If you are like me and don't come from a financial background then your first steps into cryptocurrency can be overwhelming! There are so many things to research & learn that really challenge your technical skills that it can seem like an impossible task. I am here to tell you that it's NOT impossible and anyone can learn given the right tools & instruction. I had no idea how to read a basic trading chart when I got started even though I managed to purchase Bitcoin without that knowledge.
It's simple problems like these that inspired me to create this website to help other beginners solve these problems with simple explanations. In this article I will go over some of the basics of how to read a crypto trading chart on my favorite exchange Binance.
Getting Started With Trading Charts
For those that are completely new to cryptocurrency and have not made their first purchase I would recommend checking out this previous article I wrote about buying Bitcoin with the lowest fees. You can purchase crypto from places like Coinbase or CEX.io without ever even looking at a trading chart! This works great for beginners, but if you are past this stage and want to really start trading like the pros then you need to know how to read a trading chart.
For your next step, I recommend signing up with Binance exchange.
(this is an affiliate link and I earn a small commission if you sign up using my link. I appreciate your support and this comes at no additional cost to you).
The trading charts on Binance are pretty basic and they offer a much larger amount of coins to trade versus places like Coinbase or CEX. I use Binance every day and it is my go-to exchange right now. Registering is easy and does not require any information beyond an email address. Keep in mind that Binance IS a centralized exchange so you don't hold your own private keys here. My advice is to only keep what you are actively trading on the platform. Once you register, go ahead and login. Here is what the default landing page looks like.
This screen just gives you some overview info about the markets at the bottom and all your main links for your account at the top. To get started, lets go to the top left of the screen and hover over the "Exchange" tab. You will see in the screenshot above that you have 2 choices, "Basic" & "Advanced". Now, your first thought might be to go with the Basic exchange, but in my opinion it is actually HARDER to use and read then the Advanced one. Here is what they both look like for reference:
The Basic chart is just a bit harder to read and the placement of some things is awkward. For this tutorial we are going to use the Advanced chart so click there.
The Candlestick Chart
While you may have seen some different types of crypto charts out there, the Candlestick Chart is the traders choice! As you can see in the chart above the chart is made up of red and green "candlesticks" which indicate open/close price, highs, & lows for the time they represent.
The candle "body" is the colored part and it shows how much was traded as well as the price it opened and closed at for the given time-signature (more on time-signatures in a moment). The "wick" or the lines at the top and bottom indicate the lowest and highest prices during the selected time.
The color of the candle body indicates whether the closing price was higher than the opening price represented by a green bar or lower than the opening price represented by a red bar. The green up bar can be considered "Bullish" and means it is on an uptrend. The red down bar means it is "Bearish and on a downtrend (check out my glossary of crypto terms for more). This type of chart is more useful for traders because it helps them to do technical analysis and try to predict where the price will go next.
Now that we understand what makes up the basics of a candlestick chart, lets look at the entire interface and talk about the most important parts.
Binance Crypto Chart Interface
Now we are going to cover the general interface, because this is what confused me the MOST when I started out. For months I didn't even realize some of these basics that I am going to show you. I put boxes and numbers around the things that are the least obvious. Looking at the chart below you can see that we have our candlestick chart in the middle of the screen, if you move your cursor around that chart it will give you data for that position in time. At the very top it tells you Last Price, 24hr Change, 24hr low & high, and the 24hr volume (amount of trades). At the bottom left we have a big space for our open orders, so when you place an order you will see it here until it gets filled. These are the MORE obvious things.
Let's go over the numbered items in the chart below for more detail on the LESS obvious things.
- The first thing I want to point out is the "Trading Pair" tab. This chart we are looking at above is a BTC/USDT chart, which means that we are trading Bitcoin against a stablecoin called Tether (USDT, which is pegged 1:1 to the US Dollar). Think of Tether like a "cryptocurrency dollar" that stays around $1 all the time. You can see the yellow arrow next to it, hit this to change the trading pair (not sure what a trading pair is? Click here for my article on them) and this is what you will see:Notice how there are Favorites, BNB, BTC, ALTS, and USD weird circle "S" thing. These are the major trading pairs. SO if you want to use Bitcoin to buy Ethereum, you would look in the BTC column or use the search bar to search for "ETH". I use the search bar a lot to quickly find my trading pair. Selecting a different trading pair changes your current chart to that pair.
