Safety rules are written in blood. That statement is familiar to every soldier serving his or her country. Although we are not talking about a risk to human life, losing one’s expensive bitcoins by making trading mistakes is definitely not fun.
So how can one avoid such mistakes and stay in the green? First, it is essential to note that trading requires your attention and 100% focus. Secondly, trading is not for everyone. The following tips are easy to internalize because these tips were “written in blood” (my blood). However, it’s difficult to apply them in real time. After all, humans are not rational.
Have a Reason For Every Trade
Enter a trading position only when you know why you’re entering it, and have a clear strategy in mind.
Not all traders are profitable since this is a zero-sum game (for everyone who benefits, someone else loses on the other side). Large whales drive the altcoin market – yes, the same ones responsible for placing huge blocks of hundreds of Bitcoins on the order book.
The whales are just waiting patiently for innocent little fish like us until we make trading mistakes. Even if you aspire to trade daily, sometimes it is better to do nothing instead of jumping into the rushing water and exposing yourself to substantial losses. There are days when you only keep your profits by not trading at all.
Clear Stops, Clear Targets: Have a Plan
For each position, we must set a precise target level at which to take profit and, more importantly, a stop-loss level for cutting losses. Setting a stop-loss involves selecting the maximum amount of losses we can afford before the position gets closed.
Several factors must be considered in order to correctly choose a stop loss level. Most traders fail when they fall in love with their position or the coin itself.
They may say, “It will turn around and I will get out of this trade with a minimal loss, I’m sure.” They’re letting their egos take control of them, and compared to the traditional stock market where 2-3% is considered extreme volatility, crypto trades are a lot riskier: it’s not unusual to find a coin dumping by 80% just in a few hours, and nobody wants to be the one who is left holding it.
So how can one avoid such mistakes and stay in the green? First, it is essential to note that trading requires your attention and 100% focus. Secondly, trading is not for everyone. The following tips are easy to internalize because these tips were “written in blood” (my blood). However, it’s difficult to apply them in real time. After all, humans are not rational.
Have a Reason For Every Trade
Enter a trading position only when you know why you’re entering it, and have a clear strategy in mind.
Not all traders are profitable since this is a zero-sum game (for everyone who benefits, someone else loses on the other side). Large whales drive the altcoin market – yes, the same ones responsible for placing huge blocks of hundreds of Bitcoins on the order book.
The whales are just waiting patiently for innocent little fish like us until we make trading mistakes. Even if you aspire to trade daily, sometimes it is better to do nothing instead of jumping into the rushing water and exposing yourself to substantial losses. There are days when you only keep your profits by not trading at all.
Clear Stops, Clear Targets: Have a Plan
For each position, we must set a precise target level at which to take profit and, more importantly, a stop-loss level for cutting losses. Setting a stop-loss involves selecting the maximum amount of losses we can afford before the position gets closed.
Several factors must be considered in order to correctly choose a stop loss level. Most traders fail when they fall in love with their position or the coin itself.
They may say, “It will turn around and I will get out of this trade with a minimal loss, I’m sure.” They’re letting their egos take control of them, and compared to the traditional stock market where 2-3% is considered extreme volatility, crypto trades are a lot riskier: it’s not unusual to find a coin dumping by 80% just in a few hours, and nobody wants to be the one who is left holding it.
OMO: Be Aware
Meet FOMO, or Fear of Missing Out. Indeed, it isn’t fun to see such situations from the outside – when a specific coin is being pumped up like crazy with huge two-digit gains in just minutes.
That bold green candle yells at you, “You are the only one not holding me.” At exactly this point you will notice lame people flooding Reddit and Telegram trading groups and the exchanges’ trollboxes to talk about the ongoing pump.
What do we do then? It’s very simple: Keep moving forward. True, it’s possible that many people ahead of us may have caught the rise and that the market could continue in one direction, but bare in mind that the whales (as mentioned above) are just waiting for small buyers on the way up to sell them the coins they bought for lower prices. The price has become high, and it’s clear that the current lucky holders only consist of those little fish. Needless to say, the next step is usually the bright red candle which sells through the whole order book.
Risk Management: It’s Not Just For Crypto
Pigs get fat; hogs get slaughtered. This statement tells the story of profits from our perspective. To be a profitable trader, you never look for the edge of the movement. You look for the small gains that will accumulate into a big one.
Manage risk wisely across your portfolio. For example, you should never invest more than a small percentage of your portfolio in a non-liquid (very high risk) market. To those positions we will assign greater tolerance; the stop and target levels will be chosen far from the buying level.
Read Full Article Here: 8 Must Read Tips Guide Trading Bitcoin and Altcoins (Updated 2019)
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