Cryptocurrency trading is a popular term, and many wonder what it means. Cryptocurrency trading is an act of speculating or predicting specific Cryptocurrency coins or tokens' price movements through an exchange or a CFD trading account (i.e., by buying or selling these digital assets on trading platforms.)
In this write-up, you will learn about some essential tips necessary for anyone who intends to start Cryptocurrency trading or investment, but before we dive in, who is a pro on Cryptocurrency trading and investing?
A Crypto-trader or investor is anyone who profits from either short-term, medium-term, or long-term fluctuations in the market price of different types of Cryptocurrencies or digital assets. However, Cryptocurrency trading and investing can also be for short or medium-term; they are usually known to favor long-term holding, especially the private sale or crowd sale investors in Cryptocurrency projects.
Ultimately these are groups of people whose end goal is to profit by buying when prices are low and selling when they are high. Do you link articles about Cryptocurrency trading and investing? Stay with Tycoon Insights to the end of this article.
Rules help you to make money on Crypto
Trading or investing in Cryptocurrency can be lucrative because many people have made mind-boggling fortunes doing it; however, it is not without its associated risks.
There are also different types of Crypto Market Trading, such as spot markets, futures markets, margin, and perpetual tradings. It's not the topic for today. We will talk about all these in another article in the future, and that is why you need to visit Tycoon Insights regularly to learn more about various Blockchain news and trends.
Basic Cryptocurrency Rules for Cryptocurrency trading and investing
Justify your trade
It is a well-known fact that most traders do not have specific reasons for taking a particular trade. They do not have any signals and have not seen any pattern or familiar movements in the market, yet they jump into a trade. This is one of the fastest ways to lose money as a trader. Irrespective of your trading techniques or strategy, knowing and understanding the motive and reason for going into a particular trade or investment cannot be over-emphasized. You don't have to take a trade if you cannot see anything.
Develop a strategy on Cryptocurrency trading and investing
This is another important rule to follow. Every trader must patiently learn about technical, fundamental analysis or the "pumpamentals." There are different strategies used for trading in forex, and most of the time, these strategies are also applicable to Crypto-trading. Having a good knowledge of Cryptocurrency is not enough for you to jump into Crypto-trading. You must understand that this market is highly volatile and; in addition to that, you must be able to identify your favorite trading assets or coins, their market behaviors, and correlations. (here)
There is also "Trading Psychology," which is the emotional aspect of the traders' or investors' decision-making process. It explains why some trading decisions appear more reasonable and rational than others. Furthermore, everyone who intends to be a Crypto-trader needs to sit down and ask this.
What kind of Cryptocurrency trading and investing do you like?
First, you have to understand that there are Day Traders and Swing Traders, and within these periods, they can use different approaches or strategies. For instance, day-trading could be trading news, breakouts, pullbacks, momentum, or scalping, while for swing-trading, it could be the use of bull or bear strategy. In addition, some traders can stay in a trade for days, weeks, or even months. There are thousands of professional traders from different parts of the world on our Tycoon Copytrading platform, making it easy to adopt a profitable strategy just by following and Copy Trading any one of them.
Learn risk management
Learning risk management and safety rules or protocols apply to any business or investment; because this determines the overall outcome of your business decisions or trades. By practicing risk management, you can assume or estimate if you will come out profitable or not. It gives you an informed decision if the transaction is worth taking or not. You can start from this rule to learn about Cryptocurrency trading and investing. It's the gold standard.
- Determine the amount you are willing to risk. Every holder in Cryptocurrency trading and investing must understand that investment by itself is risky, not to talk of the highly volatile Crypto-markets. It is always advisable not to risk more than one is willing to lose. Any trader must determine what amount he/she can comfortably lose that will not affect his/her emotional and mental health.
