How to Play Crypto? The Five Essential Investment Principles and Risk Avoidance Guide for Beginners

Why Should You Learn Cryptocurrency Investment Now?

The cryptocurrency market is no longer a fringe area. Listed companies, traditional financial institutions, and even central banks of various countries are researching blockchain technology, indicating that the entire industry is gradually moving toward mainstream adoption. Over the past decade, early participants have accumulated considerable wealth, from project founders to seasoned traders, many of whom have achieved financial freedom.

For novice investors, the appeal mainly comes from three aspects:

Potential returns far exceeding traditional markets — The crypto market has a short history, is in a development stage, and exhibits large volatility, meaning opportunities and risks coexist. Compared to mature markets like stocks and forex, which are dominated by institutions, retail investors still have room to participate here.

Very low entry barriers — Most cryptocurrencies can be purchased with as little as $2-10, far below traditional stocks (starting from hundreds of dollars) and forex markets (usually over $1,000).

Trading without time and space restrictions — Global 24/7, 365-day trading, with no concept of market close. Investors from any region can participate, and this liquidity is hard to imagine in traditional finance.

First Step: Choose the Trading Method That Suits You

Cryptocurrency trading mainly falls into two categories: Exchange Trading and CFD (Contract for Difference) Trading. Choosing different methods will directly affect your trading experience, risk level, and regulatory protection.

Exchange Trading: Direct Asset Holding

This is the most traditional method. Exchanges are divided into centralized (CEX) and decentralized (DEX):

Centralized Exchanges usually require real-name verification (KYC), needing identity documents. Traders can buy spot (owning tokens directly) or participate in contract trading (leverage trading). Leverage can reach 0-100x, suitable for experienced short-term traders.

Decentralized Exchanges do not require identity verification but require users to have their own crypto wallets. This method offers more privacy but also means the platform cannot custody user funds.

CFD Trading: Hedging Risks

CFD trading does not require holding real tokens, only predicting price movements. These platforms are usually strictly regulated by international financial authorities (such as ASIC, FCA, FSC), making funds relatively safer.

Advantages of CFDs include:

• Easy operation, can be done via web or app
• Trade multiple assets (cryptocurrencies, stocks, forex, gold, etc.) with a single account
• Leverage is relatively conservative (usually 1-20x), making risks more controllable
• Protected by regulation, funds stored in separate accounts, separate from platform operational funds

For beginners concerned about fund safety, CFD might be a more stable choice.

Safe Entry: You Must Check These Lists

Before investing real money, safety checks are essential:

If choosing an exchange:

• Confirm whether the platform operates legally in your region
• Check if deposit and withdrawal methods support local banks or payment tools
• Prefer larger, longer-established platforms
• Be wary of platforms claiming “no verification needed for deposits,” as this is often a scam signal

If choosing a CFD platform:

• Verify if the platform holds internationally recognized regulatory licenses
• Check the authenticity of the license on the official regulator’s website (scam platforms may forge licenses)
• Confirm whether user funds are stored in independent escrow accounts

⚠️ Important Reminder: Don’t blindly trust a platform just because it looks professional. The safest way is to directly check on the regulator’s official website.

Standard Trading Process: Three Steps to Start Your Investment Journey

Regardless of the method chosen, the basic process is similar:

Step 1: Download the platform app or access the web version

• Always use the official website to avoid phishing scams
• Download the official app (iOS/Android), ensure the source is correct

Step 2: Register an account and complete identity verification

• Prepare ID documents like ID card, passport, etc.
• Upload documents and wait for approval (usually 1-3 working days)
• If the platform allows deposits without verification, leave immediately

Step 3: Deposit funds and place orders

• Confirm supported deposit methods and currencies
• Transfer funds to the designated account as prompted
• Select the cryptocurrency you want to invest in, set your order (market or limit)
• Beginners are advised to start with the minimum trading units to test the waters

Which Cryptocurrencies Should You Watch in 2025?

For beginners, starting with high market cap coins involves lower risk. Here are some mainstream cryptocurrencies worth paying attention to:

BTC: The Market Leader Remains Unshaken

Bitcoin, as the first cryptocurrency, still holds an unshakable market position. Recently completed its fourth halving, with miner rewards halved directly. Historical experience shows that each halving triggers a new surge cycle.

Meanwhile, institutional interest is increasing, with spot ETF approvals significantly lowering entry barriers. Upgrades at the blockchain layer (such as Layer 2 scaling solutions and Rollup technology) are improving network efficiency, expanding future application scenarios.

