Several articles, videos, and other sources of information are out there that teach about the rules in crypto trading. For this reason, traders, especially beginners, tend to get confused by all of these. That is why it is vital to commit to specific rules only, rules that are fundamental and could be true for your entire trading journey. In line with this, here are the golden rules of crypto trading that could be very useful, especially for beginners.
Don’t Let Greed Dictate Your Trades
As a beginner, you are entering a trading world with high expectations. You see some videos or hear friends talking about how easy it is to become rich in the crypto market. It is true but only in two cases. First is having good luck. This luck might work once or twice, but there’s a good possibility you’ll lose money on the subsequent trades. Don’t risk all of your money on one transaction in the hopes that it will make you wealthy; instead, concentrate first on understanding technical analysis.
Second, you need to possess expertise in trading and gradually expand your portfolio by exercising patience and adhering to technical tactics. Your success rate will rise as you gain experience over time. You will encounter several losses trades along the way, but remember that it is part of the learning process.
Do not get Emotional
The ultimate risk in cryptocurrency trading is getting too attached to a coin. No matter how valuable or well-known that coin is, you must treat it as an asset and approach your research with objectiveness and openness. After a significant upswing, being overly emotional and hoping it lasts forever can cause you to suffer higher losses or prevent you from making profits. Due to the tremendous volatility of cryptocurrencies, a trade once quite profitable could quickly turn into a loser. Set a defined stop loss in case the trade goes against you and a target for seizing profits before you even initiate a position.
Do not Invest More Money than You can Afford to Lose
Cryptocurrency trading has the potential to be incredibly lucrative, but the downside risks are also substantial. In a bear market, some altcoins never recover. Given the cryptocurrency market volatility, a profitable trade might quickly turn into a loss.
Study Technical Analysis, Charts, and Strategies
Learn and master technical analysis. It might sound tedious at first, but learning that may lead you to become a consistently profitable trader. Trading without learning is like hoping to become a boxing champion without training. For the first several months, practice with tiny sums so that you may concentrate on strategy rather than profits. After that, gradually increase your entry volume. Never chase the market; instead, have a defined strategy. Decide on your goals and wait for the crypto market to find you.
Take profit but avoid becoming avaricious. Given the turbulence of the cryptocurrency market, it is always advisable to collect profits and be content with them. The precise top or precise bottom are difficult to anticipate. Take profits whenever you can because, most often than not, a profitable deal might quickly turn into a lost trade. Discover risk management. The key to trading is risk management, without which you risk losing all of your money very quickly.
Never Use the Leverage of 50x and 100x.
The leverage of 50x and 100x is for gambling, not for trading. No matter how appealing the return may seem in your thoughts, trading with incredibly high leverage almost always fails. Do not be duped by YouTube influencers demonstrating profitable tactics for high-leverage and extraordinary earnings. These are well-orchestrated videos that exist only to attract attention and clicks. In reality, excessive leverage will cause you to lose your money very quickly. Use no more than 5x on the initial deals. And you can increase your leverage to 10x if you gain more experience and consistently place profitable trades. While fortunes are built-in time, losing money can happen with just a single click.
Use a Reliable Crypto Trading Platform
Before anything else, ensure that your funds are secure on the cryptocurrency trading platform you are using. When we say crypto trading platform, we refer to any platform that involves crypto in their business, such as crypto exchanges, brokers, trader-broker connecting platforms, etc. Select only those with the best reputations in the said fields. Let’s use an example for each of these to give you an idea.
eToro (Broker Platform)
Ethereum, Ripple, Bitcoin, and Dash are just some of the cryptocurrencies that eToro offers. Many review agencies consider it one of the best cryptocurrency brokers in the market. You may follow and learn trading tactics from the large community of seasoned bitcoin traders on eToro.
Bitcoin Up (Trader-Broker Connecting Platform)
Bitcoin Up is a tempting offer for seasoned traders and cryptocurrency newcomers who need exact statistics, user-friendly tools, and individualised support. They can guide traders through the complex worlds of cryptocurrencies and blockchain technology. They have established themselves as one of the most reliable and trustworthy trading platforms that link customers with reputable brokers worldwide.
Kraken (Exchange platform)
According to Forbes, Kraken is one of the earliest crypto exchanges in the United States. It started in the Paleolithic period of cryptocurrency back in 2011. Kraken has a wide selection of coins at reasonable prices.
Sign up for a Reliable Trading and Signals Group
Free trading clubs are, most often than not, ineffective and noisy; thus, experts advise joining paid, high-quality ones. In a solid trading club, you may ask for guidance and learn much more quickly from the experiences of other traders. Additionally, you get signals with a high success rate for profitability. Pay for trading courses as well because they may assist you in mastering technical analysis. You may eventually have a higher rate of trading success.
Stop Consuming Clickbait Content
Pay attention to sources that provide in-depth and straightforward analyses of the cryptocurrency market. Disable clickbait YT channels with silly faces and cunning titles. Most of such influencers are merely con artists who do not know market analysis or price movement. They only care about generating as many clicks as they can. That is why they post the same cheap content as often as possible. You will waste time and money if you continue to watch these low-quality channels.
One should be scared when others are greedy and greedy when others are fearful, according to Warren Buffett, one of the most well-known businessmen in the world. Typically, the market’s level of greed and fear is a helpful guide for deciding whether to buy or sell an item. Therefore, hold off on investing in a currency that has already experienced a strong surge. Do not choose it just because it is the buzz of the town. It might be wiser to wait until a solid dump or correction move before beginning to invest.
Crypto trading is very profitable if you do it right. And to do it right, we must stick to the golden rules we believe in. It is up to you which and whose golden rules you will take. But the ones you ought to pick are those that serve as a guide that does not contradict itself through time. Remember that in whatever we do, consistency is the key. The same applies to crypto trading.