If you just started an adventure with crypto trading, you might need some guidance. Keep reading to discover the top 10 rules that professional traders always follow.
Be Sure Why You Want to Enter Each Trade
To succeed in cryptocurrency trade, you have to have a clear purpose in getting each trade. You have to remember that each trade is a zero-sum game. That means that someone wins, and someone loses.
Like any other market, the cryptocurrency world is full of small fish and sharks. The latter just wait for a small, avoidable mistake for you to make so they can get your money. You should always be aware of that.
Sometimes it’s better to not gain anything than rush through and lose a big amount. There are going to be days or even prolonged periods when you do better by keeping off some trades.
Set Your Profit Targets
Every trade you invest in comes with a risk. You have to know when to get out of the deal. Sometimes you might not even make any profit, but you are also not going to lose any money.
To cut your potential losses, set up a stop loss level for each trade. Knowing when to let go is a very useful skill that most traders don’t have, and this is why they don’t succeed.
The recommended stop loss is at the cost of your coin. This way, you can be sure that at least you end up at the same point as you were, without losing money.
Do the same with your profit level: set the financial goal and sell the stock when you reach it. Don’t be too greedy, especially when the bet is not certain. 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, is something that often bothers traders and makes them undertake risky investments. Rarely it happens that people get a tremendous profit in no time. Who wouldn’t want to be in their place?
While making a decision, be aware of the situation. Sometimes the sharks buy coins for very cheap and provoke others to invest more money. When that happens, usually an oversupply appears, and the value drastically drops.
Be Aware of the Risk
As a wise trader, you shouldn’t run directly into massive profits. Instead, keep gathering smaller but sure profits. Try to invest less in those trades that are less liquid, as, in case of a drop, you might end up with nothing.
Sometimes risking is good, but as a beginner, you should better stick to more certain deals.
Check Bitcoin Values
The price of most altcoins might depend on the market price of Bitcoin. It is a volatile currency. That means that when the value of Bitcoin increases, the altcoins value decreases, and vice versa.
Don’t Just Buy Because of Low Prices
Some people decide to buy a coin just because it’s cheap. Your decision shouldn’t be made based on affordability but rather be based on the market cap.
Cryptocurrencies, similarly to other stocks, are gauged by their market caps. Use the market cap to decide if the coin is worth buying.
Be Aware of Early Investments
Some startups offer a chance to the public to invest in their idea. In return, you can get tokens at a lower price and the promise that they are going to be worth much more later.
Indeed, Initial Coin Offering can bring a great outcome. However, some ICOs can be total scams on which some people might lose millions. That means you have to be extremely cautious when you want to invest in ICO. Just look at all the details that might be alarming and do your research to prevent yourself from losing money.
Don’t Stick too Long with Altcoin Investment
Some altcoins lose value after a relatively short time. That means 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 long-term, think about buying Ethereum (ETH), Monero (XRM), Dash, or Factor (FCT).
Keep It Diverse
Investing can be unpredictable, and when it comes to cryptocurrencies, the game is even less sure. You can indeed get thousands of dollars within a day, but it’s also true that you can lose your money. To avoid getting broke, invest in diverse things.
The value of most cryptocurrencies is affected by the value of Bitcoin to the USD. By investing in different currencies, you are less exposed to market changes. You can keep Bitcoin as your base asset, but you also need to have some backup. Thanks to this, you can spread the risk.
Once you have some money, be sure to invest it in other things which are less risky than crypto, for example, stocks, real estate, etc.
Place Sell Orders
To get a good outcome from your investments, be sure that you place sell orders. Your revenue targets can be reached by placing sell orders in the order books.
It is hard to say when your order price is going to be met. Yet, you just wait until you get what you need. Additionally, when you sell orders, you pay fewer transaction fees.
Remember to always stay cool, and don’t trade under emotions. They are not good advisors when it comes to cryptocurrencies. Be objective and do your research to avoid losses.
Until you are sure what you are doing, don’t trade. Keep calm and look for the next good opportunity. If something looks too good to be true, it probably is, so be sure to never rush through and be a bit cautious.
If you have just started and feel a bit confused, check out crypto trading platforms with regulations in mind like INX as an example. Thanks to them, you can feel much safer and get a bigger outcome than you would even expect.
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