ETH: The Prosperous Ecosystem of Smart Contracts

Ethereum’s core advantage is supporting “smart contracts”—programs written on the blockchain that execute automatically when conditions are met. This enables developers to quickly build complex applications in a decentralized environment, giving rise to DeFi, NFT, GameFi, and other new industries.

Unlike Bitcoin, Ethereum has no fixed supply cap, leaving room for future development. As the ecosystem’s applications proliferate, demand for Ethereum is expected to continue growing.

DOGE: A Model of Community Power

Dogecoin may seem like a joke, but it has the most loyal community worldwide. Even during a recent 20% price correction, large holders actively bought the dip because:

• The community base is solid. Support from millions of loyal fans maintains enthusiasm and demonstrates resilience during market volatility.
• Practical use cases are expanding. More online stores and physical shops are accepting Dogecoin payments, increasing its real-world value recognition.

XRP: Beneficiary of Regulatory Breakthroughs

After the SEC in the US approved Bitcoin and Ethereum ETFs, XRP has become a promising ETF candidate. Industry insiders generally expect that once XRP ETF approval is granted, a large influx of capital will push its price upward.

Sui: The Emerging Public Chain’s Dark Horse

Sui, developed by a technical team, is a Layer 1 blockchain using a unique object model and Move programming language. It has rapidly risen in a short period. Ecosystem development is swift, with a market cap reaching $8.7 billion and TVL (Total Value Locked) surpassing $1 billion.

From DEX, lending, to NFT and gaming applications, the ecosystem is becoming more complete. Many analysts predict that if the price stabilizes, it could break through $5.5, sparking a new wave of market activity.

The Five Most Common Pitfalls for Beginners

New traders are bound to make mistakes, but the key is not to repeat the same errors. Here are the most common traps:

Trap 1: Frequent Trading Causes Losses

After mastering basic operations, many beginners start day trading, buying and selling frequently, even holding multiple long and short positions across different coins. The consequences are:

• Each trade incurs fees, which can accumulate significantly
• Judgment becomes dulled by constant decision-making
• Even if the direction is correct, you might sell at the best moment and miss a big surge
• Emotional states are easily affected by market fluctuations, leading to impulsive decisions

Trap 2: Fighting Against the Market Causes Liquidation

No one can predict the market 100%. When the market moves against your judgment, ignoring market risks will cost you.

Taking the Luna collapse as a lesson, many investors noticed the risks but tried to catch the rebound, only to see prices fall below expectations and suffer irrecoverable losses. The market is always right. Admitting defeat is not surrender but the wisdom to preserve capital and continue fighting.

Trap 3: Not Setting Stop-Loss and Take-Profit Leads to Uncontrolled Risks

This is the most common and deadly mistake. Many people, driven by the mindset of “making more profit when winning, recovering losses when losing,” expose themselves to risk.

Stop-loss and take-profit are risk management tools that keep potential losses within predetermined limits. For example, during the crypto crash on March 12, 2020, even with 1x leverage, a single bearish candle could trigger liquidation. Setting stop-loss orders at target prices allows automatic closing when the price hits, effectively avoiding catastrophic losses.

Trap 4: Blindly Following Trends and Buying Unpopular Coins

Seeing a coin skyrocket and rushing in is a common rookie mistake. Illiquid, manipulated, and risky, unpopular coins are not suitable for beginners. Start with the top 50 market cap mainstream coins, and only consider other options after gaining experience.

Trap 5: Ignoring Platform Risks

Choosing a platform based solely on a nice interface or attractive promotion can lead to scams or unlicensed platforms. If the platform runs away with your funds, your investment may never be recovered.

Why Are Stop-Loss and Take-Profit So Important?

Investment always involves risks. While risks are uncontrollable, they can be effectively managed with tools. Stop-loss and take-profit are such tools.

Take-profit protects profits: When the price reaches your target, it automatically closes to lock in gains, avoiding greed-driven reversals.

Stop-loss controls losses: When the price falls below your acceptable range, it automatically closes to limit damage, preventing small losses from becoming large ones.

Even if the market gaps over your target price, stop-loss and take-profit will execute at the next most favorable price, maximizing your capital protection.

Summary: Mistakes Are a Necessary Part of Growth

Every successful trader was once a beginner. The difference lies in how many mistakes they made and how quickly they corrected them. The key is to stop trading immediately after making mistakes, and to use other methods to step back, reflect calmly, and improve.

The core wisdom of cryptocurrency investment is not about precise prediction but about:

• Choosing safe platforms and trading methods
• Starting with low-risk mainstream coins
• Strictly following stop-loss and take-profit rules
• Constantly summarizing experience to avoid repeating mistakes

Remember this phrase: Making mistakes is not scary; repeating the same mistakes is. When you make fewer mistakes than others, your era of profits truly begins.