with pros and cons, suitable for different investors:

Centralized Exchange Trading

This is the most common method. Centralized exchanges are similar to stock brokers; user assets are managed by the platform. The platform matches buy and sell orders to complete transactions.

Advantages: Deep liquidity, rich trading options, simple operation, low entry barrier. Disadvantages: If the platform is hacked or malfunctions, assets may be at risk, and privacy protection is less than other methods.

Beginners usually buy stablecoins (like USDT) first, then trade stablecoins for other crypto assets, which is the simplest process.

Decentralized Exchange Trading

These platforms do not involve asset custody; transactions are conducted via smart contracts on the blockchain, with no one controlling or tampering with the process. This greatly enhances asset security and transaction transparency, and no KYC verification is required.

However, decentralized exchanges generally have lower trading volume, and the user experience and operation complexity are higher than centralized platforms. Suitable for users with blockchain knowledge, privacy concerns, and large transaction amounts.

Derivative Platform Trading

These platforms focus on contract trading; users do not hold actual assets but track price movements through long or short positions. The advantage of derivatives is that they allow leverage to amplify positions with a small amount of capital, enabling same-day buy and sell, with high flexibility.

The downside is that leverage introduces high risk and potential liquidation, making it unsuitable for beginners. It is recommended to practice with demo accounts and fully understand risk management before trading with real funds.

How to Choose Between Spot and Derivative Trading

Features of Spot Trading

Spot trading involves directly buying and holding virtual currencies, requiring a crypto wallet for storage. Suitable for investors optimistic about Bitcoin’s long-term development, who can buy and hold for months or years.

Initial capital requirements are higher; profits depend on price appreciation. The advantages are simple logic, relatively manageable risk, and suitability for most beginners.

Features of Derivative Trading

Derivative trading includes futures, options, CFDs, etc. Investors can trade with leverage using a small amount of capital, with the flexibility to buy and sell within the same day.

These products allow short selling, providing opportunities regardless of market direction. Due to leverage, risks are magnified. Industry data shows that recent years’ derivative trading volume has significantly surpassed spot trading, becoming the mainstream.

Recommendations for Beginners Purchasing Virtual Currencies

If you are a complete novice

Choose large, user-friendly centralized exchanges, start with small amounts of Bitcoin or Ethereum for practice. Local platforms are recommended initially because supporting NTD deposits and withdrawals is more convenient. After some experience, consider switching to international platforms for more trading pairs and lower fees.

If you have basic knowledge

Consider opening accounts on international platforms that support NTD or USDT deposits and withdrawals. These platforms offer better trading experience and liquidity, with more competitive fees.

If you want to do short-term trading or speculation

Derivative platforms offer higher flexibility. Be sure to practice thoroughly on demo accounts, understand leverage risks and position management. Start with low leverage (2-5x) and gradually gain trading experience.

General advice

Regardless of the method chosen, always:

• Clarify your investment goals and risk tolerance before buying
• Only invest funds you can afford to lose
• Set stop-loss and take-profit levels for each trade
• Regularly review your positions and execute profit-taking or stop-loss actions promptly
• Keep your account keys and private keys secure; do not share them easily

Common Questions About Purchasing Virtual Currencies

Q: Is it safe to buy virtual currencies with a credit card?

A: Many international platforms accept credit card deposits. Safety depends on the platform’s security measures. Choose regulated, reputable platforms with large user bases, which usually implement stricter security. Also, note that credit card companies may charge higher fees or additional costs for crypto purchases.

Q: When should I buy or sell?

A: It depends on your trading strategy. Ultra-short-term traders seek intraday volatility, using high-frequency trades to profit from spreads. Short- to medium-term traders set stop-loss and take-profit levels based on technical analysis, holding positions from days to weeks. Long-term investors base decisions on fundamentals, holding for months or years. There is no absolute “best time”; operate according to your strategy and risk appetite.

Q: How much initial capital do I need to buy virtual currencies?

A: The entry threshold for spot trading depends on the coin’s price; it can be flexible, from a few hundred to several thousand NTD. Leverage in derivative trading reduces initial capital requirements but increases risk. Beginners are advised to start conservatively and increase gradually as they gain experience.

Summary of Key Points

The basic process of purchasing virtual currencies includes choosing a platform, completing verification, depositing funds, trading, and withdrawing. Spot trading is suitable for long-term investors, while derivatives are better for experienced short-term traders.

Taiwan users can choose local platforms (supporting NTD deposits/withdrawals but fewer trading pairs) or international platforms (more trading pairs but requiring familiarity with international interfaces). The key is to select based on your investment goals, risk preferences, and skill level.

Most importantly, the crypto market is highly volatile. Before buying, ensure you understand the risks thoroughly. Set stop-loss and take-profit levels for each trade, and adopt strategies suitable for current market conditions. As you gain experience, you will find the most suitable methods and trading rhythm for yourself.