Switchere has already explained why almost all crypto traders lose money sooner or later and why the idea of getting rich quickly usually fails. But that doesn’t mean that crypto trading itself doesn’t work. However, there are some basic rules that should be strictly observed in order to trade cryptocurrencies successfully. What are these key rules and tips? Let’s try to find out!
Rule #1: Learn, Learn and Learn Again
Many traders dive into a trade and struggle to understand what it is like to lose money quickly. In-depth trading skills are everything you need to become a successful trader.
If you want to trade, you should therefore deal with the technical analysis as a first step. Because how the prices move can often be explained with the help of technical indicators.
Every newcomer is therefore advised to obtain specialized trading literature and read useful online trading guides. Thus, before investing your own money, you should understand how technical analysis works.
Rule #2: Choose Wisely a Trading Platform
Once you’ve learned enough about the technical analysis, the next step is to choose a trading platform that will suit your needs.
Many platforms provide tutorial videos with instructions for trading on their site. Demo accounts are also useful for trading. Here you can try out trading with virtual money thus eliminating real losses. Newbies, in particular, should make use of this option before investing their own money.
Make sure to compare different providers with one another. On the one hand, it’s all about the interface. Is it simple and intuitive so that users can quickly find their way around?
On the other hand, fees are a major factor when choosing a trading exchange. The exchanges earn from the trading fees that investors have to pay in order to be able to carry out a trade. These fees can vary significantly.
In the long run, fees can be a big deal. Especially with larger positions, the trader has to make a significant profit in order to only pay the trading fees.
Rule #3: Trade Strategically
Quite often beginners don’t use a profitable trade effectively or even go into the red. There are some useful tools that can be used to trade strategically in order to hedge and make higher profits.
The stop loss is particularly important. The user can use it to set an exact rate at which the position will be closed. If a price suddenly falls sharply, the stop loss can prevent you from losses.
However, the stop loss shouldn’t be set too close to the entry position, as prices often countermove after a small correction. In general, the stop loss is a useful tool to secure profits.
What other important trading rules do you know? Feel free to share your knowledge in the comments!