Blog

7 Important Things to Consider Before Trading Crypto

Profitable trading requires a lot of knowledge, attention, and time. Trading cryptocurrency is not gambling, and it should not be. Seven essential points are explained in this article. We suggest you consider them in your trading.

 

1. Have motivation and purpose

You must have a goal to start trading cryptocurrencies. You should know that on the other side of every win, there is a corresponding loss. In the trade, one person wins, and the other person loses.

Big investors or so-called big whales control the cryptocurrency market. They are people who have thousands of bitcoins.

Whether you are a day trader or a scalper trying to make a profit in short time frames, in minutes and seconds, sometimes it is better not to make a profit than to make a loss.

 

2. Set up take profit and stop loss

In every trade you make, you should know when to get out, whether you are making a profit or a loss. Anticipating and targeting the limit of losses can help reduce losses in trading. Not all traders have this skill.

For example, if you have $1,000 in your account, $900 can be the stop loss and $1,200 can be the take profit. With this, in case of the worst case and loss, you can exit the market at the point you have determined to avoid more losses.

 

3. Welcome to FOMO

The word (FOMO) stands for “Fear of Missing Out”. People suffering from FOMO, are excited to do something because of the fear of losing their imaginary opportunity.

This fear is one of the most famous reasons why many traders fail in the cryptocurrency market. The moment green candlesticks scream like a human being on the price trend chart, begging you to enter, be cautious. At this point, the whales are smiling and watching as they buy the coins they already bought at great prices. Usually, these coins are bought by retail traders. But after some time, red candlesticks appear on the chart due to more supply than demand, which indicates the beginning of loss and decline in assets.

 

4. Manage risks

Small pigs eat a lot, but big pigs only eat once. This is an English proverb that applies to market profit and cryptocurrency trading. Smart traders don’t strive for big profits. They prefer to wait and earn small but sure profits from regular Bitcoin trading.

 

5. Big coins cause market instability

The price of most cryptocurrencies is based on the current price of Bitcoin. It is important to understand that Bitcoin is very volatile compared to fiat currencies.

When the Bitcoin market is volatile, the market can be foggy and you cannot analyze and predict prices well. In this situation, we suggest that you choose closer targets for your trades or that you don’t enter the trade easily without deep analysis.

 

6. Don’t buy just because the price is low

Most newcomers to the cryptocurrency market make this mistake. Buying a coin just because it looks cheap or affordable is not a compelling reason to buy. For example, consider someone who wants to buy Ethereum cryptocurrency. But at the time of purchase, due to the low price of Ripple, they go for this currency. Investing in a coin should not be based on its reasonable price.

 

7. Proposal on initial crypto offerings (ICO)

During an initial crypto offering (ICO), startups provide an opportunity for the public to raise capital through a crowd sale. Instead, these investors are allocated coins at a lower price than in the future.

Time has proven that after initial releases, after some time they have yielded tenfold. But what is the point of this? ICOs have attracted the attention of a large number of investors due to their high returns. Of course, initial offerings may be offered with the purpose of fraud, which should be researched in the selection of these coins.

 

The bottom line

Seven important trading points that you should follow when buying Bitcoin and buying altcoins were explained. But in addition, it is important to choose a reliable exchange for depositing assets that have high security. The next step is to choose a safe wallet for your coins. We suggest you go for devices that provide offline storage for altcoins.

 

Copyrights © 2021 ZareTech.