Crypto trading is becoming one of the most talked about topic these days and everyone wants to become a trader. Unfortunately, many traders lose money in trading because they are not fully knowledgeable about trading. You can get very high returns in trading provided you have proper trading knowledge and experience. In this article we will give you few most important trading tips which will help you in profitable trading.
Tips: Before Trading Crypto
The following are the five most important points to look out for, before trading crypto. If you follow them, you will become a successful trader.
#1 Strategy for Crypto Trading
You should have a proper and clear strategy when you are trading crypto. You should not enter a position based on hype. Before entering the trade you should have the entry and exit points. If you do not have these key points you will keep holding in case of loss and will not be unable to take profit in hope for more returns.
#2 Risk Management
Risk Management is of real Importance in crypto trading. Do not be greedy or emotional while entering trades. You should have a system in place and not just randomly buy or sell the coins.
You should always set limits in your trade. Using Stop loss and take profits is a must in a trade. You won’t be like others who keep on holding the coins even when it is constantly decreasing in value. Also, if you do not take profit when the coin reaches your target then that is another common mistake which many traders do.
3# Diversify Your Crypto Portfolio
Do not invest in a single asset or coin. You must have a diversified portfolio which should contains all types of coins. Focus on greater percentage of high volume coins, some percentage of mid volume coins which have good projects behind them and allocate a tiny percentage of your portfolio to low volume coins. In other words, you shouldn’t put all eggs in one basket.
4# Trading Is Not Gambling
You should consider trading as a long term investment. Many people are quickly in and quickly out of trades. This may give them tiny profits but will never be able to make huge gains through this process. If you are positional trader or swing trader, you will make much more money. Don’t treat trading like gambling. Taking blindly short terms entries are never be beneficial. Also If you miss a trade don’t rush into it. Stay calm and wait for the next trading reminder.
5# Money Management
You should have a clear understanding of how much risk you are willing to take in each trade. So invest only 1% or 2% of your trading capital in every single trade. Do not be over exposed in the market. Taking high positions in the market will not make you rich in one day. Always keep some amount of fund that never gets invested in your trade.
You should have the plan for profit and loss ration in each trade. A profit or loss ratio means that the size of the average profit compared to the size of the average loss per trade. You should take highly recommended 3:1 profit ratio in each trade. This way even if you lose 70% of your trades, you will still make money if you win only 30 percent of the trades.
Conclusion
There is a lot of volatility in the digital assets and crypto market. If you trade without preparation, you will lose your capital to the market. Proper risk and money management is the only way to survive in this market. You should be decisive in getting in and out of a trade. Following and understanding trading is a must for every trader.