For many years now, online brokers through their trading platforms have provided access to the financial markets allowing retail investors to trade different kinds of assets. Now, some online brokers also offer cryptocurrency trading. In this article, discover basic tips for successfully trading cryptocurrencies.
Start with a small investment
One of the first rules for any form of trading or investing is never to invest more than what you can afford to lose. The market is exceptionally volatile, which means that large price fluctuations can occur within days, hours and sometimes even minutes.
It is safer to invest a tiny percentage of your money when you are starting out.
Be knowledgeable and informed
Know that cryptocurrency trading requires a solid knowledge of the general financial and economic culture. You also need to know and practice many techniques related to trading, such as technical analysis, graphical analysis. You don’t have to get a university degree to grasp the technical analysis of the market. The crypto brokers mostly offer you these kinds of tools and the free educational material to learn how to read the charts.
Don’t go against trends
In a bull market, the rule says: buy the declines and in a bear market, sell the rebounds.
It is foolish in currency trading to think that the market is wrong.
As for cryptocurrencies, if you think you can anticipate a trend before placing a cryptocurrency on the market, you can participate in its ICO or Initial Coin Offering. They allow you to invest at a preferential price in the cryptocurrency you believe before its launch.
Let the profits run and quickly cut losses
If it is wise not to take the winnings too quickly on a winning trade, do not delay too much either. This is the best way to lose everything! Use “take profit” orders and to limit losses using stop orders. Better yet, use trailing stop orders to protect your profits or reduce a potential loss.
Implement strict money management rules
It is essential to set goals for profit and loss. And respect them!
Keep a certain distance from your trading and especially from your earnings. Do not think that you are gifted because the market is always right.
Stay on the ground with expectations
Even if testing your strategy with a virtual account is recommended, you should not assume that your performance on this account will necessarily represent your performance with a real account.
Don’t lose your sense of the value of money, either. Don’t get caught up in the game, to the detriment of your private or professional life. Do not spend 12 hours with your eyes riveted on your screen following the courses by chaining the orders.
And be careful; keeping one foot in the real world is not necessarily easy if the currency you are trading is virtual! But it is possible. Rely on tangible evidence and concrete information to know which cryptocurrency to invest in. Stay informed on cryptocurrency websites, read reviews and follow the news etc.
Prepare the trading plan before entering the market
By acting this way will prevent you from getting lost and giving in to euphoria or panic. This is all the more true in the cryptocurrency market where volatility is such that you are sure to be ruined without a well-defined trading plan.
Also, only invest money you are prepared to lose and never your precautionary savings.
Stay simple in your strategy
Whether it is currency or cryptocurrency trading, an effective strategy remains a simple strategy, which you can explain in a few sentences based on concrete, precise and factual elements and not on fanciful beliefs or anticipations.