How do I start trading cryptocurrencies? How to make the first trade? I believe those are one of the most asked questions in the past two years. First of all, it is considered very speculative to trade cryptocurrencies. It is very volatile and that is the main reason why many traders are jumping in on board with crypto trading. If you follow your strategy and discipline yourself, you’re bound to have good profits. Here is a list of a few advices how to start planning your strategy, what to focus on, and, eventually, become more disciplined.
Don’t follow the hype
As we experienced previously most of the massively hyped projects in crypto are now down almost 98% since their peak prices. These type of investments are mostly based on the hype that the community generates. Be smart. The saying “buy the rumor sell the news” is there for a reason.
Take small profits, don’t be greedy
It’s much better to take small profits like +2% or even +1% in the long term. Don’t be greedy, trade cryptocurrencies with ease, and don’t expect your investments to rise more than +10% to +50%. It will most likely never happen again in crypto. For daily stock traders, there is a “1% risk rule”. This keeps your capital losses to a minimum and avoids harsh market conditions. You can achieve this by using targets and stop-loss orders. The provisional idea is that if you take a 1% profit on every trade you make after a year you can grow your capital by +365%. Think long term, not short.
Follow your gut/heart
Most of the times, you kind of feel when the market is starting to switch directions. Again – don’t be greedy and do what you think is best for you. If you have a feeling, based on your experience and knowledge – follow it. It is better to take profits on +1% – +2%, than rather loosing -10%, or even everything on your trades or investments. Most beginner traders have this feeling that I won’t get this chance anymore, so I have to use it 100%. That is false. The market is constantly evolving and more projects and institutions are coming in, so don’t worry about your single trade.
Cash out everything to fiat
While some experts say that Bitcoin mass-adoption is a 50-year long-term plan, it is highly unlikely that the broader society will switch to only Bitcoin or even cryptocurrencies in general. At the moment, and for a couple of years from now on, fiat will be the main form of money and as they say “a bird in hand is better than two in the bush”. I’ve heard stories from many investors, that they cashed out everything to fiat when the bull-run started to emerge. They took all the profits when Bitcoin was at $9000 – $10,000. Of course, they could’ve profited more, but how do you think – are they regretting something at this point?
Educate yourself constantly
There is nothing more valuable than education. It won’t do any harm to you or your investments, only good. You have to stay up to date. Learn about cryptocurrency trading. Learn more about the industry that you have invested in, and know every little detail. It will grow your confidence in regards to your trades or investments.
Do Your Own Research
This binds with the first advice – don’t follow the hype. You have to research the assets you are willing to invest in by only yourself. At this time, when social marketing and the internet, in general, is constantly evolving, you have to understand, that nobody will share valuable information for free.
Further, this also applies to your gut and nerves. You will feel constant anxiety in those cases when you follow a different opinion rather than yours. On the other side, when you build your investments only based on your own knowledge, you will feel more safe, and secure about your decisions. Trade your cryptocurrencies with knowledge!
Never invest money that you can’t afford to lose
There are countless stories of people investing their life savings, mortgaging properties, applying for loans, and in general, investing more money that they can afford. These actions are at very high risk, and almost never pays off. Again – it is better for everyone around you if you trade cryptocurrencies with only the amount that you can afford to lose. Even if that is only $10, you will feel more calm and balanced. Because at the end of the day – these are investments, which are meant to improve your life, not destroy it. Crypto investing is unique in its base – you can invest small amounts in almost every kind of a project. Crypto investments of as little as $7 dollars can gain you multiple thousands in return. And it is definitely better to lose $7 dollars rather than $700.
“Be happy about what you have, not what you could’ve had!”
However, this is not financial advice. I don’t have a financial degree. This summary is only based on my and my friends experience. Do your own research and don’t base your opinion on somebody else. And most importantly – educate yourself!