Crypto is big and getting bigger. We’ve seen Bitcoin rise from being a mere ‘fad’ not long ago, to now being something numerous world governments have taken a significant interest in. So, how do you trade it successfully?
Tip #1 – Have A Clear Reason Before Entering A Trade
It is essential that you only begin a trade when you know why you are beginning and have a clear strategy for the trade itself. Not all traders gain from trading as this is a zero-sum game – for every person who benefits, there is a trader who will lose. The Altcoins market is driven by large whales – the same whales responsible for placement of Bitcoins on the order book – and these whales are waiting for people to make mistakes.
If you do intend on trading on a daily basis, it is sometimes better to avoid earning without doing anything instead of entering a trade without any trading plan; thereby exposing all your coins to potential losses. From person experience, I can tell you that there will be days where you can keep your trading profits by not trading online at all. Just as you can buy stocks with PayPal, many market places nowadays allow you to do the same with crypto.
Tip #2 – Have A Target And Stop When Beginning A New Trade
For each trade conducted, it is important to set a target for profit taking. More importantly, it is necessary to set a stop-loss to cut any losses made during the trade. The stop-loss setting is significant because it will set the level of loss where your trading will be closed.
When setting up a stop-loss level, it is vital that you take several considerations into account to ensure the level is correct and accurate. Many traders will fail if they continue with a trade and may believe that the trade will “turn around” leaving them with a minimum loss, which is not always true. In this situation, the trader is trading with their ego instead of their brain and this is dangerous because Crypto trades are risky to play. In personal experience as a trader, I have seen coin being dumped by approximately 80% in a few hours when working on my ego instead of my brain.
Tip #3 – Managing Risk
If a little pig eats a lot, the bigger pig will be eaten. This philosophical statement tells a story of how market profits can be attained by a profitable trader. As a profitable trader, you should never search for the peak of a trading movement – always search for smaller profits. Why? By looking for these smaller profits, it is possible to accumulate them into a large profit.
Managing risk correctly and wisely in your portfolio is an important factor to consider. For example, an effective trader would never invest a large percentage of their portfolio in non-liquid markets because it is a high risk. The trades assigned indicate greater levels of tolerance with stop-loss and target levels being chosen from a trade’s buying levels.
Tip #4 – Consider The Underlying Assets And Their Influence On Market Conditions
The majority of Altcoins are traded according to the Bitcoin value. This is an important factor to consider because Bitcoin is a volatile market asset, particularly when Bitcoin value is moving in a sharp direction. The relationship between Altcoin and Bitcoin has an inverse value; for example, when Bitcoin value raises the value of Altcoins will reduce due to them losing the Bitcoin value.
If a Bitcoin presents with a volatile value, it is typical that trading conditions will be “foggy” and difficult to manage. In this situation, it is best to either close all targets for trading or not trade in any market.
Tip #5 – The Majority Of Altcoins Will Lose Value Over Time
Many Altcoins will lose value as time passes in two different manners, either they will “bleed” the value away or eliminate it rapidly. It is important to take this into account when managing Altcoins as a long-term investment because it can influence your trading. The coins presenting with a higher trading value or volume will have a greater community with constant develop; therefore, they will be more beneficial and provide a profitable potential.
This is a guest post made by Nick Dale. He worked in the financial world for a decade and enjoys sports, BBQs and spending time with family as well as focusing on his site wesellcrypto.com