5 basic rules for successful cryptocurrency trading
Before you start trading Bitcoin or other cryptocurrencies , you should read publicly available literature for traders and information on the network. Basic knowledge of exchanges will be enough at first. However, more thorough research of the coin itself should be done, as the price can depend on traceable factors such as demand, reputation. It's very important to follow news and any patterns in price movements to be able to tell the right time to a
The choice of a niche depends on how adventurous you are, the time you are willing to invest and the strategy you choose. There are several types of trading to consider.
Day trading means selling and trading (usually significant amounts) within one trading day. End-of-day trading implies making decisions right before the markets close (or shortly after).
A third strategy is scalping, which is when a trader uses small price fluctuations to make a profit by reselling very fast.
Where to start trading? For example, Currency.com – the first fully regulated exchange, which offers 2000+ tokens and no hidden fees! It also offers a demo account, 24/7 support, and instant price alerts.
Another exchange is Coinbase, with 50 cryptocurrencies and direct USD–crypto investments.
A third service is Binance, which can be used for margin and futures trading. It has a mere 0.1% fee on all transactions. Binance provides real-time market data and is perfect for larger investments and companies.
Using the right software
It is crucial to choose a trading and analytical system, as it can give important technical details and you can learn why the price of a coin moves at a certain time.
Cluster ana(Bitcoin/Ethereum) and influence the market. It provides six clusters that encompass cryplysis helps sort out the market by coins that feature similar characteristics in price fluctuations tocurrencies with a lower trading volume. It is recommended by many advanced traders because it displays the price, volume and direction of the executed trades – buying or selling
It is important to choose a strategy for successful trading and not rely only on your gut feelings or emotions.
There are several types of strategies to employ. You already know about scalping; automated trading bots is another very popular option these days. These are developed to bring users the maximum profit possible through analysing the market data and acting according to predefined algorithms.
You can also consider arbitrage trading — buying and selling digital assets when it is the most beneficial for you (in other words, when the price is low and high).
There are some stages of the trading system that you should pay attention to in order to know when to invest:
● entering and exiting the position (meaning opening and closing a trade);
● determining the size of the transaction; and
● limiting losses and protecting profits.
The most common recommendation of trading experts is to invest only what you can afford to lose. However, newbies often neglect it, since they think that the more they invest, the higher the returns they will get. But this is true only in some cases, and luck plays a key role. It is smarter to be technically educated, and to follow patterns and charts instead of guessing.
Determine the limits for you to know when it is better to stop trading. Don't go all in if you don't have the capital. In practice across the world, there is a rule that for each transaction, the risk should be no more than 1%–2% of the budget. The total losses (all open trades) should not exceed 5%–6% of your account.
For example, if you have €1,000, don't risk more than €10–€20, and the total loss should be less than €50–€60. In short, carefully plan ahead so that you stay within the acceptable risk boundaries.
When trading stocks or cryptocurrencies, it is crucial to ignore your emotions. The market is volatile and prone to sudden changes. Stay calm and make informed and logical decisions. Don't panic, and never double your investment if you are losing. Making small losses is part of every occupation, not just trading.
In some cases, it is better to refrain from trading:
● if you are under stress;
● in a state of physical exhaustion;
● immediately after losing a trade;
● immediately after making a very profitable trade; or
● immediately after the news regarding your cryptocurrency/investment.
As a trader, you must have a proper trading strategy and use a reliable exchange. Figure out your goals and find the right software to help you do the job. Finally, invest your allocated funds and remember to keep a cool head when trading.