Be it trading in stocks or trading in cryptocurrency, it is more or less the same. Making mistakes are common and quite inevitable. To get successful cryptocurrency trading results, it is important to break the bad habits as they can very easily lead to financial suicide.
Successful Cryptocurrency Trading: Best Bitcoin Trading Strategy
So, today, we are going to dive into the intimidating but exhilarating trading market and learn some best trading tips while avoiding making the common mistakes.
Whether you belong to the traditional stock trading market or Cryptocurrency trading market, this is for all the investors out there.
Learn to manage the risk
Money management needs to be your first priority and it has to be strict. To follow a common rule, try not to risk no more than 2 percent on one trade. That’s right. Build a diversified portfolio by investing in a number of stocks or cryptocurrencies. The risk of losing money would be toned down.
Diversify from the group of investment that has the same negative factor attached to it. If you will keep all your eggs in one basket, the possibility of losing them all is pretty high.
Keep an open eye for alternative investment opportunities
Stock and cryptocurrency market gets new additions every other day. Have a keen eye for these potential projects and turn them into your favour.
For instance, Initial Coin Offering (ICO) is something that brings about a variety of projects that are looking for crowdsourcing in the market. Blockchain based startups are also a great investment opportunity for you to get into. So, never stop looking for new projects to invest in as they never stop coming.
Plan exit and entry as per your risk taking capability
Do not make the mistake of entering into a trading market without a plan. This is one of the worst things that a trader can do. Always have a plan first or you will get lost. This plan should include a time frame, your stop loss, and the exit point.
For instance, Dollar-Cost Averaging (DCA) is an investment technique to buy a fixed dollar amount of a project on a regular schedule, no matter its share price.
Having a clarity at this point will basically help you scale in and out of the trading without looking like an aimless person in need of direction. Also, make sure that you follow this plan or it’s all for nothing!
Sentiments drive the prices so stay updated
It can’t be stressed enough. Both stock and crypto market are highly volatile that changes every hour and sometimes every minute. Not everyone can play this game and if you want to get into its deep end, you need to have a close acquaintance with it.
For instance, Coindesk is one of the best sites to get all the update information on cryptocurrency news and for the stock market investors, Reuters can help you a lot.
Follow the trends at your own risk
Don’t go and start trading against or the trend. Because fighting the trends is certainly neither easy nor cheap. Understand the dynamics of demand and supply before making a decision.
Going against the trend approach may benefit you at times but not always, hence it is important to be bearish in a bear market and bullish in a bull market.
‘Leverage‘ trap is not for everyone
Leverage is basically using the borrowed money to put into the trading. It is a tool that can turn out to be really bad or good. If you end up losing your borrowed money, you would be pile deep into the debt that will include your initial investment and borrower’s interest on that money. So, avoid making this mistake at any cost!
You will lose sometimes and it’s OK!
Given the volatility of both the markets, many traders, especially beginners make the mistake of coming with unrealistic goals. It is entirely possible to make thousands in a day and at the same time losing millions. Just focus on your trading and the money will flow naturally.
The idea is to empower the investors, no matter if you belong to the traditional stock market or the cryptocurrency market. When trading follow these tips while avoid making the mistakes to gain the most out of your investment. If you have any doubt or queries, feel free to reach out to me by commenting below!
I am an entrepreneur and a writer with a bachelors degree in Computer Science. I manage the blockchain technology and crypto coverages at Coingape. follow me on Twitter at @arya_achal or reach out to me at achal[at]coingape.com.