Crypto Trading Tricks and Tips Everyone Must Know
The Crypto market is now firmly established in the financial landscape. More and more institutions and investors pay attention to it. The emergence of the crypto exchanges and new crypto traders has fueled the emergence of thousands of cryptocurrencies in just a few short years. Do you find it difficult to navigate this market, establish a clear strategy, and have a defined investment benchmark? Here are crypto trading tricks and tips for investing in virtual currencies and trading cryptocurrencies well.
Crypto Trading Tricks and Tips
Place your orders properly
It’s of utmost importance to know how to use your order books. When you open a trading position, identify your entry price, your stop-loss, and your profit target. Never take a position without placing a stop-loss order. Even better, if your cryptocurrency broker can offer you a guaranteed stop-loss, you should think about it carefully. Highly volatile markets can cause prices to drop sharply beyond your stop order. Mind that it may force you to reimburse your crypto broker for any charges.
Unless you know the associated risks, we recommend that you not trade cryptocurrencies with leverage, as this market is already significantly volatile. The market has its volatility and will continue to provide you with profitable trading opportunities.
Look at the daily trading volume, market cap, and liquidity of the crypto
One of the main attractions of day trading Bitcoin (BTC), Ether (ETH), Ripple (XRP), or any other digital currency is volatility. The volatility level is one of the main draws for short term daily traders as it allows them to enter and exit the market, hopefully with gains.
The “liquidity” factor is also very important. Four major cryptocurrencies – Bitcoin, Ether, Ripple, and Bitcoin Cash – all have market capitalizations of over $20 billion. It’s a significant source of liquidity. Always keep an eye on the capitalization of the cryptocurrencies you wish to trade. The market cap ensures the level of liquidity.
But to make sure that a cryptocurrency is liquid, we will rather look at the daily trading volume, which is a real indicator of liquidity.
Also, pay attention to the total number of tokens in circulation and the possibility of more to appear. Likewise, watch if a partner or owner of this cryptocurrency has a substantial stake. Mastering these elements will allow you to better learn how to trade cryptos.
Compare Altcoins’, Bitcoins’, and Dollar’s Graphs
Large-cap cryptos have the biggest trading volume against the USD. That’s why it’s important to analyze the graphs comparing the altcoins, bitcoin, and their dollar value. Thus, most of the crypto brokers issue this type of technical analysis every week, so make sure to check them out.
Choose your cryptocurrency trading platform carefully
It’s not just the market capitalization or daily volume of a cryptocurrency you should pay attention to. The platform in which you trade is just as important. There have been many examples of exchanges with obstacles to enable trading position during extreme volatility. The reason behind that could be an insecure trading system or their inability to manage the volume of transactions. Pick up your crypto broker starting with the next criteria: the security of the transactions, intuitive interface, and vast choice of cryptocurrencies. Read broker reviews prior to making your choice.
Don’t involve emotions when trading crypto
No matter what amazing crypto trading strategies you implement, being too emotional can condemn your trading to loss. It is especially important for short term traders. In their case, the fear of loss affects them to the extent of disturbing their plans and strategy. Controlling emotions is important after an unsuccessful trade.
One of the main ways traders lose money is by reducing discipline and chasing unrealized losing trades. If so, you will let the market control you and take your money right in front of your eyes.
The cryptocurrency market has garnered more news articles than any other asset class over the past two years. This popularity reinforces the anticipation of “the bursting of a bubble.” You have to get it out of your mind and define your own approach to the market. As a crypto trader, you must define your main objectives before starting to trade crypto.
There are no miracles in crypto trading. The management of crypto assets requires learning, practice, and patience.
Also, when it comes to crypto trading tricks and tips, we must strike the importance of avoiding scams. Crypto trading has generated a very large number of high net worth people, referred to as so-called crypto wales. Hence, it resulted in many offers promising you to get rich in a short time trading crypto. Beware of websites that convey the idea that your crypto investments will make you rich quickly.