Top 3 useful trading tips for cryptocurrency newbies
Planning to start trading crypto but are overwhelmed by the complex information you’ve found online? Keep calm and don’t panic. We’ll help you get started on your crypto trading journey with three useful trading tips for those who are new to this digital currency.
What does it mean to trade Cryptos?
When someone trades cryptocurrency it simply means interacting on a trading platform to buy or sell cryptos. Of course, this statement remains valid, but since the advent of cryptos, the trading landscape has evolved and spot trading is no longer the norm.
Indeed, other trading platforms have emerged and allow what is called “margin trading”. This allows the trader to use leverage and potentially take positions larger than their capital, or to take more simultaneous positions. I do not recommend taking a position larger than your capital at all and we will come back to this later.
Why should I trade cryptos and how can I get started?
There are several reasons that can push someone to trade in the cryptos market, the search for quick profit being unfortunately the main one. Indeed, there are many different types of market participants that we will classify in 3 main categories.
The trader, who can use his own strategy manually or use an algorithmic type of automatic trading. A trader will most often be there for short to medium term profits by trading the most liquid pairs, such as BTC, ETH, and possibly large liquid altcoins such as LINK.
The investor will have a longer time horizon in his search for profit and will most often make his decision based on fundamental analysis and the solidity of a project, rather than on technical and graphical analysis.
Finally, the miner is the one who participates in securing a network in BTC, ETH, and others in exchange for a crypto reward. Mining consumes energy and, from time to time, miners go to the exchange platforms to sell their cryptos earned by securing the network.
Is it easy to get started trading cryptocurrency?
This question might seem simple at first glance, but the answer is actually more nuanced.
Indeed, opening an account on a trading platform such as FTX or Binance only takes a few minutes. All you have to do is transfer cryptos from another wallet, if you already have one, or directly by credit card if you don’t have one.
We don’t recommend you to use the second method (credit card), as it involves quite high fees. Instead, we suggest that you fill out the KYCs allowing you to transfer money directly from your bank account.
These two answers are of course about the logistics, so it is rather simple to get started. As for the profitability and trading strategy aspect, that’s a completely different story and we’ll come back to that later.
Who can trade cryptos?
Anyone, except for citizens of certain countries — as it may be illegal. As crypto trading is still relatively new, the regulation changes often. These regulations are likely to change again in the future, until it reaches a maturity and a higher level of security, similar to the classical markets.
3 golden crypto trading tips for newcomers
Let’s now get to the heart of the matter with the 3 golden tips for traders new to the crypto market.
There will be no miracle indicators or strategies here. Rather, we will focus on the fundamental aspect of the trader’s job because it is a job and not a hobby, and you will need to arm yourself with patience and courage in order to become profitable.
I. Plan the trade, trade the plan!
It may seem obvious to some, but having a trading plan is one of the most important things to understand in your trading career. Indeed, it is not enough to simply open a chart and “feel” that it is the right time to open a position to succeed.
When we start trading, and everyone has been through it, we tend to be guided by our emotions, driven by something fundamentally human, our survival instinct. Success in trading is only possible if we leave that aside.
The easiest way to get yourself under control when you start is:
First, you have to create and test your strategy. It doesn’t have to be complicated because it’s possible to make money with a moving average. As soon as this strategy is tested, that’s when it becomes difficult. You will have to stick to your entry and exit rules as well as your stop-loss and take-profit without changing them.
In other words, as soon as you enter a position, there will only be two possible outcomes: a stop-loss or a take-profit. You must absolutely prevent yourself from closing a position before one of these levels is reached.
Why? Although it is difficult to accept, it’s far more likely that changing your exit rules after a position is opened will cause you to lose money in the long run than the other way around. In addition, it will force you to work on your discipline, which is necessary to your long-term success.
II. Keep a trading journal
This advice is one of the best if you want to improve. Even with excellent preparation, a coherent strategy and motivation to resell, it’s impossible not to make mistakes when you start trading with your money.
This is why keeping a journal is of paramount importance. On one hand, it allows you to keep your statistics up to date and thus to be able to judge your performance. On the other hand (this is its major benefit), it will also allow you to understand your mistakes and target the weak points of your strategy in order to correct them.
