EVERYTHING YOU NEED TO KNOW TO BE SUCCESSFUL AS A CRYPTO TRADER
Cryptocurrency trading is like any other form of trading. You buy when prices are low and sell when they go high. In cryptocurrency, the buying and selling is done on a platform called an exchange where you can buy a cryptocurrency using dollars or sell it to get dollars. In theory, it sounds like it something that everyone can without any effort, but that’s not the case in real life. Unless you want to make money by luck (which is less likely to happen), earning as cryptocurrency trader will require you to do some homework. However, trading cryptocurrency is not rocket science or something that is only done by geniuses. It simply needs some amount of effort and the willingness to learn daily. If you are a trader or maybe you are someone who wants to start trading cryptocurrencies, this article is for you.
I am going to share with you everything you need to know to be successful as far as trading cryptocurrencies is concerned. I will try to explain with less technical language so that everyone can understand, including absolute beginners.
Tips #1: Only invest what you can afford to lose
Trading is some kind of calculated gambling, and losing is part of the game. If the amount of money you want to invest is an amount you can’t afford to lose, its better you don’t get into cryptocurrency trading. This is not meant to scare you but the reality that you have to live with. Cryptocurrency values are so volatile, and in a matter of minutes, the value of a coin can drop by a huge percentage. They are not like the usual currencies where the fluctuation can rarely reach 5% in a day.
Tip #2: Do your homework before you invest
To be successful with crypto trading, you need to be ready to read the news that is related to cryptocurrencies. It’s from this news and research that you will be able to judge whether a coin is going to increase in value or not. Doing research and analysis before investing is what they call taking calculated risks.
Tip #3: Learn to control your emotions
While doing crypto trading, you will, at some point, be clouded with emotions of greed and fear. For instance; After doing your analysis and research and finding out that a particular coin’s value is most likely to increase, fear my cloud your mind, and you end up not investing. On the other hand, you may do an analysis that predicts a coin’s value is going to experience a drop in price, but the emotion of greed may make you feel like the value will increase hence to earn you more money and at the end of the day you end up not selling. In crypto trading, you only need to trust your research and analysis, not your emotions.
Tip #4: Don’t invest in only one coin
For the case of beginners, it is fine to start by investing in the cryptocurrency you understand the most. But as you get more experience in trading, you will realize that investing in one coin is not a good strategy. This is because if the coin you’ve invested in gets destabilized by uncertainties like a fork, your business will most likely be on a standstill. So, the only way out is choosing a couple of coins that have the potential of gaining value (after doing research and analysis) and invest in those. The most important thing here is to keep track of the factors that are likely to affect the value of the coins you will have chosen.
Tip #5: Invest with both the short term and long-term perspectives
While investing in cryptocurrency, you need to categorize coins that you can invest in the short term and those you will invest in the medium and long term. However, you need to base these decisions on researched data to avoid making the wrong choice. While researching, you need to identify coins that have the potential to rise in the future and categorize those as long-term investments. More established coins like Bitcoin and Ethereum would best suit to be in short term category since their rates are not likely to change by a significant percentage like those of newer coins.
Tip #6: Set a loss limit
A loss limit is a percentage of the original investment below which you decide to sell the coin no matter the loss. This will mainly apply for coins that you chose to invest in on a short-term basis. It will help also help you avoid getting into a situation where you lose almost everything. The hurdle here will be determining the loss limit. This will require you to do research and studying what has been happening in the past regarding the coins you have invested in. You can always change this value after some time especially when the dynamics in the market change
Tip #7: Be part of other traders’ forums
As a trader, it is crucial to always interact with like-minded people to share knowledge. Being in a crypto traders’ forum will allow you always to be informed about the happenings in the world of cryptocurrencies. This information can be of use as far as making your investment choices is concerned. However, I recommend that you should not take all the information on these platforms as the gospel truth since there are a lot of so-called gurus on these forums and the internet in general that, at times, give misleading information. But you can instead choose to use the information obtained from these platforms to guide your investment research.
CONCLUSION
Cryptocurrency trading is still a very fertile venture to earn you some money online. Many have gained millions of dollars trading, and likewise, many have lost. So, you need to enter the game knowing that if you don’t do your calculations right, you will most likely lose money. For those that are just starting, it is crucial that you start trading with amounts that you can afford to lose so that as you get more experience trading, you can then invest more. For more reliable information about crypto trading, you should always check out this blog.
