Tips for Successful Cryptocurrency Trading -

Read Time:3 Minute, 55 Second

Cryptocurrency trading is a highly efficient way of making profits when done correctly, though it involves risks. However to the newbies, it is crucial to learn and prepare yourself before you venture into the business. Here are some key tips for cryptocurrency trading success. Here are some key tips for cryptocurrency trading success:

1. Do Your Research
If you decide to invest in any cryptocurrency, always consider what you need to know about the project: the problem that the project solves, the technology used, the plan of development, team behind the project, competitors, etc. Knowledge of the basics will enable you to assess the projects and make the right decisions. Take time to familiarize yourself with terms commonly used in the world of cryptocurrency, as well.

2. Dollar Cost Average
Do not bring your money to the table all at once. To minimize the effect of volatility, dollar-cost average by buying the stock in portions over weeks or even months. It also enables one to acquire the crypto assets at various prices other than the prevailing market price thus avoiding the issue of lump sum purchase. Establish a pace (such as weekly) and adhere to it.

3. Technical and fundamental analysis
In your case you cannot be a trader without both forms of analysis. Technical analysis involves utilizing charts and indicators to decipher the price changes. Basic analysis is about assessing projects based on usage, partnerships, development and other functional criteria. Combined, they should be used to identify the right time to enter and exit a trade.

4. Follow Crypto News Sites
Subscribe to the news from reliable cryptocurrency sources. Continually manage investments made in projects and look out for new technologies that may present good investment opportunities. Prices are highly sensitive to news, which means it is important to know major events as and when they happen. It is also possible to come across fake news sometimes therefore ensure that you check the accuracy of information.

5. Use Limit Orders
Use limit orders that allow bulk purchases at a stated maximum price, and sales at a stated minimum price. It gives control over the entry and exit prices, thus anchoring the downside risks. Market orders are those that buy/sell at the current market price and should generally speaking be employed as a rule.

6. Have a Trading Strategy/Plan
Create a set of guidelines for the types of investments you want to make and when you are going to take profits and have losses. Strategies assist in eliminating emotion driven decisions. There are numerous approaches available (DCA, swing, day trading). To decide which of them aligns with you the most, try to read them out loud and compare the feeling.

7. It is therefore more advisable to practice first using a demo before deploying it in a live environment.
Each exchange provides practice trading accounts with virtual money. This means that mistakes can be made since there is no real money invested in the business. Demo mode can be used to test the chosen strategy/plan and also to become familiar with tools available on the platform. After mastering the demo account, move to a live trading environment with real money.

8. Stay Calm During Volatility
Crypto can be one of the most risky and unpredictable markets where you can see crashes up to -80% and boosts of 10 x at least based on the news. Do not panic sell when the price is dropping sharply or get too exuberant when the market is trending upwards. Avoid trading based on emotions, and instead, stick to the policy and plan you had laid down before trading.

9. Keep Updated Records
Document every crypto purchase and sale transactions and include buy/sell prices, fees, date/time etc. When the tax season is around the corner, all your capital gains/losses will be well documented. Trust me, you will be smiling to the bank for this admin!

10. Use Cold Storage Wallets
When an asset is acquired ensure that it is placed in cold storage which is in hardware devices for maximum security. In contrast to hot exchange accounts, cold storage eliminates risks from hackers and is managed solely by the private keys you define. Popular choices are Trezor and Ledger.

So, do not rush to invest money immediately, develop trading plans, try it on demo, study crypto news, use smart orders, and be precise with documentation. Adopt these practices as part of your routine and your chances of achieving long-term success in cryptocurrency trading will significantly improve. In time, you will have more experience, expertise, and have worked on more projects that you can apply to strategic planning based on research and analysis.