Investing in cryptocurrencies is a raging global trend nowadays. However, only a few people know in detail about it.
There has been a recent market correction and that has led to more confusion. Even though everyone knows the problem, only a few know how to get out of it.
If you have also started dabbling in crypto trading and are confused about market conditions, or stuck while trying to analyze chart patterns like candle hammer, then worry not. Here, we have provided nine tips that all cryptocurrency traders should remember for better trading.
- Motive- This is quite obvious, just like you have a motive behind doing anything, there should also be a motive for crypto trading. Whether you day trade or scalp, there should be a purpose behind it. Digital currency trading is a zero-sum game and you would need to realize that for each of your wins. Remember that you will not make profits by trading every day. However, you can avoid losses by being off a trade for a few days.
- Targets- You should always be aware of your trading targets so that you can make crypto trading a profitable affair. You should always establish a clear stop loss level as it will help to cut down your stop losses, which is a skill every trader should possess. Choosing the right stop loss needs a lot of research and analysis.
- Risk management- Running towards higher profits, you might end up acquiring greater risks. It is essential to manage risks properly when it comes to cryptocurrency trading. Always go for small and sure profits by regular traders. Start with small investments when the market has less liquidity. Higher traders require greater tolerance, also the stop loss and profit target points will be allocated further away from the buying level.
- Underlying assets- The price of bitcoin has a great influence on the prices of most of the altcoins. They are inversely related to one another. The market becomes foggy when the price of the Bitcoin gets volatile, and it also prevents the traders from getting a clear understanding of what is happening in the market. In this situation, you can either choose to have close targets or you can simply stop trading at all.
- Buying price- Do not buy cryptos simply because its price seems to be low and affordable. You should always study the scope of the crypto before you actually purchase it. Know about the market cap of the given crypto which can easily be found by multiplying its current market price with the total number of outstanding shares. Using the market cap information to decide whether you should buy a share is much more efficient than using its price. The cryptos suitable for investment have higher market caps.
- Crowd sales- During the Initial Coin Offering, the startups offer an early chance to the general public to invest in their ideas through the process of crowded sales. In return, tokens are allocated to the investors at a very low price with the promise that they will be able to sell them at a higher price when it gets listed on the exchange. IPOs have mostly shown great success and some tokens even showed ten times the value of the project returns. It has a great prospect but chances are there that the IPOs can come out to be total scams. So you should always give attention to details rather than focusing only on the return prospects.
- Time- Many altcoins can lose their value when they are held up for a certain period. This can be an unusually short period or a very long one. The catch here is to hold it for the right amount of time.
- Diversify- As every niche trader would agree, investments are always unpredictable. So you must diversify your portfolio. By doing so, you will be able to reduce uncertainties related to returns.
- Sell order- Use the goal-setting feature by placing a sell order. You should set your revenue targets by placing sell orders in the books. Whenever the order price meets, it will help you earn exactly what you need. Besides, it attracts lower transaction fees too.