Are You Winning The Trading Game? The Ultimate Checklist
Are You Winning the Trading Game?
Cryptocurrency trading is a great way to earn money. It has become a full-time career for some people. However, some people start trading with the wrong mindset, thinking that they will become rich overnight. They do not understand that those who are winning the trading game are patient and usually take their time to learn new market tricks.
Trading, just like any other business, needs proper strategies and a high degree of knowledge. It is not as easy as it looks. Even some people who are experts in the trading industry have lost tons of money occasionally.
Therefore, you will find most people asking how they can become successful traders. Here is the ultimate checklist to help you understand if you are on track to become a pro trader.
Are you doing your Homework?
As any Bitcoin or any other digital currency trader would tell you, do not underestimate the value of conducting proper research. Take your time to check what’s happening in the crypto space and read about the hot topics. You may better comprehend what drives cryptocurrencies’ values by reading the general tone of the news published every day.
News and announcements may be leading indicators of the mood of traders and investors. They are the ultimate drivers of the price, so it’s essential to use the sentiment as the primary indicator for your investment decisions.
Don’t blindly follow trading advice. Every trader has different price targets, profit objectives, and risk attitudes. A trade that may make sense for a trader may not suit another well. That’s why doing your research can add value to your wallet, teaching you how to make the best investment decisions for your needs.
What’s in your basket?
All investments involve risk, but cryptocurrency tops the list of the unpredictability of returns. Even though they appear to give uncapped positive yields, they might collapse without any evident reason, and you may lose everything before you can even take action.
Therefore, as a trader, putting all your eggs in one basket might get you into trouble. Minimize your risks by investing in crypto assets that have different levels of risks is a savvy choice. Although this may seem to be straightforward in theory, it takes some considerations to do that it will be effective in practice.
Pro tip: are you looking into crypto correlations?
Allocating a significant portion of your wallet into coins that are highly correlated does not add much diversification. It may actually do the opposite, increasing the risk. You can read more about the topic here.
The above matrix shows the correlations between a selected panel of cryptocurrencies. When the correlation approaches values around 1, it means that the coins move often in the same direction. Adding coins with a very high correlation is not going to add much diversification to your wallet.
On the other way, coins with low correlations, like those in the orange box, represent great opportunity of diversification of the overall portfolio risk.
Are you keeping a record?
As a trader, you are your accountant. Therefore, if you want to keep winning in the trading game, you should maintain excellent records of your trading activities.
If you win a trade, know why and how it happened. It also would be best if you did the same thing when you lose, so you don’t make the same mistakes again.
Write down the specifics of each transaction, including the objective of each specific trade, the entry and exit points, and the time you spent in the trade. It would also be helpful to record the support and resistance levels, daily opening ranges, market open and close for the day, and notes about the lessons gained.
After recording, be sure to keep the records safe. Occasionally evaluate the profit or loss for a specific system and the drawdowns lost per transaction while using that particular system. Also, consider the average time spent per trade to determine trade efficiency and other critical aspects in the future.
One of the advantages of using an automated trading strategy is to keep track of every single trade so that periodically it’s easier to analyze what performed as expected and what didn’t meet the original plan. Assessing periodically how a trading system is performing gives you a significant edge.
Examining the transaction history of a trading strategy is more valuable than staring at charts all day.
How do you deal with losses?
Most traders fall into the trap of focusing all their efforts on finding buy signals and forget to pay attention to what point to exit. This situation usually happens because most traders do not like losses. However, to be a successful trader, you need to know how to accept losses.
Even pro traders have losses. What makes the difference between a pro and a hobbyist trader is how they deal with losses.
If the price hits your stop, do not let emotions overwhelm you. You need to accept it was not your lucky day and move on. Go back to the drawing board, see where you went wrong, and lay down strategies for your next trade. Learning from a trade in loss is the only way to translate a failure today into a success tomorrow.
Many professional traders lose more trades than what they win in terms of an absolute number of transactions. What makes them profitable is that they aim to secure as much gains from trades in profit to compensate for the losses.
All you should care about is to have more assets tomorrow than how much you old today. Do you?
Do you expect the unexpected?
Winning in the cryptocurrency trading game can happen fast. So does losing it all is. It is possible to see your investment grow by 300% within few hours when you invest in cryptocurrency. These extreme market volatilities are the ones that can make people become billionaires in a short while or become broke.
As a reminder, even Bitcoin, which is perceived as the safest cryptocurrency, dropped by 60% in a matter of three days in March. Some traders still recall that as a great buy-opportunity, others still have to recover from such a brutal loss.
Cryptocurrency investment is a double-edged sword since the market can pull the rug from under your feet at any moment. As a result, it is advisable to be prepared for the worst always when trading cryptos.
If you lose your investment once, do not give up. Get up and keep moving since giving up doesn’t get you anywhere. People who have become successful in trading cryptos are consistent and always learn from their mistakes.
Final Words
Cryptocurrency trading has become one of the significant ways to make an extra income nowadays. However, it is not an easy thing. If you want to keep winning the trading game, ensure you have all the facts right before investing. In case things don’t go as planned, do not give up because consistency is key. You will keep learning from your mistakes and become a successful trader.
Whether you are a Hobbyist trader or a pro one, using advanced tools helps you win the trading game and manage your wallet better.
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DISCLAIMER
I am not an analyst or investment advisor. Everything that I provide here site is purely for guidance, informational and educational purposes. All information contained in my post should be independently verified and confirmed. I can’t be found accountable for any loss or damage whatsoever caused in reliance upon such information. Please be aware of the risks involved with trading cryptocurrencies.
