If you’ve just started a crypto trading adventure, you may need some guidance. Read on to discover the top 10 rules that professional traders always follow.
Be sure why you want to enter every trade
To be successful in cryptocurrency trading, you must have a clear purpose in order to receive every trade. You need to remember that every trade is a zero sum game. That means someone wins and someone loses.
Like any other market, the cryptocurrency world is full of tiny fish and sharks. The latter are just waiting for a small, avoidable mistake to make in order for them to get your money. You should always be aware of this.
Sometimes it’s better to win nothing than storm through and lose a large amount. There will be days or even longer periods of time when you can do better by keeping some trades off.
Set your profit goals
Every trade you invest in involves risk. You need to know when to get out of business. Sometimes you may not even make a profit, but you will not lose any money either.
To reduce your potential losses, set up a stop loss level for every trade. Knowing when to let go is a very useful skill that most traders don’t have, and because of that, they don’t succeed.
The recommended stop loss is at the expense of your coin. That way, you can be sure that you will at least end up at the point where you have been without losing any money.
Do the same with your profit level: set the financial goal and sell the stock when you hit it. Don’t be too greedy, especially if the bet is unsafe. Otherwise, you can end up with nothing.
Don’t be afraid of the fear of missing out
The fear of missing out, also known as FOMO, often bothers traders and leads them to make risky investments. Rarely does it happen that people make huge profits in a very short period of time. Who wouldn’t want to be in their place?
Be aware of the situation as you make a decision. Sometimes the sharks buy coins very cheaply and provoke others to invest more money. When this happens, there is usually oversupply and the value drops dramatically.
Be aware of the risk
As a wise trader, you shouldn’t run into massive profits straight away. Instead, collect smaller and smaller but sure winnings. Try to invest less in trades that are less liquid as in the event of a decline you may have nothing.
Sometimes the risk is good, but if you are a beginner, it is better to stick to certain trades.
Check the Bitcoin values
The price of most altcoins can depend on the market price of bitcoin. It’s a volatile currency. That is, when the value of Bitcoin increases, the Altcoins value decreases and vice versa.
Don’t just buy for the low prices
Some people choose to buy a coin just because it is cheap. Your decision shouldn’t be made based on affordability, but rather on market capitalization.
Similar to other stocks, cryptocurrencies are measured by their market capitalizations. Use market capitalization to help decide whether the coin is worth buying.
Make sure you invest early
Some startups offer the public the opportunity to invest in their idea. In return, you will receive tokens at a cheaper price and a promise that they will be worth a lot more later.
Indeed, the first coin offering can produce a great result. However, some ICOs can be total scams that may cause some people to lose millions. That means that you have to be extremely careful if you want to invest in ICO. Just look at all the details that could be alarming and do some research to prevent you from losing money.
Don’t stay with Altcoin Investment for too long
Some altcoins lose their value after a relatively short period of time. That said, you shouldn’t hold on to them for too long.
Check the trading volume. The higher it is, the more stable it is for long-term investments. If you want to invest for the long term, consider buying Ethereum (ETH), Monero (XRM), Dash or Factor (FCT).
Keep it diverse
Investments can be unpredictable, and when it comes to cryptocurrencies, the game is even less secure. While you can get thousands of dollars in a day, it is also true that you can lose your money. To avoid going broke, invest in various things.
The value of most cryptocurrencies is influenced by the value of Bitcoin against the USD. When you invest in different currencies, you are less exposed to market changes. You can keep Bitcoin as a base asset, but you will also need a backup. Thanks to this, you can spread the risk.
When you have some money, consider investing it in other things that are less risky than crypto, such as: B. stocks, real estate, etc.
Place sales orders
Make sure to place sales orders to get a good return on your investments. Your sales goals can be met by adding sales orders to the order books.
It’s hard to tell when your order price will hit. However, they just wait until you get what you need. Plus, when you sell orders, you pay fewer transaction fees.
Remember to always stay cool and not act under emotions. They’re not good advisors when it comes to cryptocurrencies. Be objective and do your research to avoid loss.
Don’t act until you are sure of what you are doing. Keep calm and find the next good opportunity. If something looks too good to be true, it probably is. So never go through and be a little careful.
If you’re just starting out and are feeling a little confused, take a look at crypto trading platforms with regulations like INX as an example. Thanks to them, you can feel much more confident and get a greater result than you would ever expect.