With the current increase in acceptance of the cryptoworld and the many uses cryptocurrency is currently being used for you might be wondering if it is a good idea to start investing some money. This is a basic guide on how to use one of the main exchanges: Binance.
Binance is a Chinese exchange founded in July 2017 and it has very rapidly ascended to the best exchanges worldwide both in terms of trading volumes and reputation/reliability. At the time of writing of this article, it sits first in Coinmarketcap’s ranking for “Exchange Score” and second for volume, and you can check updates of these rankings here.
Many times, readers decide to look at an article, and after some minutes of reading, they realize it is not exactly what they’ve been looking for. This is a very introductory guide on the instruments of the crypto exchange Binance, where we are going to teach you how to set up your account and understand how this exchange works. Little by little, start understanding the concepts and how these tools work and being able to get the most out of these platforms. This article isn't a trading guide or a guide for financial advice and the examples mentioned are completely for educational purposes. The crypto market is a very volatile one and it can be very dangerous if one trades without knowledge. There are many tools like margin trading and options that make your portfolio even more volatile, therefore it should be very clear that no advice on trading strategies or currencies to trade should be followed from this article. You should invest very carefully in these markets and at your own risk.
1. Setting up your account
This is the easiest part but a fundamental one.
First, look in your browser for https://www.binance.com. You must enter the correct page because there are phishing scams everywhere. They change or add a letter to the name of the website or its link, and steal your personal information and money.
Once you are on the page click the yellow button that says register. Then insert your email, a safe password, and there you have an account.
2. Security (KYC and 2FA)
KYC stands for “know your customer” and it is a standard approach adopted by many services to optimize security. You are required to verify your account to gain higher privileges in the exchange such as higher withdrawal limits and buying crypto with a bank transfer.
2FA stands for “two-factor authentication” and it is a (cyber)security principle and procedure that consists of verifying the user identity in the authentication process by making her/him provide an element which she/he possesses. In our case, among the 2FA methods Binance requires, there is Google Authentication, a solution widely adopted in many different systems and services. It works by downloading an app on your smartphone. Then you scan a code on the Binance page through the app. Once you have done it, every time you log in you need to enter this code to prevent hacking. The Binance page will recommend it since you log in to your account for the first time.
3. Buy crypto
Binance allows you to buy crypto in the buy crypto window. Then go to bank deposit where you can do many different types of payments. The most common one is bank transfer (SEPA).
Under the bank deposit option, there is also an option to buy a specific coin directly with your account. After this, you have money in your account and you can start trading.
All the assets you bought in point 3 will be shown here. In this window of Binance, you can see all your assets in this exchange and their value BTC-denominated. This is a fundamental part of the account because you can see how your portfolio is doing and your profit and loss, it contains the value of any asset, and it separates it depending on their distinction such as Fiat and spot (all your regular currencies), cross margin positions, etc.
5. Deposit and withdrawal
It is useful to buy crypto with FIAT money, but it is also possible to receive money from accounts of other crypto owners. When you will receive money, the operation is called a deposit and when you give money you do a withdrawal. In every transaction, one person is doing the withdrawal and the counterpart a deposit. In the top right corner of your wallet overview, there is a yellow button for deposit and a white one for withdrawal right next to it.
Deposit is the procedure of adding funds to your account balance. First, select the currency you will transfer. This is the most important part because if it's not the same currency these funds will be lost. Then you have your public address and a QR code. This code should be sent exactly as it is to the withdrawal counterpart, and, after you receive your funds, they will be visible in the wallet.
Withdrawal is the complementary part of the deposit procedure. You should select the same coin of the deposit and then paste the address you received from the person receiving the transfer. Then select one of the transfer networks which might be a bit more complicated and the amount you want to send to the receiver. The transfer of networks has different costs: if it is another Binance account then it is an internal transfer with no cost (regardless of the network), if it is an address on the Binance chain or the Binance smart chain, BNB and BSC should work and have tiny fees.
Now that we have money in our accounts, we can begin the interesting part and the real use of
the exchange: Trading! Under the trade window of Binance to convert is “the easiest way to trade”. You have two selections to make, the currency you want to use for the conversion has to be put in “FROM:” selecting the amount, then select the currency you want to get in “to:”. Then you click the
“Preview conversion” button and you have a few seconds to accept the trade at that price. It is that simple, although it is not available for all currencies listed in Binance.
7. Spot trading
There is a more advanced but still simple way to trade. It is called spot trading and it works in the same way but under two different decisions of the investor. You can find it in the trading window of Binance by the name “classic”. That opens just BTC/USDT, but if you go to the markets window, there are many markets you can choose from and you should start in the BTC market or the Fiat market that you own. Then search for the currency you would like to buy and click on it. You can see it opens a very different interface that could be complicated to read. The first thing you see is a chart and on the left of the chart, you see many numbers. These are orders of other investors. You have the price, amount, and total value for sellers and buyers that meet in the middle at the current price. Now the most important part under the chart you have a small box, this is where we will put our buy or sell order. We start with a market order.
Market: You select market at the top of the box and the price that will be executed is the one in the market (be careful in low volume coins). Usually, the price will be executed at a very similar price that it is now because it is executed immediately. You just select the quantity and you put it on the buy-side or the sell-side depending on what you want to do, and then click on the buy or sell button.
Limit: The limit is a bit more complicated so I will explain it on the buy-side only but on the sell-side, it follows the same logic. First, you select the limit on top of the aforementioned box, then you select the price you wish to buy and the quantity and you click buy. Usually, these orders are set at a lower value than the market, if the value is greater it will execute at market value. This is a great tool for when you want to buy, let's say BTC at 40.000$, but it is currently at 42.000$. If you don't want to wait until the value comes down, you just set a limit order and it will be executed when the price falls to 40.000$.
This basic guide aims at providing you basic knowledge on Binance so that you can start to understand how this exchange works. Hopefully, it will also be easier for you to start using other exchanges and to understand more about how markets work and the different tools to take profit from them.
Let's start trading!