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The cryptocurrency market keeps expanding – with a market of over $1 trillion and over $112 billion traded in crypto every day. With today’s advancements in technology, online trading is becoming more and more popular, and even beginners enter the market from the comfort of their homes.
We have to agree that despite the complexities of blockchain technologies, cryptocurrency trading is not rocket science. And here are five tips to help you tame the market and start like a pro.
Tip 1: Research the Market
Perhaps you’ve heard the phrase “Do your due diligence!” Frankly, this is more than a cliche! The crypto landscape keeps changing, and one needs a lot of time and dedication to stay up to date with the latest crypto news, market data, and technical analysis insights. Here we should note that technical and fundamental analyses are the two main approaches used for forecasting the market. While predicting the market is almost impossible due to its volatility, historical data, support-resistance levels, trading signals, market sentiment and more are often used to analyse possible price changes.
If you don’t feel confident enough, keep in mind that there are different crypto-related platforms, such as bitalpha-ai.pro, that can help you connect with a reliable broker or service provider. Again, always do your due diligence before using any trading platform and ensure the asset of your choice is regulated in your country!
Tip 2: Explore Your Emotions
While we are not here to give you a pop phycology lecture, we should mention something crucial: controlling your emotions while trading is the key to success. Among all the data, technologies and regulations, we often forget the human factor. However, even the big fish in the industry will agree that having positive trading habits is vital. As Mark Douglas said, “If you can learn to create a state of mind that’s not affected by the market’s behaviour, the struggle will cease to exist.”
Focus on the importance of trading psychology. Never allow greed, fear of missing out or euphoria to control your decisions. Better leave a trade and take a break before you continue. Note that crypto trading robots can be beneficial in eliminating human emotions and errors. They are programmes that execute trades based on given parameters. That said, such tools might be unsuitable for beginner traders.
Tip 3: Set Adequate Financial Goals
Even if you have the best trading tools and services at your disposal, even if you have positive trading habits, nothing is possible without adequate financial planning. Whether you prefer short-term trading or hodling, you should be able to assess your financial situation, retirement plans, and vulnerability.
The current health and economic crisis showed us that unexpected events cannot be predicted or changed, so when setting goals, be prepared to reassess your goals and adapt according to the situation. Annual planning might be needed to help archive more distant goals. After all, financial management is an ongoing process that also involves your significant ones, so be flexible. If needed, consult a licensed professional to help you get started.
“If your goal is to become financially secure, you’ll likely attain it, but if your motive is to make money to spend money on a good life, you’re never gonna make it.” – Thomas J. Stanley.
Tip 4: Diversify Your Portfolio
Even the biggest Bitcoin enthusiasts will agree that portfolio diversification is crucial. The best part about the crypto sector is that there are thousands of coins, tokens, and projects, so one can choose any asset to suit their financial goals. From Ethereum to Cardano to Uniswap, you pick. Just remember to invest only money you can afford to lose.
That said, many experts recommend investing only around 5% in crypto and spreading your investments. Consider forex trading, stocks, commodities, and more. This way, your exposure to risks will be minimised. As the saying goes, “Never put all your eggs in one basket.”
Tip 5: Accept Losses
In the end, even if you have a diversified portfolio, do not forget that losses are part of the game. You should accept them and see them as a learning experience to help you implement stop-loss orders and improve your trading skills. If you’ve learned to control your emotions, then dealing with losses will be even easier.
Here we should mention that you should not focus so much on your win-loss ratio, as there is no one-size-fits-all in trading. For example, long-term traders may have a low ratio but more significant returns, while scalpers aim for small movements. As Peter Lynch put it, “You can lose money very fast, in two months, but you very rarely make money very fast in the stock market. When I look back, my great stocks took a long time to work out.”
Trading Cryptocurrency Tips: Conclusion
Trading cryptocurrency is, without a doubt, a lucrative financial venture. The numbers prove it! Believe it or not, according to a recent study, there are more than 50 million crypto traders. You can also join the sector and find like-minded people. No, don’t worry! Crypto trading is not rocket science. Those who know how to 1) do their research; 2) control their emotions; 3) set reasonable financial goals; 4) diversify their portfolios; & 5) accept losses can easily tame the volatility of the market.
Still, remember that cryptocurrency investing is complex and may not be suitable for all investors. You risk losing your entire capital!
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