In this article, we will list the top tips you need to know before entering crypto trading. This way, you can definitely take a smarter approach to cryptocurrency trading. Remember, you absolutely cannot participate in the 'game' of crypto trading without understanding how to optimize your transactions.
Cryptocurrency trading is a new trend in the market today as this new class of digital assets is changing everything in the world and offers new enrichment opportunities. However, the point is that cryptocurrencies are also famous for their volatility and unpredictable fluctuations. Mistakes while trading cryptocurrencies can result in you losing a significant amount of your crypto assets. Therefore, in order to make transactions properly and securely, you need to take a calculated approach. Cryptocurrency trading is not that simple and it may not be for everyone in the world.
In this article, we will give you the 7 most important tips you must know if you want to get rich from this type of trading.
1. Understand the theoretical aspect
Before you start trading cryptocurrencies, it's important to understand the basics of cryptocurrency theory. Make sure you understand all the terms used in cryptocurrencies, what they mean in the market, and how they relate to you. Learn about candlestick charts, deep and wide analysis charts and all the other trading terms you will encounter when you start trading cryptocurrencies.
Once you have grasped the basic concepts and terminology, the next important thing is to keep yourself up to date with all the latest developments in the cryptocurrency world (you can do it). Get this if followed Blogtienao ours). The trends of various cryptocurrencies, their prices and news around the cryptocurrency world will shape your decision.
Understanding technical analysis is also an important thing to learn. If you don't have an understanding of how cryptocurrencies have worked in the past, you can't expect to correctly predict how coins will perform in the future.
2. Price difference
If you've been following the cryptocurrency world with a bit of attention, you'll notice that different cryptocurrency exchanges will have different prices for cryptocurrencies. It's a difficult thing to keep track of prices and will even make it harder for you to find which is the cheapest so you can make a profit through the price difference on both exchanges. deal.
Other factors such as transaction fees, price fluctuations and available volume for the price you are looking for can significantly affect your trade. CoinScanner is a very useful resource. You can use it to gain a better understanding of the spread, buy and trade cryptocurrencies at the cheapest price at the time of trading, and take advantage of the spread.
3. Always start with small amounts
Never take big steps in the first place. You should always start with small amounts to check 'waters' before you make any big business decisions, even in the world of traditional finance. Carefulness has never been emphasized enough when it comes to cryptocurrencies. You must always keep in mind that Bitcoin and other digital assets are quite volatile. One thing that is predictable about cryptocurrencies is that they are unpredictable.
A trader may see a large loss or a huge profit in a very short period of time. This is why you should only invest the money that you are willing to accept losing. That means you should reconsider putting your savings in cryptocurrency trading. It is not a smart idea.
When you start with small amounts, it will help you understand a little bit about how the market works. Once you have doubled your initial investment, you can withdraw the principal from the transaction and continue trading with the profit you have earned.
4. Be careful with pump-dump and FOMO
There are a lot of people out there who are just pumping cryptocurrencies they have invested in. They take advantage of social media platforms to advertise the way they invest in one of the most promising cryptocurrencies in the world and they try to scare others into being abandoned (FOMO).
This is an inexpensive marketing trick that a lot of 'whales' use. They are holding a lot of the coin they buy at a very low price and they will sell it to the traders for a higher price, once they have successfully raised an online FOMO.
Never let yourself get caught up in the whole flow-discharge scenario for FOMO. Because if you get caught up in this tornado, you probably won't have a chance to sell it at a higher price to others and you will lose money.
5. Diversify your portfolio
You understand the saying "don't keep all your eggs in one basket" right? And you should apply this in cryptocurrency trading. You see, there aren't many cryptocurrencies that can make the predictions of the experts; Therefore, you should not invest all of your assets in a single coin.
Diversifying your portfolio is a dispersion of the risks you will likely face across a number of different cryptocurrencies. Make sure that you have some level of distribution of your investment amount for different cryptocurrencies, for example you can 'pour' more money into a coin with more promise.
6. Stop loss and target level
Ensure that when you start trading, you will set yourself a target and a stop loss. Having a clear target level for profits and a specific stop loss level is essential because it will help you minimize losses.
Stop loss is the limit that you set to automatically withdraw cash from a trade if the price drops too much. The target level for profit is the upper limit that you will set for you to automatically withdraw cash from a trade when it reaches a certain point so that you can receive a certain profit from the trade.
You need to set up both of these levels after falling in love with a cryptocurrency. If you allow your ego to make decisions for you, your assets will be at a high risk of loss because the cryptocurrency market is much more volatile than in other markets.
7. The last word
To become a successful trader, you should not focus on one side and chase the peaks at all times. Instead of aiming for a huge profit in a short time, aim for a small amount of profit in a long time. Make sure you can control the risks. Don't wait for big profits because you could end up being a failed trader with debt on your back.
Finally, do a due diligence of all cryptocurrencies and make sure you invest in them wisely. For those with higher daily trading volume than others - you might have a better chance of starting your crypto trading career.
According to Medium
Translated by Blogtienao.com