Opinion: 10 Rules Every Newbie Crypto Trader Should Follow So You Don’t Lose Your Shirt

If you’re reading this, I’m assuming you know the basics of cryptocurrency – for example, that crypto is digital or electronic money not backed by a government or a bank. To protect your account, you probably know how to store crypto in a digital wallet, preferably offline on a computer, USB stick, or mobile device. And you should know that cryptocurrencies are extremely volatile, very risky, and easy to manipulate.

If you still want to trade cryptos, let’s talk about security. First, open an account with a trading platform you can trust, like Coinbase or Robinhood. Yes, there are other platforms but you have to start somewhere. These two reliable and well-known providers will do the job until you can separate the good from the bad.

By the way, absolutely avoid fancy online brokerage firms or crypto exchanges you’ve never heard of. Many are scam sites designed to exploit your inexperience. Please do basic research and never donate your money to unknown companies. Here’s an idea: call or email the brokerage before transferring your money and determine its level of service. Better yet, see if the business exists.

Second, while there are thousands of cryptocurrencies out there (some real, some fake), stick with the world’s most popular and liquid crypto: BTCUSD bitcoin,
After gaining more experience, do not hesitate to trade other cryptos (after bitcoin, Ethereum ETHEUR,
is the second in importance).

Now let’s talk about trade. The first question most newbies want to know is, “Can I make money trading cryptocurrency?” The answer is yes, but it takes skill, discipline and due diligence. Crypto is still in its early stages and it could take decades for it to be accepted and supported by a government or institution (if applicable). Until then, the buyer is wary.

The worst part is that the crypto universe is populated with black money, manipulators and manipulators who give misleading advice on social media, trick you into buying their fake currencies, or try to convince you to join their. fake crypto exchanges. Crypto is just pure speculation right now, but as long as you do your research you should be able to avoid scams.

Since you are now aware of some of the risks, here are the top 10 rules that any trader new to crypto should remember and follow:

1. Evolve in a trade rather than depositing large sums of money: If you are new to crypto trading, it is a mistake to put large sums of money into bitcoin (or other cryptos) all at once. Because crypto is so volatile, instead of buying $ 1,000 in bitcoin, for example, start with $ 200, and if it moves in the right direction (upward) add an additional $ 200. Keep adding until your position size is fully funded.

2. Buy and sell at extremes: Whenever you trade a volatile financial product such as crypto, you should consistently take profit. If your winnings are extreme, sell half or all of it, but take something off the table. Resist the urge to be greedy when trading crypto (i.e. fear of running out or “FOMO”) or risk holding on until you lose most or all of your money.

3. Small business: At first, aim for small gains. Of course, some people have made millions of dollars exchanging bitcoin, but like lottery winners, there are many others who have lost all or a good portion of their money.

4. Never buy on margin: When you go for margin, you are borrowing money from the brokerage house to increase the amount you can buy. It’s leverage, and it’s a double-edged sword. If you are right, you can make substantial profits. If you are wrong, you may owe more than what you invested. Savvy traders manage risk, which means not borrowing money to buy crypto. (You’ll know what I mean after you get your first margin call.)

5. Keep the mental stop-losses: It’s always wise to have stop losses, but since cryptos move so quickly, “hard” stop losses are often ineffective (one of the reasons many platforms don’t allow you to use hard stops for them. cryptos). Instead, use “mental” stops and have the discipline to obey them. An alternative method is a “time stop”, ie tell yourself that you will sell the position on a certain day, for example Friday. This is an effective way to force yourself to block the winners and eliminate the losers.

6. Don’t keep losing positions: If a trade goes against you, consider selling all or half – don’t let small losers turn into big ones. It is true that those who sold bitcoin for $ 20,000 were shocked when it skyrocketed to $ 60,000. Rule # 7 shows you how to handle this.

7. Have a trading plan: It is important to have a trading plan, especially for cryptos. Have a plan that helps you decide when to buy or when to sell. Follow the plan and obey your rules.

8. Use technical analysis: Technical analysis gives you clues as to when to enter or exit a position. For beginners, the two best indicators are moving averages and the RSI (Relative Strength Indicator). They are easy to grasp and provide good signals.

As of June 30, 2021, bitcoin was well below its 20, 50, 100, and 200-day moving averages on the daily chart. (Bitcoin needs to hit its 200-day MA of $ 43,794 to come out of the basement.) On the weekly chart, although consolidating, bitcoin is still slightly above its 50-day moving average.

The RSI is 44.72 for bitcoin on the weekly chart. Although oversold, it is not yet at extreme levels. At 30 or less it’s extremely oversold, but don’t use the RSI to know when to enter.

9. Diversify: Never put everything you own into one financial product. Buy crypto but spread your money over non-crypto investments. If this is not possible, make small purchases until you have more experience and knowledge.

10. Practice with a simulated account before you buy: If available, practice on a simulated account or paper money before trading with real money. If you don’t have access to a test account, follow rule # 3.

Michael Sincere (michaelsincere.com) is the author of “Understanding Options,” “Understanding Stocks” and “Make Money Trading Options,” which presents simple options strategies for beginners.

After: These 6 Smart Stock Selling Strategies Can Help You Keep What You Earn in the Market

Read also : Bitcoin and Ether Head to Worst Second Quarter on Record for # 1 & 2 Crypto in the World

About Janet Young

Check Also

Death of Sangli: FIR against 25 people for incitement to suicide

Hours after nine people from a family were found dead, Miraj police charged 25 people …

Leave a Reply

Your email address will not be published.