Cryptocurrency trading has evolved from a little spark to an inferno over the past decade, sweeping through the media and gaining a lot of institutional attention.
The nature of investing is somewhat similar to the traditional stocks or other currencies. It pretty much works the same way — buy low and sell high. But the main thing is that it remains unregulated by any government or regulatory body.
There have been many success stories from the crypto world over the years, which have inspired even more public interest in these digital assets. However, there are also many told and untold failure stories, mostly resulting from ignorance. Cryptocurrencies are really volatile assets, so you wouldn’t want to be on the wrong side in your trades.
Before you go ahead to pop your cherry in crypto trading, here are a few tips you should keep in mind if you want to become (and stay) successful and profitable in the crypto space:
1. Start Small, You Have Time
The first thing you have to do when you start is to start small. Don’t go all in trying to get rich overnight. Take your time, learn to manage your positions with little at stake. The markets are not going anywhere, believe me. You won’t be late as long as you spend time to gain mastery More so, you can always ladder your holdings of an asset by adding to your positions as you grow. Bottom line is — don’t invest more than you can afford to lose.
2. Have A Clear Trading Objective
Having clarity in your head helps you in deciding how you will trade. You want to know if you’re coming in for short-term profits or for the long run (HODLERS), and your trading objective will let you know that. Don’t simply jump in because you’re excited, take your time and write down a trading plan that gives you enough clarity.
3. Stay Informed
The need for traders and investors to be on top of information about the markets cannot be overemphasized. Information moves the markets in the long run. You need to be updated on price movements and current trends in the markets if you want to be successful. You don’t want to arrive late to the party and end up catching falling knives. Fortunately, Afriupdate News has got you covered on current events in the crypto, and even stock markets.
3. Always Use A Stop-Loss
A stop-loss is an extremely important requirement in any trade you take. You need to realize that you are not in control of the markets and firmly decide how much you can stand to lose on your positions, then add that as a stop-loss to your orders. That way, you not only protect your capital from potential losses, but you also keep your emotions in check as you already know the worst that could happen is bearable for you.
4. Be Careful With Margin Trading
It’s no secret that many brokers and exchanges offer margin trading to their customers these days (in simplest terms, margin trading is when your broker loans you money to trade), but you need to be really careful because it’s really not free money. The brokers and exchanges are also trying to make some profit from you, and they certainly will once you take their margin trading offer. It needs to be emphasized that margin is borrowed money so the investor or trader should treat it as if it is their own money. Trading and investing with someone else’s money could deceive novice individuals into thinking they can take unnecessary risks since the money isn’t theirs. Anyone that can’t respect this basic principle may want to think twice about borrowing funds.
5. Learn Technical Analysis (TA)
It is very important to understand technical analysis if you intend to really do well as a crypto trader. Technical analysis will help you make better decisions on when to buy and sell your crypto assets once you get a hang of it.
6. Protect Yourself
Using digital currencies adds complexity to how you handle your money and protect yourself. It’s important to ensure you have robust cybersecurity features in place, operating on a VPN and avoiding public networks while trading. Use an alternative email address for your trading accounts that offers two-factor authentication and isn’t used for anything else. Also, use an encrypted password rather than the same password you use for Netflix, Gmail, and Facebook.
You also need to protect yourself by making your cryptocurrency foolproof so that you don’t accidentally lose it to cyberspace if your computer crashes. Finally, protect yourself from scammers by finding industry recommendations and advisors you can trust.
7. Ignore The Hype
One of the most valuable pieces of advice for cryptocurrency beginners is to block out the noise and ignore the hype. Yes, trading cryptocurrency can be incredibly profitable and rewarding. It’s an exciting opportunity that’s decentralized and works outside the traditional currency trading platforms and protocols.
However, as with any form of trading, success with cryptocurrency takes time, investment, dedication to expanding your knowledge, and more than a bit of luck. As you enter this realm of investing and trading, you’ll come across a lot of naysayers who tell you you’re wasting your money. You’ll also find a lot of people with the secret formula to become a billionaire.
So what do you do? Dedicate yourself to education from reliable, unbiased sources. Take some time to evaluate the legitimacy of what you hear and read, then make decisions for yourself.
READ ALSO: Crypto Trading, Types And Terms Explained For Beginners
8. Ensure You Diversify
While it is true that trading cryptocurrencies can make you rich within a shortened time gap, the opposite is equally true. It is important that you don’t leave all your earnings concentrated in cryptos if you intend to keep your money for long. Take a considerable volume of your profits to less volatile instruments. Life is short but can feel really long when you lose all your money in a short time.
Finally, if you want to last as a cryptocurrency trader, or in anything at all, take the time to gain adequate knowledge. The rewards will come more consistently once you really understand what you’re doing and aren’t just taking blind shots
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