III. Respecting strict risk management
You can stick to your strategy and execute all your trades from a trading journal but if you don’t follow strict risk management, it won’t help.
Indeed, when we start, it’s common to get overwhelmed by our emotions, to the point that we no longer have control over our decisions. This is normal and all traders have gone through this.
Have you ever wanted to open a bigger position in order to get back in? Or open a bigger position than usual just because you’re sure of the direction the market is going to take?
To stop these impulsive behaviors that can have a detrimental effect on your capital, we recommend that you use a constant level of risk, maximum 1 to 2% per trade, so that even after a series of losses, you are always ready to enter the next one.
This is the major utility of risk management, allowing you total control over your emotions; even when you suffer losses, it wouldn’t have too much influence on your psychological state.
How can the SMART Bots help you?
Everything we have discussed above will apply throughout your trading career. Although it could be off-putting at first glance, these are definitely good practices to adopt right from the beginning of your trading journey. In fact, before being profitable, most traders lose all of their capital at least once, within a few months at the most.
However, you can avoid this by using only part of your capital for manual trading and allocating the rest to an automated strategy, like 4C’s SMART Bots.
What are SMART Bots?
SMART Bots are trading algorithms that operate on different pairs of cryptographic algorithms such as BTC, ETH and LINK. The bots only trade on these pairs because they are the most liquid and have the highest trading volume. Bots trade on the Binance trading platform and are designed to increase your USDT capital.
SMART Bots have different levels of risk, SMART BTC being the most conservative with a drawdown and a fairly low variance in profits. It’s the perfect tool for the investor who wants to increase his capital consistently without too much turbulence.
Regarding SMART ETH and SMART LINK, their goal is also to accumulate USDT but they are riskier, with a greater variance in profits. This can certainly lead to months of negative returns from time-to-time, but their long-term performance is also much higher, with more than 1000% for both of them since 2019. They are well suited for investors who are willing to add a little more risk to their portfolio in exchange for much higher long-term profits.
Common crypto trading questions
Is crypto taxable?
Yes, you have to pay taxes on your investment in Cryptos. Nevertheless, it depends on the country and the regulation is not yet clear on the subject.
How much money should I have before starting?
It depends on your goal and risk tolerance. Generally speaking, a capital amount between 2500 and 5000 USD is a good start for an investment in cryptos. Don’t expect to make it your main source of income with capital less than 100000 USD.
Is trading cryptocurrency a scam?
Short answer no, but it depends on the exchange platforms, some have practices that are dubious, to say the least, while others are regulated and perfectly transparent. Always research and enquire about the robustness of an exchange platform before putting any money on it.
What are the best crypto exchanges?
At 4C-Trading, we only trade on trusted trading platforms such as FTX and Binance.
What is wash trading in cryptocurrency?
Wash trading — involves transactions in which no funds or financial interests are actually exchanged. They are sometimes referred to as “false trades” and are used to bolster an exchange’s reported trade volume. This, in turn, gives the appearance of liquidity and market activity, attracting new users to the exchange.
Is trading cryptocurrency illegal?
Again, it depends on the country you are in. Trading with Cryptos is indeed illegal in some countries but like taxation, this is bound to change as the market matures.
Is trading cryptocurrency better than stocks?
It requires lesser start-up capital. No market is really better than another, you have to adapt to the one you choose to operate in.
How can you automate cryptocurrency trading?
You can subscribe to an all-in-one solution like 4C-Trading’s SMART Bots. These automated trading bots are designed with advanced trading algorithms to buy and sell on your behalf at the most optimized opportunities, round the clock; to help you maximize your gains in the long term.
There are no trading skills required with SMART Bots. All you need is to set up your API and account once and the bots will trade on your behalf. The only thing to remember: it benefits you to have your goal and vision set for the long term with the SMART Bots — the longer you allow it to trade on your behalf, the more you will yield.
In the past six months, the SMART BTC, ETH and LINK Bots have accumulated a total of 678.85%!
There’s no shortcut to building your wealth and it’s no exception in cryptocurrency!
