With global economy moving towards digital ecosystem, everything from money transfer to investment is becoming paperless. The newest and apparently most promising of all digital payments is cryptocurrency and we all want to get into the world of cryptocurrencies. But cryptocurrency mining is not easy and all cannot understand it, so for those who are looking for a straightforward way of crypto trading this guide is for you.
1. Crypto trading is not always profitable
Remember the seesaw you use to play on as kids? Crypto trading is like that seesaw. Sometimes nothing moves and sometimes one makes profit and at other times may even lose. One’s loss is others gain.
2. Crypto trading is a situation of uncertainty
During critical state of affairs, “fog of war” term is often used. This means situation of uncertainty where participants need to make decision with incomplete information. Same is the case with trading. In trading, individuals are always at the wrong side. Because the so-called whales have so much digital currency that they can change the complete market with one trade and only whales know about it. Usually individuals get to know whether the information is false or real after a long time and in trading only they can win who have information on time.
3. 50-50 rule
This again is the same situation as the seesaw. There is either rise or fall, this means it is a 50-50 thing. If we trade without any prior knowledge there are chances we are partially right or wrong. Nobody can be 100% right even a person with immense knowledge can make mistakes. There is no system that can predict what is going to happen in the market. The goal of each trader is to be more than 50% correct and every trader should be ready to lose. Not all trades can be profitable.
4. You need to trust everything
Unfortunately, this is true in this case. You need to have faith in what you are doing. Sometimes, when you see a coin rising you like to invest in it but are scared as it is already too late to get in. It depends on you when you wish to invest. If you decide to invest in something after seeing its rise without seeing the market trend then there are chances you may lose.
5. You are wrong not the market
Always remember market is always right, it is you who is wrong. If market isn’t working as calculated or predicted, you’re wrong, forever and ever.
6. 80/20 Rule of Crypto trading
Good traders make money from their 20% trades, the rest is either equal or loss. If a good trader makes 16% profit then a worse one will make 4% on an average. But this can only be achieved when the new trader uses stop loss. Plus, if you see 3% profit on a trade then consider it zero as it is no profit.
7. Beginners lose due to following reasons:
- invest too much money.
- trade without knowledge, this means they play plain lottery and try their luck.
- keep on holding for long duration.
- Do trade with small and not too good coins.
- never get their profits out of the market.
- Trade too often, even when it is mediocre trade.
8. Invest when you understand
Gain as much knowledge as possible before buying a coin like how it is doing in market, does it make sense investing in it, growth chart, how to invest and all the small to big information. The better you understand it the sooner you will be able to earn profit and will see a rise in its price.
9. Difference of crypto trading and other market
Unlike normal markets crypto markets do not close, they are open 24 hours a day. Crypto market changes each week. Crypto markets are volatile, price fluctuations can rise up to 30 percent in a day. Say for example you read an article about price hike for a coin, by the time you think of trading it the price may have fallen or risen by 30% more, that is hardly the case with stock market.
Crypto traders think in X whereas stock traders think in percent. We know illegal things take place everywhere but it happens more in crypto trade as people don’t have much knowledge about crypto trading.
10. Trade in reality
The only way to increase your chances of earning profit is by investing in market. Just by reading books nothing will work, you need to have practical and theoretical knowledge. Do not trade with play money, real trading can only be done with real money and that gives you experience. Start with small trades if you earn profit with that then take out the profit and circulate the initial investment.
See Also: How to Buy Bitcoin for The First Time?
11. Technical analysis
Learn from market trend, basics, don’t think wonders can happen in minutes. It takes time to see a result, but don’t wait for too long to get results.
Crypto trading is not similar to stock market in fact it is poles apart. If you are into stock trading and think you can trade for crypto too then you are wrong. Before you begin with crypto trading you need to keep above pointers in mind. Have a complete knowledge about the coin you want to invest in, do a thorough analysis and keep all the other pointers in mind.