Cryptocurrencies, and especially Bitcoin and Ethereum, were the big winners in 2017. Cryptocurrencies proved they could rise almost daily, and if you had purchased them at the beginning of this year, your investment would have doubled or tripled by now. To learn more about cryptocurrency trading, then read more.
We will share with you some advice from some of the most experienced people in crypto trading.
Understand the market needs before investing your money anywhere
The first mistake novice investors make investing without having proper research completed on possible investments available around them. There are thousands of companies offering different opportunities for foreign currency speculation, countless online brokers offering opportunities and even private investors who offer to open up their portfolios for smaller accounts.
You need to research any possible option available.
Don’t chase too much!
The crypto market is very volatile, so prices are subject to significant fluctuations every day. Even if a coin rose significantly yesterday, it can fall back today, so it’s important not to make impulsive decisions based on emotion when investing in cryptos. It would help if you didn’t worry that you’ve already missed out on major gains. Instead, check prices regularly and decide what to do based on the market situation at hand.
Think long-term!
Since the last Bitcoin correction, many people panicked and sold their coins at a loss, thinking that it’s better to get at least something rather than nothing at all. We recommend you think twice before selling and ask yourself if this is an isolated move or part of a more significant trend.
Buying low and selling high is the key to success in trading, so don’t let your emotions take control over you and do nothing rash before taking some time for reflection.
Don’t invest more than you can afford to lose
Since it’s impossible (and not advisable) to predict the performance of cryptocurrencies, the chances are high that your investment may fail or drop in value. If this happens, it means that you should cut your losses and take advantage of this situation by rebalancing your portfolio.
Never go all-in with cryptocurrency investing, as even the most successful traders have lost money during their career, so try not to risk over 2% of your current portfolio on a single trade.
Master technical analysis for trading cryptocurrency
Technical analysis is the most used trading strategy among cryptocurrency traders. It’s simple to learn but takes time to master, so it’s essential not to over-trade because of impatience.
Don’t wait until the whole correction is over!
We know cryptocurrencies for their rapid gains and steep corrections, so you can make a lot of money quickly if you catch the right moment but also lose everything just as fast. If you have invested all your savings, wait until the price stabilizes before rechecking your account.
There is nothing more defeating than seeing an investment drop 60% overnight after waiting for months for this moment, only to sell it at a loss later on. For this reason, many traders use a strategy called “dollar-cost averaging”, it’s investing a fixed amount at regular intervals irrespective of the price.
By doing this, even if the price drops after a few months, you will gain coins for a lower average price and ultimately increase your potential profits.
Don’t underestimate the role of emotions!
As we mentioned earlier, cryptocurrencies are very volatile, leading to inflated prices due to hype or fear of missing out (FOMO). In these situations, traders should not rely on their logic, as they can make impulsive decisions based on emotions instead.
If you see everyone around you being ecstatic about investment, it’s best not to buy unless there is clear market momentum. Also, if everyone is panicking, stay calm and analyze the situation because these are usually the best times to buy.
If you follow these tips, you can significantly increase your chances of success in crypto trading!
