5 Vital Trading Tips [Must Read Before You Start Crypto Trading]
Trading in the crypto market is indeed challenging. It may be like a roller coaster ride due to the market volatility. Sometimes you win, and there are times you do not. However, traders can lower the risk of losing if they follow fundamental principles to guide them throughout their journey. Let us discover five essential crypto trading tips in this article.
Handle your emotions when trading.
The inability to avoid falling victim to emotions again and over again is the most underappreciated yet widespread reason for failure among traders, whether beginners or seasonal traders. We cannot condemn them because it is tough to manage emotions, especially when it comes to money. The larger the risk aspect in a deal, the higher the emotional impact on a trader.
Trading requires emotional control, according to Forbes. Trading emotionally, for example, exposes you to needless danger. When you trade emotionally, you are more likely to dismiss essential components of the market. For example, when markets undergo an exuberant bull run, the fear of missing out circulates. Many investors believe if they do not invest now, they will miss the bus. Another disadvantage of emotional trading is that it causes trade to be out of sync with personal objectives. It makes you detached from the big picture and makes you assume a short-term perspective. This tendency might harm wealth generation.
Furthermore, trading emotionally degrades your trading experience. Emotional traders are more impatient and use shortcuts to achieve their goals. Shortcuts frequently result in poor judgments that might ruin the entire experience. Also, when you lose money due to emotional trading, you are more likely to engage in revenge trading. This trading refers to the practice of continuing a deal after suffering a loss. There is a strong desire to recover from the loss as soon as possible. And in the desire to do so, you make haphazard deals that may cause more harm than good.
Discover trading tactics that suit you.
There are tons of trading tactics out there, but it does not necessarily mean you have to employ all of those. Choose a trading strategy that fits your goals, personality, and patience, among other factors. Tactics involve the use of indicators, which are grouped into two generally: Technical and Fundamental Analysis.
Choose the right trading platform.
Knowing how to handle your emotions, use tactics, and manage money, does not matter if you do not operate on the right platform. When choosing a platform, check the six crucial aspects: trading fees, security, available coins, trading volume, educational resources, accessibility. Articles like the review of Bitcoin Up, are a great source to distinguish the trusted platforms from the frauds. The study shows that the website is safe and suitable for beginners.
Technical analysis, according to Investopedia, is a trading discipline that evaluates assets and uncovers trading opportunities by analysing statistical trends derived from trading activity, such as price movement and volume. In essence, it seeks to predict price fluctuations using previous data. Knowing the future pricing conditions could help the trader make decisions now. It includes combining science and the arts to research mass psychology.
The basic indicators in technical analysis include candlesticks, trendlines, support and resistance, trading volume, RSI, market cap, Bearish and Bullish Divergence in RSI, moving averages, and time-frame. Advanced indicators include Fibonacci retracement, stochastics, Elliott wave theory, Bollinger bands, Doji candlesticks, random walk index, MACD, exponential moving average, and a lot more.
According to Coindesk, it is a method of assessing an asset’s true value. Its intrinsic worth reflects in the financial statements, profitability, and dividend distributions. And if you know how to evaluate these elements, you may boost your odds of predicting a market’s future price movement accurately. When conducting fundamental analysis, the first issue that comes to mind is whether or not this cryptocurrency is authentic and can expand. It is learning what market participants have to say about the cryptocurrency you intend to invest in. So you go online and look at the news, forums, articles, and social media. Some traders conduct additional research by looking at the crypto market cap, currency availability, volume, use case, developers and founders, and road map.
Manage your money.
Risk management is more important than profit to successful traders. On the other hand, inexperienced traders are more concerned with profit than risk management. They assume they will reap the benefits on a monthly or weekly basis. It happens until their account runs dry. At which point, they realise they need risk management. This predicament arises since they compare their previous employment to trading. However, many people are unaware that trading is not the same as working. No matter how much time you spend staring at the chart on the monitor, your money will not grow. It’s akin to beginning a business without knowing whether or not you’ll earn money.
Money management is more than just putting a stop loss on every transaction; it also entails following guidelines. It also establishes the maximum amount you may lose on each transaction over a month. You’ll stop trading after achieving your daily limit or the monthly percentage you’ve specified. Successful traders understand their limitations, and this discipline is something that every trader, whether short-term or long-term, must learn.
Monitor your trading.
Keep a record of everything you do. Monitor every transaction so you may identify your flaws and improve your performance. The trader may also learn how to apply trading techniques and tactics that are suited for the trend of the chart rapidly. An excellent example is someone on a diet keeping track of everything he eats. He understands his daily calorie, protein, and fat needs. He also weighs himself every day or month to see if he is improving at what he does. If there is little or almost nothing, he merely has to adjust. Similarly, if a trader does not maintain track of his prior performances, he cannot discern if he is improving.
To Sum It Up
There are several fundamental concepts in crypto trading that always come together. Removing one will result in a trader’s failure. These are handling emotions, identifying trading methods, managing money, selecting the right platform, and monitoring trading. If traders follow these basic concepts, they may reduce their chance of losing money.