Once a person learns how to buy Bitcoin, the last thing they want is to lose any of the money they invested because of trading. However, it is a reality many people face because they often jump into trading without worrying about any guidelines. So, how does one keep themselves from making unwise decisions? What can they do to make sure that they’re always on the right side of green?
First and foremost, people must realize that successful trading demands great attention; it is not and never should be a game of chance. In addition to these useful pointers, people should keep an eye on supply and demand in the market to determine when each applies.
I’ll be sharing some useful tips to help a cryptocurrency trader make better trading decisions.
Have a Reason for Each Trade
While it may seem self-evident, every person must have a specific goal in mind before they begin trading cryptocurrencies. Regardless of whether they want to day trade or scalp, it’s important to have a reason for getting into crypto trading in the first place. Investors need to remember that trading digital currencies is a zero-sum game and that every victory comes at the expense of a loss. Somebody comes out on top while someone else comes out on the bottom.
There are instances when not making money on a particular deal is preferable to rushing into losses as a day trader or scalper. From years of market study, it’s been proven that sometimes investors can only stay profitable by avoiding certain trades on particular days or times. After all, the cryptocurrency market is mostly controlled by “whales.” These big-time investors wait patiently for regular investors to make mistakes in trading after they learn how to buy Bitcoin.
Use Stop Losses and Set up Profit Targets
It doesn’t matter if an investor makes a Bitcoin profit or not; they must always know when to pull out of a deal. Setting a specific stop-loss level can assist investors in limiting their losses, which is a skill lacking in most traders.
Choosing a stop loss is not something that should be done at random. An essential thing to keep in mind is that nobody should let their emotions get the better of them. A good place to put the stop loss is at the cost of your coin.
Investors should set the minimum price at which they’re prepared to exchange their coins based on how much they paid for them. This way, even if anything terrible happens, they’ll still have the amount of money that they originally invested. If the goal is to exit the market after making a specific minimum profit, stick to established profit targets.
Manage All Risks
Traders who are wise do not go after huge gains. It’s just something that they simply don’t do. Instead, they prefer to stay in the same place and make tiny but steady earnings from transactions. For them, this safe way to profit off their investments is a better choice than taking huge risks and losing everything.
Investors need to reduce their portfolios’ exposure to volatile markets by investing less of their money there. Trading at these levels requires greater patience, and the stop-loss and profit targets will be placed further away from the purchase price.
Don’t Fall Victim to FOMO
FOMO is an acronym for the phrase “fear of missing out.” This is a well-known reason why so many traders fail in the business. People making huge profits within minutes with pumped-up coins isn’t an appealing sight from the outside. To be honest, just about everybody dislikes those scenarios (or not).
Investors need to make sure that they are not tempted to jump into certain scenarios. It’s okay to pass on certain trades. These are the whales that were talked about previously. They sit back, beaming as they watch people buy the coins they acquired earlier at extremely low cost.
When investors jump into one of these scenarios, this is what typically happens next. Due to an overstock of these coins, they often wind up in the hands of tiny dealers, and as a result, losses begin to accumulate quickly.
Don’t Buy Because the Price Is Low
For the most part, newbies make the error of purchasing a coin based on its perceived low price or what they think to be a reasonable price. Investors should always look at the market cap rather than the cost of the coin.