The cryptocurrency markets may be a chaotic roller coaster of volatility, with large profits and losses possible. Cryptocurrency trading is a zero-sum game, meaning that not everyone can win. In fact, the vast majority of traders lose money, and only a select few ever achieve continuous profits.
Making money as a crypto trader needs a certain amount of discipline; it isn’t about getting fortunate a few times. If you want to be successful in cryptocurrency trading, you need to focus on basics, good habits, and experience.
In this article, we will go over five basic rules that can be helpful to you when it comes to trading cryptocurrencies.
1. Never put money into an investment or transaction that you can’t afford to lose.
As a newbie crypto trader, you will inevitably make mistakes, and you may lose money throughout the learning phase. To avoid a major financial setback, you should not place a large wager at first.
You may dedicate more money to this asset class if you are comfortable with the cryptocurrencies you are investing in and understand their worth and possibilities. Cryptocurrencies should not account for more than 5% of an investor’s portfolio, according to experts.
2. Choose a trustworthy platform for cryptocurrency trading.
What actually makes a crypto trading platform good and trustworthy? Here are some points that you should consider:
- Customer Service – connecting you with the most reliable brokers that are on standby 24/7 to assist you with whatever concerns you might have.
- Advanced Crypto Trading Software – allowing you to buy and sell Bitcoin and Altcoins like Ethereum, Litecoin, Cardano, Stellar, Chainlink, and many others that are available.
- Fast Transaction Speed – executing trades quickly as well as pay-outs.
- Beginner-Friendly – appealing website or application features to beginners.
- Security – securing your cryptocurrency and information.
3. Be prepared for extreme volatility in the crypto market.
Volatility is an unavoidable element of market activity. Changes in the price of an asset are referred to as volatility in financial markets. It might be beneficial if there are consistent price rises or decreases within a broad range. It may also be severe, with sharp price swings in both directions.
In the recent article of Forbes, Bitcoin had a brief period of strength earlier this month, reaching $60,000 on May 8 and trading in the vicinity for a few days. However, the world’s most popular digital currency saw some unavoidable volatility, breaking over the $50,000 and $40,000 levels before attempting to break over the $30,000 barrier.
At the time of writing, the most volatile cryptocurrencies in the last 20 days, as curated by the Yahoo Finance team, Dogecoin (DOGE) ranks first. It is followed by Algorand (ALGO), ThetaFuel (TFUEL), Dash (DASH), and Compound (COMP).
4. Learn about charts and technical analysis.
You need to devote some time to understand the fundamentals of chart reading, trading platforms, and technical analysis (TA).
Technical analysis includes parts of behavioural economics and risk management as well as the study of charts and trends. To learn about technical analysis, newbie traders might resort to available books and online or offline courses. Although many of these materials are free, some educators, seminars, and courses do charge.
Cryptocurrency markets are still in their infancy, and no fundamental study of any asset is possible. That is why it is critical to study the charts and do technical analysis.
5. Do not invest blindly.
When it comes to your finances, investing blindly implies following the crowd or listening to other individuals in the cryptocurrency industry. Some traders may really wish to assist you and provide you with a bit of useful advice. However, the majority of them frequently offer their “opinions” to take advantage of uninformed investors. They may advise you to purchase a certain currency so that they may go securely.
It is best recommended that when making financial decisions, just rely on your knowledge and expertise from your research once you have started your crypto trading journey.