- One of the MOST important things to know is the "Time Signature" or time scale. Changing this changes how much time each candlestick represents. In our main sample chart above you can see that "1D" is highlighted in yellow which means 1 day and every candlestick represents 1 day of trading on this chart. The small "m" stands for minute, "h" stands for hour, then we have 1 Day, 1 Week, 1 Month. Clicking on either m or h gives you additional options like 1, 3, 5, 15, and 30 minute candlesticks, or 1, 2, 4, 6, 12 hour candlesticks. We use different time signatures to see what the trading pair has done far in the past or down to the minute of trading. I like to check multiple time signatures before I make a trade to see both very current as well as far reaching data. This helps to give you a better picture of what might happen.
- Number 3 on our main reference chart shows the "Order Book". This is the list of all the current Buy & Sell orders that are waiting to be filled. People have placed these orders, but they have not been filled or executed yet. In the middle you can see the current price and sometimes it will be green or red. The order book is great to see what others are trying to buy/sell at as a point of reference to placing your own order at the right amount. If you wanted to sell 1 BTC for USDT and all the sell orders were at $4,000, you would not want to place an order drastically lower at $3,000!
- Just to the right of the Order Book are the orders that have recently been executed and filled. This is also another way to benchmark your trading. You can see what the most recent orders are and then plan your buy/sell accordingly.
- The vertical green and red bars at the bottom of the chart are the "Volume Bars". These correspond with the time-signature selected and show you how much of the asset has been traded in that amount of time. Volume is a great indicator to track as it gives you insight as to how much people are trading that asset and how likely you might be to find a buyer or seller for your trade. It also plays a heavy part in Technical Analysis too. You can see in this chart that around 12/15 we stared to get strong buying volume (green bar) that coincided with a pretty decent increase in price.
- Last but not least we have the "Order Box". This is where you place your buy or sell orders. Binance offers 3 different ways to buy or sell which include Limit, Market, and Stop-Limit. The default is a limit order and what that means is you set your own price for buying and selling. When the price hits that "Limit" then your order executes. In contrast a "Market" order means you buy or sell for the price the coin is at right when you place the order. The good thing about a Limit order versus a Market order is that you can set your Limit target and the order can go through at any time so you don't have to watch it. A Market order is immediate. Even if I want to buy a coin immediately I almost always use a Limit order anyways and just set it to or very close to the current price. This makes you a "Market Maker" instead of a "Market Taker". Being a Market Maker means your fees for the trade are slightly lower than if you were a Taker. You can see Binance fees here.
The last option is a Stop-Limit order. This is a more complicated order and Binance actually does a good job explaining it here. You are basically setting a target for the Limit order to start at and it will execute at that target or possibly even better than your target. This is good for more long term sells/buys.
These are the most important features you need to know to read trading charts. There are lots of other cool things like "Indicators" that you can turn on and help you with making better calls. There are a LOT of indicators and what they mean and how they work is beyond the scope of this article (see my video with CryptoWendyO on some of them here). You can see in this chart below that I have some Indicators turned on, if your chart looks funky you might want to turn them off by looking just to the right of the Time Signature and clicking on the "X" next to their names. Below I have "MCAD" & "Bollinger Bands" Indicators turned on. You can easily turn these off.
That covers all the main parts that you really have to know to get started reading crypto trading charts. With the knowledge I taught you above you can start to explore the chart more and really get a feel for it. I know it can be confusing at first, but it's like the Matrix... the more you look at it the more you just see Blonde, Redhead, shitcoin, etc!
Like always, if you have questions, just leave a comment below or reach out to me and I will do my best to guide you in the right direction. Time to start trading like a pro! More great crypto tips coming your way soon, but until next time...