5 Rules Every New Crypto Trader Should Obey
The crypto market is a crazy place, but it's also incredibly exciting. With the massive growth of cryptocurrency and blockchain technology in 2021, more and more people are becoming interested in investing in this emerging space.
However, one of the main challenges many new traders face is that there's not much reliable information on how to get started in trading cryptocurrencies.
If you're looking for some basic rules to abide by before trading into cryptocurrency, here are five things every new trader should do.
Practice With A Stimulated Account
Cryptocurrency trading is a new and exciting field that has been rapidly evolving over the last few years. New traders have to deal with many complexities that can make it difficult for them to succeed. However, many tools and resources are available for those who want to learn more about how crypto markets work.
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One of these tools is a simulated account called practice or play money account, where you can trade without risking any real money. Practice accounts allow you to discover your strengths and weaknesses and develop strategies before using real funds on an exchange.
Avoid Investing Large Sums Of Money
The cryptocurrency market is very volatile, meaning that prices can change drastically in a short period of time. If you are new to this market and have never traded before, it's important to be careful when investing large sums of money.
Here's why: if the price drops on your investment after you've bought a coin, then there is no way for you to sell at a profit or break even. You will essentially be stuck with a loss until the price rises again, which could take weeks or months.
Don’t Buy And Sell On Extremes
We have all heard of the terms ‘buy low’ and ‘sell high’, but that is not always the best strategy when it comes to cryptocurrency trading. When holding for a long time, there will be an increase in price at some point, which will make your investment worth more than what you bought it for. However, if you are day trading or even swing trading these coins on exchanges like Bittrex or Poloniex, never do so on extremes.
Prioritize Small Gains While Starting Out
Crypto traders who are just starting out in the space should prioritize small gains and losses. When starting in crypto trading, it's important to work on your trading success rate and lower your risk as much as possible. This is because the crypto market is still very volatile and unpredictable, which means that even if you're careful about what trades you take, there will be times where things might not go well for you.
The best way to minimize these risks is by making sure that when bad things happen (and they will), the impact isn't too big or lasting. This means not taking any trades with a potential loss of more than 3% of your portfolio value at one time and never risking more than 5% of your total holding per trade.
Use Technical Analysis
Every day, new traders are entering the cryptocurrency markets. For some, it's their first time trading; for others, they are veterans who have traded other assets before. Regardless of where you're coming from, you need to understand that crypto is different from traditional asset classes like stocks or forex.
With crypto, there are many more variables that can affect your trades and profits - things like forks, announcements by major players in the industry, regulatory changes in key jurisdictions worldwide, etc. This is why all new traders should use technical analysis as part of their trading strategy.
Technical analysis will help identify trends and patterns, which allow you to make better-informed decisions about what trades to take and when to enter/exit them.
Bottom Line
The cryptocurrency market is an exciting new frontier with money-making potential. But, like any other investment opportunity, it comes with many risks and can be difficult to navigate for those who are not familiar with crypto trading. If you want to step into the world of crypto and start trading today, visit bitcoin-up.live.
About The Authors
William Willis - William Willis is a freelance writer and social media manager who specializes in assisting finance professionals and Fintech entrepreneurs in growing their online audience and attracting more paying customers. William worked as a bank teller and virtual assistant for financial firms in the United States and the United Kingdom for six years before beginning her writing career. William is a strong force in the workplace, inspiring others to work hard and excel with his optimistic attitude and boundless energy. He enjoys hiking, crocheting, and playing video games with his children in his spare time.