If you've never traded on a regular fiat currency exchange before, then you may have a tough time navigating cryptocurrency exchanges like Bittrex. In this guide I will explain many of the features and nuances that will make your initial trading journey easier. Basic technical and financial literacy is assumed (see prerequisites below). In all examples I will consider NEO as the target cryptocurrency and Bitcoins (BTC) as the transacting cryptocurrency. If you want to learn more about blockchain technology, check out my blockchain ELI5 post. Otherwise hold onto to your seats... you're about to hop on the NEO blockchain rocket to the moon.
There's lots to learn in this post. To help you remember, try my app Harvest, the easiest way to grow your mind. You can write or highlight any notes, save them, and automatically receive reminders on an optimal learning schedule.
Table of Contents
- Get Bitcoins
- Fund Bittrex Account
- Learn Trading Basics
- Buy NEO
- Useful Links
1. Get Bitcoins
For most people, getting Bitcoins (BTC) is the first step to acquiring cryptocurrencies like NEO. BTC is the world's crypto reserve currency, like the role USD plays for fiat. Got some obscure coin? Someone out there is probably willing to buy or sell it for BTC.
There are tons of ways to get BTC, but the easiest way is to use the most established crypto platform in the USA, Coinbase.
Help me help you! Sign up for Coinbase using my referral code (already linked) and we both get $10!
On Coinbase, you'll be able to purchase BTC with conventional fiat ways (like bank account and wallet), which I won't even begin to describe here. I'll wait here while you buy some.
A few days later...
Okay great! Let's get those BTC over to Bittrex, one of the best exchanges for acquiring coins like NEO. Tab on over in your Coinbase account to "Send" and pop in that Bitcoin address from your Bittrex account with all of your newly bought BTC.
2. Fund Bittrex Account
What Bittrex account address, you ask? If you haven't already, make an account on Bittrex with Basic and Phone verifications set up so you can get some Digital Token Trading in. If everything is set up correctly, then your "Settings" tab should have a check mark like the following:
Now you can head over to your "Wallets" tab and click on the "+" next to "Bitcoin". Clicking on that will pop open an address that represents your personal online wallet that Bittrex holds for you. This address is where you should be sending your BTC that you bought from Coinbase.
3. Learn Trading Basics
I know I said this was a prerequisite, but basic transaction elements are so important that I wanted to give you a refresher. A basic transaction has 4 key components: buyer, seller, price, and volume. Remember that we are talking about NEO/BTC in our examples.
Buyer: Owns BTC and wants to buy NEO in exchange for it. The lower the price the better for the buyer, as then they can get more NEO for their BTC.
Seller: Owns NEO and wants to sell it in exchange for BTC. The higher the price the better for the seller, as they can get more BTC for their NEO.
Price: The amount of BTC for one unit of NEO. As of this writing, it costs 0.0055 BTC for one unit of NEO.
Volume: The amount of NEO that is to be exchanged. Multiply the price by this amount to get the total transaction cost.
Example: I own 1 BTC and I want to buy some NEO (some say it's going to the moon). I see someone is willing to sell NEO for a price of 0.001 BTC per NEO (what a deal!). I buy all 100 NEO, handing over 100*0.001 BTC = 0.1 BTC to the seller, who in return gives me 100 NEO. I now have 0.9 BTC and 100 NEO, and the seller has 0.1 BTC.
Here is a screenshot of real transactions taking place:
In the example from the previous section, I just happened to find a seller willing to sell me NEO. Where did I go? Where was the seller? Exchanges like Bittrex are basically a giant meeting area where many buyers and many sellers congregate to trade things like cryptocurrencies. The way the exchanges make money is by taking a fee from every transaction; traders are willing to pay that fee because exchanges offer a convenient and secure place to find buyers and sellers.
The top cryptocurrencies traded on Bittrex using BTC as the transacting currency:
Now we're rolling! We know that buyers and sellers come to Bittrex to hang out and try to trade their wares, in our case NEO and BTC. Navigate to the NEO page now, and on the top right we'll see something like this:
Last: The price of the most recent trade that happened
BVol: The total transaction costs of all trades that have happened (presumably in the last 24 hours)
Bid: The highest price a buyer is currently willing to pay
Ask: The lowest price a seller is currently willing to sell
24H High/Low: The highest and lowest price NEO has reached in the last 24H
On the left of that page, you'll see a candlestick chart of the price over time, as well as an "Order Book" tab; click on that tab. This chart is a visual representation of the mess of numbers you see below the "Trading" section below. It is much friendlier to figure out what's actually going on here. On the x-axis, you have prices in BTC. On the y-axis, you have volume of NEO that buyers and sellers are willing to trade. The green, on the left side, is the buyers; the red, on the right side, is the sellers. Where they meet is the actively trading price that you see in the market information section, and the price that you will most likely be able to transact in.
The order book table section, below "Trading", shows you the actual numbers. Price goes up on the left side (bids), from the bottom up, showing you buyers all the way up to the highest price that a buyer is willing to pay, in this case 0.00556004 BTC for 1013 NEO. Price goes down on the right side (asks), from bottom up, showing you sellers all the way down to the lowest price that a seller is willing to sell at, in this case 0.00558000 for 41 NEO.
And here's the whole page for reference:
4. Buy NEO
Alright now let's get into the meat of it. Buying NEO is what we came here to do and by God we're going to do it. You'll see there's a Buy section and a Sell section. The concepts for each are the same but reversed so I'll only go over buying.
Begin by figuring out what Price (Bid) you want to buy at. There are three options:
Last: The price of the most recent trade
Bid: The highest current bid price
Ask: The lowest current ask price
If you want to get your order traded immediately, then choose Ask; this option will let you scoop up the lowest price available that someone is currently ready to sell at. If you want to buy at a slightly better price, then choose Bid; this option will put you "in line" behind the existing buyers at this price, so that when a seller comes to sell at this price, they will eventually get to you after trading with the volume who got there before you. The Last option is a bit of a crapshoot in that it could be either the bid, the ask, or somewhere in-between. Of course, you can also put in a lower price, but your order will be in line behind everyone that has a higher bid than you.
You can keep "Type" as "Limit" and "Time In Force" as "Good 'Til Cancelled". A "Limit" order just means you only want your order to execute at the price you specify. A "Good 'Til Cancelled" order means your order stays in the Order Book until it is either executed or you manually cancel it. Both are usually what we want.
Now hit "Max" under Units and you'll see the max number of NEO you can purchase for the BTC you have available and at the Price that you set. If you don't want to spend all of your BTC, then lower this number. The total amount of the transaction will show up under "Total".
+ Buy NEO and a modal screen will pop up like the one below. Verify the numbers and hit "Confirm".
Et voila! You've submitted an order to buy NEO using BTC! Remember though that you're not done yet - your order needs to be executed in order for the NEO to come through. Watch your "Open Orders" to see how much volume you still have yet to do before you get completely filled. Once your trade goes through, transfer your NEO to your local wallet, sit back, and watch the NEO Gas flow in!
Bittrex has announced that it will be lowering NEO withdrawal fees to 0.025, as well as adding protections for "truncated" whole numbers. Good updates that protect users!
A newer exchange called Binance offers less expensive trading fees, free NEO and GAS withdrawals, and even gives you your accumulated GAS for the NEO you hold with them. I've written a similar guide for buying their Binance BNB coin which you can use to pay for lower trading fees. The guide is generalizable to buying NEO as well. Check it out!
5. Useful Links
Next up: Guide to setting up your NEO desktop wallet. Stay tuned.
Like this tutorial? Any tips are greatly appreciated!