In recent years, we have been bombarded both with positive and negative news and information regarding cryptocurrency trading. You probably even have some friends that have been invested in this market and think they know all the ins and outs of it. Plus, when they share their experience, everything seems so easy and simple.
It may be for them, and it probably was for other people a few years ago. However, don’t forget that this market has been continuously developing, so nowadays, you need to be prepared before making your first investment. Even though we will provide you with some general tips regarding trading, our advice is first to visit this page and learn everything about day trading and Bitcoin brokers in your country.
1. Invest only what you can afford
This is the first rule of trading. In addition, it is also the most common mistake novices make. No, you won’t get rich overnight, and if you try to, you are more likely to lose all the money. Remember that for every win, there is a loss. The only way to protect your finances is to think about the amount of money you can afford meticulously. We are not talking about the money you have on your bank account at this moment, but actually, about the money, you can afford to lose, and that won’t cause any significant changes in your life. You should always play safe because this is not the place where you should test your luck.
2. Set a target goal
In order to be successful in the trading world, you have to master certain skills and knowing when to invest and when to stop is one of them. Yes, we understand, it is easy to get carried away by your emotions, but don’t forget about the “play safe” tip.
Our advice is to set a stop point at the amount of money you have acquired. For example, if you have just got a $500 coin, this sum should also be the one you invest in. At the end of the day, if the worst-case scenario happens, you will have the exact amount of money you started with. You won’t acquire anything, but look at it for the bright side, you won’t lose anything.
3. Be smart
Another common issue that not a lot of trades can overcome is the fear of missing out. You have to be prepared for this feeling. Just imagine the following situation – you have a strategy, you have been following it, and you’ve been more or less successful. You have played all your cards, and now, you are just waiting. However, it seems that those green marks start talking to you, telling you to abandon your plan and make an investment at the final moments. This is when people start doubting themselves and ask that awful question – “What if I skip the investment and miss this chance to win?” Don’t worry, this almost never happens, which means that you should continue investing smartly and sticking up to your strategy.
4. Minimize the risk
Another golden rule of cryptocurrency trading is never to go for a big win. Do you remember what we said about the winning/losing ratio, as well as about the fear of missing out? If an opportunity seems to be too good to be true, then it probably is.
Our advice is to always go for sure trades and profit. Yes, these will earn you significantly less money, but they will increase your assets and eliminate the risk of losing investments, there is no doubt about it.
5. The price of the coin isn’t crucial
Well, at least it shouldn’t be crucial in deciding whether or not to make a purchase. Naturally, you should remember the rule “only invest what you can afford to lose,” but at the same time, you shouldn’t make a purchase simply because the price of the coins is low or affordable to you. It sounds confusing, doesn’t it? The coin’s market cap should be the thing that steers you in the right direction. The higher this is, the more suitable the coin is for the investment.
6. This isn’t a poker game
No, you should never take the risk and go all in. There isn’t such a thing in the cryptocurrency trading. Don’t ever forget how unstable the market can be. It means that even though it might seem like there is no way for you to lose a specific investment, it can happen when you least expect it.
Due to this reason, you should always stick to the sum of money you already decided on, and don’t forget to follow the strategy. Yes, we know, the temptation to go off the track is great, but you have to find a way to resist it if you want to become a successful trader.
7. Short-term or Long-term trading?
This is one of the first things you have to decide on when entering the world of cryptocurrency trading. As you can assume, the former means that you will hold on the coins for a short period of time, maybe a few hours, days, or weeks. On the other hand, when it comes to the latter, i.e., the long-term trading, it means that you expect the value to increase over a longer period of time steadily. Think about the people who bought Bitcoin in 2011 and held on to it until 2017 or 2018 when its value was at its highest.
As it is to be expected, both of these have certain benefits and downsides, and so we will mention only some of them. First of all, the main advantage of short-term trading is that it enables you to earn a significant profit for a short period of time. The prices of cryptocurrencies can double in a day, meaning that you will make a profit if you sell them at the right moment. At the same time, this is also its main downside. In order to be successful, you will have to spend a lot of time analyzing the market and figuring out when to buy and when to sell.
On the contrary, as you can probably imagine by now, the greatest advantage of long-term trading is that it doesn’t require so much time and effort. Since you will be holding on the investment for years, you won’t need to check and analyze the markets continually. What’s more, you can start with a small amount of money and avoid all the stress since you won’t have to worry about the sudden changes in the market.