How To Become Successful in Cryptocurrency Trading?
Do you want to become successful in cryptocurrency trading and live life on your own terms? Cryptocurrency trading requires the necessary knowledge and constant practice you need to put in place for you to be successful. The crypto industry has experienced massive growth in the last five years. Cryptocurrency trading has increased on the global stage from $3 million per day in 2016 to over $1 billion in 2021, which is over 300x within five years.
Who is a Cryptocurrency Trader?
Before we dive deep into cryptocurrency trading and how you can be successful with it. We should go back to the basics and see who are cryptocurrency traders and how they can make a profit. So who is a cryptocurrency trader?
A cryptocurrency trader is an individual who uses short-term changes in the market price of cryptocurrencies like bitcoin, altcoins, and other value tokens to make a profit when they buy certain amount of these coins when they are low and sell when they are high. Basically, there is a low barrier to entry to cryptocurrency trading as anyone with the knowledge and capital with internet access can go into trading these tokens and coins.
There are strategies you can implement for you to be a successful cryptocurrency trader as you can decide to trade on a single pairing between a coin and a normal currency such as the BTC/EUR or Bitcoin and Euro. You may also decide to just trade only between altcoins like Sol/Busd, which is a pair Solana and Binance USD. Of course, there are numerous altcoins with a verifiable market capitalization that represent them.
However, you should identify the two choices you can select from to become a successful cryptocurrency trader. And who says you can not utilize both of these choices? These ways are;
Buy, Hold and Sell Cryptocurrencies through the Exchange
You may choose to buy cryptocurrencies you have most likely studied their potential from a cryptocurrency exchange, thereby making you the owner of the crypto asset. The advantage of this method determines how long you can hold before you sell. This means if you buy, for example Ethereum when it was $200 per Eth and decide to hold for three years and sell when Ethereum hits $4,000 per Eth. So this option is not for short-term trading.
But you should note that it is risky to buy and store cryptocurrencies on the exchange because some exchanges are prone to crypto hacks while some are unregulated. You should however, seek to store your cryptocurrency in a secure wallet until you are ready to sell them.
Trade Cryptocurrencies in Short-Term
This method has to do with trading cryptocurrencies with a regulated broker on a short-term basis with the intent to make a profit quickly. You can leverage tools or bots to enter and come out of the market by setting the buy and sell order to suit your goal. You will most likely want to use a small deposit of the position’s full value so as to minimize loss and maximize profit.
Obviously, the quick changes in market price, which present itself as a risk to your capital, serve as a disadvantage to this form of trading cryptocurrencies. However, by trading cryptocurrency CFDs, you could make a profit in a failing market.
Now let us look at the steps and measures you need to take to become successful in cryptocurrency trading.
How Can You Become Successful in Cryptocurrency Trading?
Below are five pointers to observe if you want to become successful in cryptocurrency trading. They are as follows:
1. Approach Cryptocurrency Trading as a Business
Cryptocurrency trading is a business because you are going in to make money through profits from your trades. Other traders like you, with a handful of them being professionals alongside their sophisticated tools, are out there trading cryptocurrencies and are killing it. In this game, it is either you win or lose. You have to get some practical knowledge in cryptocurrency trading and get your money in line to make profit off your trades.
2. Map Out a Suitable Trading Action Plan and Follow Through
You should sit down to constructively map out a trading action plan suitable enough to make profits. Remember your ultimate goal is to be successful in cryptocurrency trading, hence you should be able to identify the following in your trading strategy from the get-go. They are;
a. For you to identify the type of cryptocurrency trading you want to perform. These can range from day trading, long-term holding and investing, automated trading, and copy trading amongst other strategies.
b. Identify and utilize reliable cryptocurrency exchange you can use as well as viable tools suitable for your trading strategy.
3. Identify and Utilize the Best form of Analysis Suitable for your Trade
There are two major types of analysis successful cryptocurrency traders utilize for the best outcome from their trades. They are technical and fundamental analyses. Some traders even utilize both analyses at the same time before going into the market. Let us take a quick look at them;
a. Technical Analysis
You can do technical analysis to monitor the movement of cryptocurrency prices and watch out for repeated patterns which can help you predict the next movement before you enter a trade. This is because you are able to monitor the value changes of a cryptocurrency through patterns and trends, which can help you decide the best time to enter or exit a trade. There is sophisticated technical analysis you can make do with, such as the moving averages, Bollinger bands, and the Fibonacci retracements.
b. Fundamental Analysis
You can choose to be acquainted with news and happenings in the cryptocurrency and blockchain space. This is basically what fundamental analysis is all about. Most of these activities usually affect the price of the related cryptocurrency.
You can choose to work with one or both analyses to trade efficiently while you make insane profits.
4. Keep Track of Your Capital
To be successful in cryptocurrency trading, you should know that your capital is your most important asset because you will no longer be in business without it. Hence, the need for you to decide the amount you are willing to risk, especially when you are starting out is important. You should endeavour to keep track of how much funds you have as capital and the returns you are getting per trade so as to know if you should change your strategy if you have a negative return rate.
You should also safeguard your money by diversifying your means of cryptocurrency storage. This is to prevent you from total loss of funds in the case of unexpected eventualities such as losing your private keys, change of laws, failure, or hack of your exchange.
5. Master Emotional Intelligence
You need to have the self-control to be successful in cryptocurrency trading. We all know that the number one goal of every trader is to make money through profit from trades. Hence, the need for you to not be greedy and too fearful as these are powerful emotional triggers that can block your right sense of reasoning, which in turn is capable of having you make terrible decisions.
Try to master the art and science of emotional intelligence by being calm, patient, and calculative before and during trading. Avoid getting greedy by staking all your capital on a trade you feel is an opportunity to cash out big time. You may end up burning your fingers by losing your capital in one fell swoop.
Just like every other venture in life, cryptocurrency trading is not 100% failure-proof, as you will occasionally lose money once in a while. But with the above tips, you should be able to minimize loss and increase profit. In the case where you start experiencing massive loss, you should go back to the drawing board and change your strategies. More so, endeavour to start trading with a lesser amount or a demo account.
Conclusion
The good news is that it is far easier to be successful in cryptocurrency trading with the existing tools and the right implementation of your trading strategies. However, in every trade, there are bound to be winners and losers. Those who lose are unprepared, but when you approach cryptocurrency trading as a business and still expand your practical knowledge. Definitely, the sky will be your starting point in cryptocurrency trading.
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