- Set profit and stop-loss targets - Setting a profit and stop-loss target is also vital to making a successful trade. By placing your profit and stop-loss targets, you indirectly automate your trade or give direct instructions regarding your trades. By doing this, you are telling the system to take you out of a trade-in profit, if the price of a specific token or coin goes up to a particular price and vice-versa (for stop-loss, it will take you out with a calculated or expected loss)
Avoid using too many indicators
There are countless numbers like the moving average, Bollinger Bands, the Ichimoku Cloud. Fibonacci retracement levels, the directional movement index, the parabolic SAR, the relative strength index, and more. Indicators predict the direction of movement for an asset or instrument, either upwards or downwards. I believe you will agree that many new traders rely so much on it, and when you look at their screen, it's usually clogged with indicators.
Truthfully, they don't guarantee profits most of the time and might even lag or predict wrong movements. There is still a need to understand technical and fundamental analysis before using them. In practice, a seasoned trader would only need not more than 1-2 trading indicators to carry out a profitable trade. Learn to use the ones that have been tested over time, hence trustworthy and dependable.
Control your greed
Whenever you are in profit while taking a trade, don't shy away from making a profit. Don't allow pride and greediness to destroy your profitable positions. It would be best if you never regretted taking profits no matter how small it is, even though the trade continues to progress in your predicted trend. You can always restrategize.
We will discuss margin Cryptocurrency trading and investing in the future, but until then, please avoid over-leveraging whenever you are encouraged to try margin trading. Instead, lower your leverage, and my recommendation would be that you don't use more than a 1:5 leverage.
Don't hold losing positions on Cryptocurrency trading and investing
It means you must learn to cut your losses. If you are in a Binance trade and that trade is against you, consider selling all or half — don't let your small losses turn into big ones; don't be too arrogant. Profitable trading comes with years of experience, but you can rely on our experienced traders on Tycoon.io just by following them, and they make the decisions for you.
Diversify portfolio and keep your investments
Although El Salvador has fully adopted Bitcoin and other Cryptocurrencies as a legal tender, Crypto is still in its early stages. It could take decades for it to be widely accepted and backed by most governments or institutions. However, you can buy Crypto and spread your money across other non-Crypto assets. In other words, never put everything you own into one financial product (i.e., it's good to diversify one's portfolio). Do your research (DYOR) and due diligence. Once that is established, and you are confident in that Crypto project, its fundamentals, and the team behind it, please do well to HODL it for a long time. You can make small purchases until you've acquired enough knowledge and experience with the asset. Remember, those who sold bitcoin at $10,000 or $20,000 were dazed when its price suddenly skyrocketed towards $69,000.
Keep betting on your winners
If you are doing very well on Cryptocurrency trading and investing, make sure you dig deeper to understand their behaviors and other correlations so you can maximize your profit. There is also an effective strategy known as the "Dollar-cost Average." You can continue to increase your position at every significant retracement once you are confident in the asset or coin.
Be cautious with influencers and scam projects
Most beginners ask one of the most common questions: "How much money can I make Cryptocurrency trading or investing?" The answer is that you can make a lot. And also there is no known limit to how profitable one can be while trading, but it takes some skills and discipline. On the other hand, one can also lose a lot of money without due diligence.
The worst part is that the so-called influencers who give misleading advice on Youtube or other social media platforms and fill with pump-and-dump manipulators Crypto industry. They lure you into buying counterfeit currencies or by dumping their bags on your head. Don't FOMO (i.e., fear of missing out) into any buying project without doing your research. The Crypto market is pure speculation like other traditional assets, but you are most likely to avoid scams or buy the top as long as you do quality analysis and research.
Stay informed to join Cryptocurrency trading and investing
Always do well to keep informed with current trends and happenings with Cryptocurrencies and the Blockchain. There are so many platforms where you can follow up-to-date Crypto news and information, but most do not do in-depth research about the topics or news they are addressing.
That is why you need to stay in touch with Tycoon Insights. If you are still a newbie but interested in trading, you can rely on the Tycoon (TYC) project, the Best Social Copy Trading Platform that is most suitable for Cryptocurrency trading and investing while you continue to learn the act of trading. Tycoon.io is a seamless profit-making platform that puts your trading on autopilot just by following a professional trader of your choice without the need to read complex charts. You are only required to integrate your exchange's API with the Tycoon Platform and have >8,000 TYC staked, and registration is free for now.