With the crash of the mighty bitcoin, and the downward spiral in the crypto market after the #BlackSaturday, many of us are really unsure what to do. To fully capitalise and ensure crypto trading is profitable for you, you must keep your eyes peeled for certain things so that you do not make errors.
Here are ten key things to watch out for in the crypto trading business:
1. The crypto-news cycle: Experts have labeled the crypto market as a ‘speculative market.’ This is true because news easily sways the market. It has the power to shift the price of a cryptocurrency either upward or downward depending on whether the crypto in question is involved in negative or positive news. For example, on April 19th, Ripple (XRP) price jumped an outstanding 17.6 percent within 24 hours, amidst news that XRP was announcing new partnerships and expansion.
This is one of many examples that proves that staying up-to-date with crypto news is extremely valuable to any trader wishing to make better trade decisions.
2. Buying the Rumour: “Buy the rumour, sell the news” is a well-known advice in the crypto space, unfortunately, when it comes to crypto trading, a lot of traders work with emotions and throw this advice out the window. The fact is that by the time major news sites get hold of “hot crypto gist,” the experienced traders have already started pulling out of the market because they bought the rumour while the noobs will rush in to buy the news only for the market to tank and they end up on the losing side.
3. Keep your eyes on Bitcoin: Some of described Bitcoin as the mother of all cryptocurrency, perhaps they are right, Bitcoin is not only the first crypto, but statistics show that Bitcoin and Altcoins have a shared market destiny. Evidence has proven that when BTC price experiences a drastic pump, the price of altcoin will go down drastically too, this is because traders are exiting altcoins and trying to cash in on the BTC pump. Consequently, when BTC prices go down, altcoins will tow the same line because traders are exiting the crypto markets altogether and turning to fiat. So, monitoring Bitcoin is an excellent way to be aware of market sentiment.
4. Avoid getting hooked to one coin: When researching on viable coins, it is easy for an inexperienced trader to get emotionally attached to a particular crypto and thus channel all resources in this direction. This is a WRONG move! Experienced traders always look at the bigger picture by diversifying their portfolios and increasing their chances of making more money.
5. Avoid trading under pressure: Manipulating the crypto market is done using shills, FOMO, fake news and pump scams. This will put pressure on neophytes causing them to panic and make mistakes which the charlatans capitalize on. Before trading, ensure you have done your own research on the crypto; make sure you take responsibility for your trades so that you aren’t trading under the pressure of FOMO or fake news.
6. Your profit targets: Before jumping on any trade, it is vital to know where you are heading. Profit targets help give you clarity on what your goal is for each trade. It will help to divorce emotions from your trading and keep your eyes on the price.
7. Keeping greed in check: Greed is inherent in every trader, but keeping it in check separates successful traders from mediocre ones. If you have decided to HODL ensure you do that, if you have decided to sell at a particular target ensure you do that, ignoring the voice of greed and sticking to your plan is vital to successful trading. Discipline is a trader’s best friend.
8. Implementing proper risk management: Effective risk management in trading is a culmination of practices that will help you mitigate your losses. Some of these practices include:
- Using stop loss for all trades
- Investing small amounts of your portfolio when operating in non-liquid markets
- Not putting all your eggs in one basket, i.e., Diversification
9. Choosing the right exchange: Crypto trading is done on exchanges, right? True, but that doesn’t mean every exchange is good for you. You have to make some research to find the right exchange that is congruent with your requirements. Not all exchanges are the same; they vary with policy, trading fees, volume, reputation, and security protocol. For example, some exchanges may accept fiat some may not. You may have to experiment a little, but most importantly, you must do your research so that you’re working with an exchange that will be profitable for you in the long run.
10. Your chat analysis game: Crypto trading isn’t as simple as buying when the price is low and selling when it goes up. A lot of other skills are needed to help make the best out of a trade. One of such skills is chat analysis. You need to understand chat concepts like trend lines, moving averages, support, and resistance, trading volume, etc. Identifying trends is crucial in making profits from trades; however, this isn’t so easy when it comes to the crypto markets due to its volatility. The good news is that several websites offer tools you can use to help identify and take advantage of trends.
Becoming a professional crypto trader takes time, patience, practice and discipline. The trick is to keep at it and update your knowledge consistently. After all, practice makes perfect!