Cryptocurrency has made a statement in the crypto market and so is its trading. With such volatility associated with it, there is a high probability of gaining profits. However, without implementing optimal strategies, you might lose more than you gain. This is why it is imperative to play safe and follow below-written crypto trading rules to mitigate the errors and proliferate your profits.
So, let’s dive in.
Only invest money that you can afford to lose
Many investors take loans to invest in a cryptocurrency which might be beneficial for few, but not for everyone. Crypto market is highly volatile, and it can anytime turn you from zero to hero and vice-versa. Also, the decentralization of cryptocurrency is susceptible to many factors like government regulations, hacks and so on. So, we suggest you to never go into debt and invest money that you can afford to lose.
Trade on a reliable exchange
Trade on a reliable digital asset exchange platform having high liquidity and trading volume along with a powerful trading engine. Also, ensure that it is underpinned with robust security features so as to eliminate the users’ apprehensions of losing the stored coin. Some exchanges like ZedXe have partnered with custodial service provider named BitGo to add an extra level of security to the funds of their users.
Diversification is the key to success
Multiple coins surged by 100x and 1000x in the year 2017. Such elevation can easily attract the interest of a novice investor and tempt them to put all their eggs in one basket.
Currently, the crypto market has over 1500 cryptocurrencies and you can gain the most out of this market by leveraging diversification technique. It is always a good idea to invest in 3-5 coins to minimize risk and maximize profit. To begin with, you can invest a little amount in bitcoins so that you can escalate the BTC rally and reduce loss while the value of altcoin goes down.
Take profits at regular intervals
In the crypto market, you can easily find a coin increasing by 20-30% in a span of 2-3 hours. In such a scenario, some investors get greedy and wait for more elevation due to which, they miss out on apparent profit. No matter what your goal is, you must reap the profits at regular intervals. This habit can help you eradicate the pain of losing a lot of profit when the price of the coin again plunges drastically.
Do proper research prior to investing
It is common to see newbie investors invest in the hyped coins and then repent. Also, there are a plethora of Initial Coin offerings and Ponzi schemes out there that only aim to befool the investors and steal their money. By meticulously researching the market trends and understanding the momentum of the coin you’re investing in, you can invest in the right coin on the right time and also take responsibility for your investment.
If you’re into day trading, it is imperative for you to set a stop-loss. It can help you mitigate losses. Many cryptocurrencies are not good for long-term trading and must be traded with caution. Stop-loss allows you to automate a trigger when the coin is sold and also replace that coin with any other beneficial coin if needed.
Crypto trading is quite a simple task. All you need to do is understand the market, TA, coin you’re investing in and trade volume for that particular coin, and find the best site to buy and sell bitcoin or altcoin. Besides, these six rules will also keep your float for the long-term and help you to trade efficiently.