FOUR EXPERT PRACTICES THAT WOULD RADICALLY IMPROVE YOUR TRADING
Whether you're already trading or just intending, these four tips will put you on a different level if you know and apply them.
Crypto-Trading is just like any other profession. It takes a lot of practice and patience to master. Not only that; you must be a lover of knowledge. A lot of new traders lose money because they get in with a mindset that they have to retire tomorrow.
The earlier you understand that it is not a get-rich-quick scheme (although it can make you a lot of money), the more you’ll last in the game.
In today’s newsletter, I’ll share a couple of practices that would help you become a better trader even if you’re still thinking about trading.
Seek Knowledge
I’m going to be quite honest! Some of the banes you see me share frequently in my newsletter, I fell for them in my beginner days. I came in a bit recklessly – what did it bring me? Wreckage!
Knowledge is the very first thing you should seek. You need to understand what you’re getting into. Knowledge separates those who do well from those who don’t.
You’d need to learn how to use technical indicators so you can properly and independently predict the next move of a coin – although this can never be guaranteed. Knowing how to use them will make you more confident in your trading set-up.
Also, you’d have to constantly look out for development updates regarding your investment or potential trade. These updates are usually the key metrics to a profitable trade if you can catch them early enough.
Preserve Capital
One thing you must know is that trading is a zero-sum game. For every single trade you enter, you bear a risk of losing money. There’s no possibility of making money in the market without this risk.
However, the premier goal should be to play defensive and protect your capital. That is why a tool like “stop-loss” exists.
The cryptocurrency market is very volatile so you can’t undermine its adverse effects as well. Before entering your trade, you’d have to figure out where to place your take-profit and stop-loss order should your trade idea get invalidated. It’s often said that retail traders should not be willing to lose more than 2% on any trade, but that would depend on the kind of market you’re trading (spot, futures…) and your capital size.
Beware of low cap coins
These usually coin with low market capitalization. They tend to yield massive gains in a short period - I’m talking of gains over 500 – 1000%. Reason being that it doesn’t take a lot of money to move such markets. For example, a coin with a market cap of $2 million would require just another $2 million to move it 100%. That can happen within a short period on a random pump in reaction to fundamental analysis (F.A).
On the flip side, it doesn’t take much to dump such markets too. Trading them can be profitable but note that you can find yourself on the wrong side of the trade if your entry timing is horrible.
Don’t chase trades
This is one of the most important pieces of advice I’d have to give a beginner. The more you grow in handling your emotions, the easier this becomes for you. Before that, you’d have to follow a mentor’s advice.
Chasing trades is one of the easiest ways to bring your capital to zero. If you spot a good trade that has moved already, keep off! There will always be new opportunities in the market. Always!
Final words: Stay loyal to your trading plan, apply good risk management that helps minimize your losses and increase your gains.
You don’t have to win all your trades to be profitable. A lower win rate with a higher risk-reward strategy will put you up among profitable traders.