Top 10 Rules from Professional Traders to Newbies in the Field
If you just started an adventure with crypto trading, you might need some guidance. Keep reading to discover the top 10 rules that professional traders always follow.
Be Sure Why You Want to Enter Each Trade
To succeed in cryptocurrency trade, you have to have a clear purpose in getting each trade. You have to remember that each trade is a zero-sum game. That means that someone wins, and someone loses.
Like any other market, the cryptocurrency world is full of small fish and sharks. The latter just wait for a small, avoidable mistake for you to make so they can get your money. You should always be aware of that.Sometimes it’s better to not gain anything than rush through and lose a big amount. There are going to be days or even prolonged periods when you do better by keeping off some trades.
Set Your Profit Targets
Every trade you invest in comes with a risk. You have to know when to get out of the deal. Sometimes you might not even make any profit, but you are also not going to lose any money.
To cut your potential losses, set up a stop loss level for each trade. Knowing when to let go is a very useful skill that most traders don’t have, and this is why they don’t succeed.
The recommended stop loss is at the cost of your coin. This way, you can be sure that at least you end up at the same point as you were, without losing money.
Do the same with your profit level: set the financial goal and sell the stock when you reach it. Don’t be too greedy, especially when the bet is not certain. Otherwise, you can end up with nothing.
Don’t Be Afraid of the Fear of Missing Out
The fear of missing out, also known as FOMO, is something that often bothers traders and makes them undertake risky investments. Rarely it happens that people get a tremendous profit in no time. Who wouldn’t want to be in their place?
While making a decision, be aware of the situation. Sometimes the sharks buy coins for very cheap and provoke others to invest more money. When that happens, usually an oversupply appears, and the value drastically drops.
Be Aware of the Risk
As a wise trader, you shouldn’t run directly into massive profits. Instead, keep gathering smaller but sure profits. Try to invest less in those trades that are less liquid, as, in case of a drop, you might end up with nothing.
Sometimes risking is good, but as a beginner, you should better stick to more certain deals.Check Bitcoin Values
The price of most altcoins might depend on the market price of Bitcoin. It is a volatile currency. That means that when the value of Bitcoin increases, the altcoins value decreases, and vice versa.
Don’t Just Buy Because of Low Prices
Some people decide to buy a coin just because it’s cheap. Your decision shouldn’t be made based on affordability but rather be based on the market cap.
Cryptocurrencies, similarly to other stocks, are gauged by their market caps. Use the market cap to decide if the coin is worth buying.