When you are starting with trading cryptocurrency, several obstacles might come in your way. If you tried reading all the manuals and tutorials you could find, there are still things that you will miss out. This is what we call learning along the way. In this article, we compiled the things that will surely help you start trading.
Here are details that you won’t find anywhere else. These are seven tips on how to get into trading cryptocurrency.
7 Tips To Get You Trading Cryptocurrency
1. Don’t just get in because of pressure!
Do not just get in because you fear missing out. This is one of the several reasons why many traders fail in cryptocurrency. From an external perspective, it is not fair seeing people make huge profits within a few minutes from pumped-up coins.
Beware of that moment when the signs seem to be screaming at you, saying you should jump in. At this precise moment, the giants and schemes are watching and smiling while you buy the coins at low prices.
What typically follows is that these coins end up in the hands of new and small traders. And what happens next is that red candles start popping up due to oversupply, and losses start trickling in.
2. Enter each trade with intention
Although obvious, you need to have a purpose for getting into trading cryptocurrency. Whether your intention is to day trade or scalp, you must have a sense for starting to trade.
Trading of digital currencies is a zero-sum game – it always and must even out. You must realize that winning and losing come in sets. Someone wins because someone else loses.
The cryptocurrency market is well-ordered by the large ‘whales’, just like those who place thousands of Bitcoins in market order books.
And these whales have patience. They wait for beginner traders like you and me to make a single mistake that puts our investment to their banks due to needless mistakes.
So, whether you are a scalper or day trader, sometimes you are at an advantage not gaining anything on a trade than rushing into losses. From our experience, we can suggest you that on certain days or periods, you could only stay gainful by keeping off some trades.
3. Make use of stop losses and set profit targets
If you haven’t heard of the word stop loss in trading, it is time that you research it first before getting into cryptocurrency. You can look at our other articles to learn more.
Every trade we choose obliges us to know when to get out, whether we’re making a profit or not. Forming a clear stop loss level could help you avoid huge losses; a skill that’s very rare in most traders.
4. Be smart with your risks
Risk is tangible – you can literally divide or multiply them with your investments. This is true of market profits when you start trading cryptocurrencies. Remember that wise traders never go in the direction of massive profits.
They would rather wait, be patient while gathering small but safe profits from regular trades. Think carefully about investing less of your portfolio in a market that is less liquid. These high trades come with more tolerance, while the profit target points and stop loss will be allocated further from the buying level.
5. Beware of low prices
Almost all beginner traders make one common mistake: buying a cryptocurrency as its price seems affordable. When you decide to invest in a coin, it should have very little to do with its mere price. Investing and trading have a lot to do with its market cap.
Like the traditional stocks are judged by their market caps, which is evaluated by the formula Current Market Price X Total Number of Outstanding Shares, the same thing is with cryptocurrencies.
6. Reminder for Altcoin investors
Several Altcoins loses their value over time, sometimes in an oddly short time. Thus, it is vital to understand that when you have an altcoin for the long term, be wary not to hold on to them for too long.
One of the best ways to say that coins work for long-term investments is their daily trading volumes. The greater the daily trading volume, the more fit an asset is for long-term investments.
7. Diversify your investments
Investments are volatile; even those that look to have infinite positive returns can crumble down under certain economic conditions. With this, cryptocurrencies are even more erratic.
As much as you can gain thousands in a day or less, the entire opposite can also happen. You can lose your entire investments in digital assets in a snap. So, there is no better way to get past such mishaps but through diversification.
Remember that all crypto coins’ value is shaped by the Bitcoin’s value against the US Dollars. When Bitcoin has a lower value against the dollar, all other crypto coins lose value and vice versa. From that, you must realize that diversifying your portfolio among several coins may not be enough to protect your investments. You must diversify away from the same type of asset to spread your risk. Click here to know more about trading cryptocurrency!
While investing and trading in cryptocurrency sounds like a good idea, you need to be careful with your emotions. Excitement and intensity won’t always bring you good returns. With the seven tips above on how to get into trading cryptocurrency, you can be a wiser crypto-trader.
Learn from the mistakes of other traders so you won’t do the same thing. Be patient and don’t always go for the shiniest object in the trading graphs. At the end of the day, you surely would still learn a thing or two when you started trading. So, go on and begin the process if you haven’t got your crypto-basics like wallet, app, etc.