Crypto trading has become one of the favorite trading options of the new era. But not being familiar with the basic rules of smart trading can lead to failure in the initial stages of trading. Therefore, to prevent the novice traders from going bankrupt, here are 5 of the most important and undisputed rules of cryptocurrency trading:
1. Avoid Investing All Your Capital in Cryptocurrencies
Investing all your savings in cryptocurrency trading is not a sane choice, and taking additional loans for the investment is even worse. Avoid causing yourself additional anxiety by spending every last penny you possess. When you are investing everything you have, you are practically guaranteed to make ill-considered decisions and might even lose it all.
2. Avoid Greed and Consider All Risks Carefully Before Investing
Getting on the chopping block because of some spur-of-the-moment decision is one of the most common novice trader mistakes. Never buy coins at high prices when you were not able to buy the digital currency at the time of its growth.
Always have the right sense to wait after the prices increase, because usually after every raise, there is a price correction which will then be advantageous to buy. But waiting too much out of greed to get some extra bucks can also cause you to miss the window of opportunity. Pay attention to when the price has risen above what you paid, and then be satisfied with taking a little profit. As a novice, small risks like these are more than enough to stay in the flow.
3. Buy Your Assets When Prices Fall and Sell Them When They Are Growing
And vice versa – it is the best rule to follow when we talk about trading of any kind. Buy coins while they are still cheap and sell them as soon as the price increases.
4. Do Not Trust Anyone Other Than Yourself
With the internet generation, you are going to be fed tons and tons of information that you didn’t ask for, and that may or may not be false. Several chats and forums here and there might mislead you, because they are often built on forecasts and opinions that are more wishful thinking by individual investors than actual analysis based on hard facts. We’re not saying you should completely ignore everything you hear. A little information might even help you equip yourself well, but always keep a critical distance and see the information with the eye of an analyst, and not the wishful thinker. Be independent in your decisions, and critical when someone is trying to trick you into validating theirs, or worse, impose them onto you.
5. Do Not Make Decisions on Expectations of Prices Rising or Falling
Since the currency rate is often strongly driven by so-called manipulators, a new trader should only look for an ‘above average’ level. Fixing profits at this level is ideal, after which you have all the time in the world to sell coins profitably. Manipulators usually regulate the coin value over 15-20 minutes, therefore, staying low as a beginner is recommended.
The first profitable trade doesn’t always ensure you have mastered the technical fundamentals of digital currency trading. The crypto industry is a vast field in itself and requires you to stay abreast of the latest developments and news on cryptocurrencies all across the globe. Thus, make sure that when you are in the field, you are paying special attention to:
- Market psychology and technical knowledge
- Factors that affect currency growth
- Blockchain technology and ICO market
- Determination of currency capitalization