In trading any financial asset, making mistakes is never a fun situation. So, how can one avoid making mistakes in trading the most popular trading instrument, Bitcoins? How can one be on the side of profits? We need to understand that to be able to trade right; one has to be attentive and give total focus on the trading exercise. Second, and most important, trading is not for everyone. We are going to look at tips that you can implement in your daily trading; even though real-time applications are not guaranteed because of our human nature.
1. Have a strategy when trading
Have a good reason when you want to get into a trade: only start a trade when you know the reason as to why you are taking that trade. Not every trader makes a profit when trading since it is a zero-sum game. The Bitcoins market is driven by market makers (whales) who are patiently waiting for retail bitcoins traders to make mistakes. Even if you want to trade daily, sometimes it is better to stay on the sidelines, instead of exposing your coins when you feel the urge to trade. Sometimes, it is a good trading decision when you don’t trade at all.
2. Plan your entry and exit points
Ensure that you place clear take profit levels and stop loss levels when you place your trade. In fact, you need to have already identified your take profit and stop loss levels even before getting into the trade. Most traders fail because they put their heart on the fact that Bitcoin is a new currency and they are trading it. Some feel attached to the coin on the trade itself that they hope the trade will turn in their favor when in case, they are trading against the trend.
Once you let your ego get into the table of making decisions, you are going to fail miserably. Unlike the stocks that have very low daily movements, Crypto trades are far riskier, because trades can jump up or down by 70% in a matter of hours. You don’t want to be on the losing side.
3. Don’t be trapped in FOMO(Fear of missing out)
It is not fun to see a good move in the market that you missed. It can be tough to watch a crazy two-digit gain that happens in minutes, and you are not in it. At this point, losers jump into the trade, and before they realize, the move goes against you, that’s when it gets even worse. Learn to be patient, accept the moves that you missed and be on the look for other opportunities.
4. Risk management
The Bitcoins market is a greedy place; you can either get eaten, or you eat. To be profitable, you need to identify high probability trades that you can lock in profits. You need to stop looking for picks and identify small profits that will accumulate to big ones. In high-risk markets like the altcoin markets, you should never invest more than a small percentage in a trade.
Trading tips for Altcoins
5. Altcoins loose value over time
Most Altcoins lose their value rapidly or over time. You should take this point seriously when you are holding Altcoins over a long period. Monero, Ethereum, DASH, Factom are leading coins that are traded in huge volumes each day. Follow the coin’s chart that is on an exchange and look for stable periods. When this happens, you will be in a good position to sell with the whales.
6. Be careful about ICO’s.
An ICO is a project where investors are offered an early buying opportunity of a token in what is referred to as a good price. Investors get in with the hope that they will yield a profit over time. In recent times, there have been successful ICO’s that doubled and even tripled in value. For instance, Augur’s ICO yielded investors 1,000% in its preliminary crowd sale. Even though that is the case, not all ICO’s turn out like Augur. Some have been scams that disappeared with cash until today.
Don’t trade with lots of pressure, only trade when you have a strategy of when you want to get into a trade and where you have placed your exits. Set goals by selling orders. You never know when a whale will match your command and pay low fees on the command side. To counter this, always make low buy orders.