If you are considering to become a full-time cryptocurrency trader it is important to know the rules of the game by heart. For the simple reason that keeping these rules in mind can reduce your chances of losing money. Remember, it is never too late to start cryptocurrency trading.
Never invest more than what you can afford to loseThe number one rule when it comes to trading. Due to the volatility of the cryptocurrency market, it is important not to invest more than what you can afford to lose.
Do Your Own ResearchConducting your own research before buying a coin is very important. Free crypto signals on platforms like Telegram promote a coin and tell members to buy as soon as possible. This is a popular tactic that is used to hype a coin to push up the price for whales or early investors to sell. It leaves you with a coin that you probably paid too much for. You may have to wait a while for the trade to become profitable. Learn to ignore rumours and fud.
However, platforms like Reddit, Telegram and Twitter are great to stay up to date on news developments and to engage with others in the crypto space.
Look out for trading opportunitiesHow does one know if the price of a particular cryptocurrency is likely to go up or not? You look at buying volume. Volume equals opportunities. These opportunities may be in the form of entering a long or short position, but presents an opportunity non the less. There are various resources one can use to detect volume. One such is called WhaleBot and is free to join on Telegram. It is a bot that picks up on high buying volume and sends out alerts.
Don’t be greedyIf not kept under control, emotions can get the better of you when trading. Afterall, patience is a virtue. It is so easy to FOMO into buying or selling too early or too late. To prevent loss of profit, one can trade using a stop-loss. Stop-losses are a trader’s best friend! You can set a price at which you wish to sell a coin. Due to the volatile nature of cryptocurrencies, it may seem as if a coin is performing really well and the next minute it starts dumping. In order to protect your profits and even capital, a stop-loss will trigger at a set price and sell the coin for you. Little profit is better than no profit.
Implement a money management systemSome traders think that cryptocurrency trading is a get-rich-quick scheme. It may be true during an epic bull market, but trading is general is not that simple. Therefore, implementing a money management system is of pivotal importance. Set a realistic goal for expected returns. It could be anything between 5 – 20% per trade. Set your sell price and bank your profits. If the price of the coin goes up some more, its no big deal but just think if the price went down and you didn’t make any profit.
Know your trading toolsWhen starting out as a cryptocurrency trader, it is important to learn how to use technical indicators. One tool stands out, the Fear and Greed Index. The Index shows the overall market sentiment, whether the market is greedy or fearful. So, when the market is greedy, it is wise to take profits and when the market is fearful, it may be a good opportunity to buy. As part of your research, be sure to learn as much as you can about technical indicators.
In conclusion, being a cryptocurrency trader is a lot of fun. The crypto space is truly a fascinating and innovative industry. The community is very forthcoming with information and being of assistance. It is an open source industry after all. Take it slow in the beginning in order to gain experience and confidence and be sure to stick to reputable and secure cryptocurrency exchanges like AltCoinTrader.