Any investment you make in a cryptocurrency is at your own risk. So, engage wisely when you trade! More so, it takes a disciplined trader to watch the portfolio value plummet and still have the strong will to say no to the sell button.
The crypto market has grown over the years and it is still growing. Cryptocurrency is rising in fame and popularity on a day-to-day basis, and there are over 2,000 cryptocurrencies in existence globally. Does this tell you anything?
Foremost, the cryptocurrencies and blockchain technology that is backing them have been crowned by a wider audience as the obliterator of the old way of life. This is true as cryptocurrencies provide new, unique opportunities in the financial industry and better ways of processing all kinds of transactions.
However, one fact stands tall; the crypto-market is extremely volatile and all the traders suffer from the price fluctuation inherent in the market. Nonetheless, putting up a good investing habit will help you reduce losses and garner more profits. Apart from this, there are important lessons you should learn and implement in order to stay afloat in the cryptocurrency world.
7 Outstanding Lessons for Crypto Trading
Here are the series of lessons you need to learn in order to survive this highly speculative cryptocurrency market. Our hope is that you take these lessons to heart and make your lives better as a result.
1. Invest Only What You Can Lose
This is actually presumed to be the most important lesson or rule for investors and traders alike. Permit me to state categorically that the January 2018 cryptocurrency crash left many people frustrated and hopeless.
The reality about digital currency is that when you convert your fiat cash into cryptocurrency, you could potentially lose it forever. Especially if the cryptocurrency is performing poorly. There is no guarantee that you will get back your money as losses don’t come back. Besides, some factors, such as government interference/regulation, hacking, and malware, may prevent you from seeing your money ever again.
Wait a minute, what does it mean to invest the money you cannot afford to lose? It is an act of desperation when you invest all you have with the expectation of making huge returns. An example includes: applying for loans, then selling everything you have and traveling around the world.
So, the best bet is to invest what you can lose, maybe a small amount from your savings, so you don’t fall into a financial pit.
2. Concentrate Your Investment in Bitcoin
The majority of altcoins are fixed rather closely to Bitcoin (BTC). What this means is that if Bitcoin price rises significantly, the price of altcoins will decline as investors and traders will shift to Bitcoin profits and exit altcoins. On the other hand, if the price of Bitcoin falls drastically, altcoin prices will decrease because investors and traders will exchange back to fiat currency.
By implication, the right times to grow your altcoins is when Bitcoin shows signs of growth or fall, or when price remains constant.
3. Invest Wisely
Investing wisely entails that a good trader or investor completes the necessary research and gathers the required background information about a particular cryptocurrency. This will make the trader take complete responsibility for the likely outcome of the trading investment. The highly unpredictable and volatile nature of the cryptocurrency market makes it impossible to trust even the “best” information from the “best” trader. However, considering the utility value of a cryptocurrency is a good way to start.
4. Always Learn from Your Mistakes
When a complete loss happens, accept it. Then, evaluate the situation that led to the loss and why it happened. Hold whatever lessons you have learned from your mistakes as an asset, as they will be your guide tomorrow. Take every trade as a lesson and grow upon that foundation.
Remember that no mortal being is perfect and no one is capable of winning every trade at all times. So, when you lose in any trade, it shouldn’t discourage you. The truth of the matter is that your failures or losses of today will make you a better trader or investor if you take the effort to learn from them.
5. On a Trade, Always Set up a Stop-Loss
This lesson is necessary if you are taking part in an active trading. It is important you quit trading for any coins that are not in your portfolio. This action is necessary as it helps to reduce your losses. Furthermore, such action will afford you the opportunity to gauge your success at keeping or adjusting your level for future trades.
Therefore, when the cryptocurrency market dips, the altcoins fall drastically in like manner and stop-losses can translate into profits. How? By independently exchanging fiat currency you can reenter the market again for cheaper rates.
6. Ticker Symbols Are Not the Same Everywhere
Always check the ticker symbol as they mostly vary from one exchange to the other. For instance, the ticker symbol for Bitcoin Cash as it trades on exchanges is BCH, but it trades on other exchanges as BCC. On the other hand, BCC is the ticker symbol for BitConnect. So, if you buy BCC thinking it’s Bitcoin Cash when actually, it’s BitConnect, you will lose your money. So, always be alert and check twice before clicking final confirmations!
7. Wait for a Bit for the Next Loss
Do you know that Bitcoin fell to a whopping low around $5,900 USD from an all-high around $20,000 USD last December this year? When you are greedy, unwise, and investing foolishly, you’re likely to buy cryptocurrencies at a high rate. If a coin rises quickly in the crypto market, it will gradually correct in a matter of time.
So, why that unrealistic rush? The next stop (loss) could offer you something greater than you might have thought possible. Exercising patience is critical in cryptocurrency trading.
Collaboration is Vital
These lessons are not the only ones that will make you successful, rather they are a great starting point for any prospective cryptocurrency trader or investor. In the world of cryptocurrency investing, it is dangerous to work alone. You need a community of like-minded crypto-traders to succeed. Why?
A community offers you an accumulated resource for free. Many investors and traders will always vastly surpass your own trading experience. They will also support your efforts and give you a soft landing during rough times. You may have the flair for analyzing and consuming news, but it would be better if it is done as a group.
Undoubtedly, the community of traders will definitely increase your knowledge much faster then you trading all by yourself. However, with that being said, recognize that groups sometimes act as a herd, stampeding over the cliff.
This article should not be taken as, and is not intended to provide, investment advice. Users are ultimately responsible for the investment decisions he/she/it makes based on this information. It is your responsibility to review, analyze and verify any content/information before relying on them. Trading is a highly risky activity. Do consult your financial adviser before making any decision. Please conduct your thorough research before investing in any cryptocurrency and read our full disclaimer.
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