Seven essential tips for trading cryptocurrencies
The recent rise in the bitcoin price, which accompanied its rise, was accompanied by the rise of the crypto market in general from various digital currencies, which affected the total market value that reached more than $ 2 trillion.
The recent rise of the cryptocurrency market has made many people want to enter this market and double investments in this volatile arena.
Here are some tips that will increase your safety rules and avoid making costly mistakes.
First of all, you need to understand that profitable trading requires a lot of attention, follow-up, and commitment.
Trading in the crypto market is not gambling and it should not be.
Other than the following seven tips, make sure you pay close attention to market forces of demand and supply so that you know when this or that tip applies.
- Tip # 1: Master patience and don't try to get into all trades
This advice may be clear and does not need much detail, but it is very important and deserves to be at the top of the list of these tips.
Determine what your goal in trading is, is it day trading, speculation, or investment. Before you start in this market, you must be well defined for your goal.
Trading cryptocurrencies without a goal or planning is a zero-sum game.
Realize that for every win, there is a corresponding loss.
They are waiting for innocent merchants like you and me to make one mistake that puts our money in their hands due to avoidable mistakes.
Whether you are a day trader or an investor, it is sometimes better not to win anything on a particular trade than to run into losses.
There are time periods in the market that are best seen only.
And patience and patience with your digital currency, especially if it meets basic and technical conditions.
Someone wins, someone else loses.
The cryptocurrency market is controlled by the big "whales".
Can you guess what these whales do best?
They have patience.
- Tip # 2: Set profit targets and use a stop loss
Every trade we enter requires that we know when to exit, whether or not we are making a profit.
Establishing a clear stop-loss level can help you reduce your losses.
Although easy, it is a very rare skill for most traders.
Choosing a stop loss is not an activity and random movement and perhaps the most important thing to note about it is that it stops the physical loss of the digital currency from falling further and stops the emotional attachment to the currency as well.
The same applies to profit levels. If you are targeting to exit the market after reaching a certain minimum profit, then stick to that, do not greed, and do not be greedy.
- Tip # 3: Avoid feelings of fear of missing out on FOMO
From sentiment is one of the most well-known reasons why many traders on the crypto market fail.
Many traders are tempted to see a double-digit cryptocurrency - while their digital currency is static - to try to catch up.
So, be wary. Beware of chasing after the green candles that are exciting and screaming in the face of those who did not follow them. What are you waiting for?
At this stage, and if you respond to these feelings and temptations, the whales that we mentioned earlier will smile and watch you buy the currencies that they previously bought at very low prices.
Guess the next move?
Yes, it is the cruel move that hangs many traders in the tops that may be very difficult to repeat, at least after some time, and maybe a long time.
- Tip # 4: Manage your risk
Young fish eat a lot at different times and places.
Whereas, large whales eat these small fish only once, with one calculated movement.
This is especially true for market profits when trading cryptocurrencies.
Prudent traders don't run in the direction of massive profits which are also risky.
Rather, they prefer to stay in their places until a near-certain and well-thought-out bargain is revealed, and then they attack it.
- Tip # 5: The major digital currencies create volatile market conditions
The prices of most altcoins are based on the bitcoin price.
Meaning, when the value of Bitcoin rises, the value of the alternative digital currencies decreases, and vice versa.
The market is usually murky when the bitcoin price is volatile, which prevents most traders from gaining a clear understanding of what is going on in the market.
At this point, it is recommended that you either have close trade targets or simply not trade at all.
- Tip # 6: Don't just buy because the price is low
Most beginners make a common mistake, which is to buy a cryptocurrency because it appears to have a low price or what they consider affordable.
For example, someone would go for Dogecoin instead of Ethereum just because Dogecoin is much cheaper.
Although the dog coin did it today and it increased many times what it was a few days ago
The decision to invest in a digital currency should not have a lot to do with the unit price of it, but must take into account other technical and basic aspects, for example, Ethereum is relied upon to be a strong presence in Web 3.0, smart contracts and decentralized financing, while the Dogecoin is a speculative currency that does not have a clear project. Except that she is just kidding, and Elon Musk supports her.
- Tip # 7. Diversify, diversify and diversify!
Investing and trading in cryptocurrencies is unpredictable.
Even those that appear to offer unlimited positive returns can collapse under certain economic conditions.
In short, cryptocurrencies cannot be predicted.
You can lose everything you invest in cryptocurrencies in no time.
So, diversification is the best way to bypass this problem.
As mentioned earlier, the value of all other digital currencies is affected by the value of Bitcoin against the dollar.
When Bitcoin loses its value against the dollar, all other currencies lose their value and vice versa.
Therefore, it is very important to diversify the digital wallet from large currencies in terms of market value to small currencies, provided that it is well studied.
These were some of the most important tips to consider when trading cryptocurrencies.