Manage risks, do not rush, and other tips for crypto traders

Our cryptocurrency trading tips are not a guarantee of success, but rather a precautionary measure. To begin with, profitable crypto trading requires a basic understanding of technical analysis as well as the principles of the digital asset market's operation.

Keep in mind that cryptocurrencies are extremely volatile. The bankruptcies of their ally companies, the tweets of influencers, and other (human and non-human) factors all have an impact on the value of many of them. In light of this, even experts occasionally misjudge how prices will move. Nevertheless, a beginner can reduce losses by using some crypto trading tips.

Don't ignore risk management

Do not turn trading into gambling. Be specific and realistic in your goals, and manage your risks. The first step towards this goal is to limit your trading capital to what you can afford to lose without jeopardizing your standard of living or endangering your mental health. Do not trade highly leveraged assets unless you have sufficient funds to cover the debt in the event of a failure. Caution should be your middle name, as it is better to make a small profit than a large loss. 

Don't rush

The advice is relevant for both day crypto traders and scalpers. There are times when you should sit back and watch the market move rather than take action. When in doubt, wait, test your theory a few times using experiments or other people's experiences, and then come to your own conclusions.

Analyze the market situation

The success of crypto trading is largely determined by how thoroughly you have studied the behavior of the cryptocurrency market under various conditions. This is a very voluminous process, as it is necessary to consider the level of supply and demand, news on a specific crypto project, changes in economic indicators (inflation, base rates, supply chains), ongoing cataclysms, whales’ behavior, current bankruptcies, regulators’ policies, and so on.

It’s possible to benefit from the market through the study of technical analysis and the use of trading strategies based on it. Therefore, don't overlook learning how to read charts and spot patterns in them.

Set Take Profit and Stop Loss

The two most important tools to use when opening trading positions are the take profit and stop loss orders. Make sure to set a realistic profit and acceptable loss, after which the trade will be automatically closed. 

Instead of using these orders, inexperienced cryptocurrency traders may choose to hold onto their positions in the hope of making more money. As a result, they are psychologically trapped in greed and lose profits and sometimes capital.

Pay attention to capitalization

Avoid the common beginner’s mistake and take into consideration a digital asset's market value rather than its price. Just because tokens are extremely cheap doesn't mean you should buy them. High capitalization is an indicator of profitable assets.

Choose an active and legitimate crypto exchange

Rather than looking for cheap cryptocurrencies, find a trustworthy, cost-effective, and time-tested cryptocurrency exchange. Commissions and fees must not exceed your profit.

Check the trading platform's legitimacy before registering. Read reviews and overviews, look for more information online, and get to know the team behind it. Kraken, KuCoin, Bitstamp, WhiteBIT, and Bybit are examples of safe platforms.

Consider the trading volumes

Large daily trading volumes are the primary indicator of high liquidity, which is necessary for successful trading. The higher the daily trading volume is, the better the asset is suitable for trading.

Low liquidity limits a trader's ability to quickly sell and buy cryptocurrencies, making it difficult to enter and exit positions. Furthermore, low trading volumes raise trading costs.

Control your emotions

The results of your trading may not be what you were hoping for if you were driven by greed or fear. To avoid falling into psychological traps, learn to recognize and control your emotions. Stick to your trading strategy, analyze the charts, and don't let your emotions guide you through a process that requires a cold mind.

The given cryptocurrency trading tips will assist you in developing a conscious approach to trading digital currencies and prevent you from suffering catastrophic losses, but they will not replace an understanding of the theoretical basics and the ability to apply them in practice.