Must-Read Tips for Trading Cryptocurrencies

Must-Read Tips for Trading Cryptocurrencies

A smart man will learn from his mistakes, and a wise man will learn from the mistakes of others. The fact is, as any soldier knows all too well, that safety rules were written in blood. So, to avoid the crushing pain of losing your bitcoins while trading all for the sake of learning some lessons you could have learned beforehand, take some time to consider the tips below about how to trade effectively.

The objective of every cryptocurrency trader is to be in profit constantly. To do that, you first have to be attentive and focused 100 percent on your trading. You also have to be cognizant of the fact that trading isn’t for everyone. While the trading tips below are easy to understand, they are not necessarily easy to apply. To be able to apply them consistently, you must have the discipline and self-awareness that are characteristic of pro traders. You will have to cultivate those on your own. Meanwhile, here are some helpful tips to help you make a profit while trading.

Have a Reason for Every Trade

You should have a legitimate reason for every trade that you make. That means knowing exactly why you are entering the trade and having a concrete plan for what you’re going to do in the aftermath. Trading, at the heart of it, is a zero-sum game. Every time money is made on a trade, an equal amount of money is lost. So, when you make money on your trades, it didn’t materialize out of thin air — you took it from some other trader on the other end who is now regretting his or her decision. In the same way, if you lose money and are having a bad trading day overall, one or more traders are having a good day on the other side. As it turns out, the altcoin and bitcoin markets are driven by whales, which are capable of placing volumes of hundreds of bitcoins at a time. They are there for one reason and one reason only: to take your money. They will set up the bait and wait patiently for someone to take it. Don’t be one of the fish that take that bait. Sometimes, it’s better to earn no money at all and just watch the markets, rather than participate. You can also make a profit by not trading at all since you will be saving yourself from losses.

Have a Stop and a Target for Each Trade

For every trade you take, there are two elements that you should take seriously. Spend more of your time determining these two things than you do determining anything else to do with the trade. These are your target profit and your stop-loss level. The target profit is where you exit the trade and liquidate your profits, so they’re not just theoretical. The stop-loss level is the exit point of the trade when things are not going in your favor. If you’ve got nothing else to your trading strategy, then make sure you always have these two levels.

When picking your levels, there are a lot of factors to consider. We won’t go into the mechanics of that here. What we will say instead is that you should know what not to do. Do not fall in love with your trades. You will often feel the need to hold on to a loser long after it has exceeded your stop-loss level. During these times, you’re probably thinking it will turn around, and you will be able to exit with a minimum of losses. That’s your ego talking; do not listen to it. The cryptocurrency markets are not like the stock market, where daily fluctuations are in the single-digit percentage levels. In the crypto markets, a coin can lose more than 70 percent of its value in a matter of hours. Don’t let your ego be the reason you lost your shirt.

Consider Getting a Trading Bot

Ultimately, you are human, and that makes you irrational and prone to overwhelming emotions. Meanwhile, crypto software is not. Trading bots will be able to place precise trades with well-defined target profit levels and stop-loss levels. They trade around the clock, being immune to such deterrents as fatigue or the need to sleep. They will also be much faster than you because they don’t need to think before they place their trades. The only limitation to a trading bot is the programming that went into it. However, that’s what trading bot reviews are for. You get to see which ones work based on what other traders say about them and avoid scams in the process. If you want to circumvent the whole trading in the zone thing, get yourself a trading bot and make your trading a truly passive source of income.