If you have been trading in Bitcoins for a while now, you probably know how important safety is. We cannot stress its importance enough, especially to newbies in this field. Losing your expensive Bitcoins isn’t fun at all.
Hence, you probably want to learn about ways to avoid trading mistakes. As trading requires all of your focus, you should know several useful tips which will help you avoid mistakes and stay in the green. So, we decided to share with you a few useful tips which will help you become better at trading in Bitcoins.
If you feel like you’re missing out a lot, especially when a specific coin is being pumped, don’t worry. Instead, when a certain coin goes up like crazy with huge two-digit gains in minutes, you should simply move forward. The ongoing pump is usually a hot topic on Reddit and Telegram trading groups.
In fact, many people who have been ahead of you having caught the rise. However, you should remember that the whales are just waiting for small buyers on the way up to sell them the coins they bought for lower prices.
Have a Plan
No matter what position you hold, you always have to have a specific plan and target in mind. The plan you develop should be about how to make a profit and stop losses. Setting up and correctly choosing a stop-loss plan is a very important step in trading.
So, instead of letting the ego take control, you should never fall in love with your position or the coin itself. It’s very common to see a coin dumping by 80% in just a few hours. Hence, you wouldn’t like to be the one who is left holding it.
Have a Clear Strategy
Having a clear strategy and a reason for every trade is the best trading position. Hence, you should know why you’re entering a certain position and have a clear strategy in mind at the same time.
You should remember that trading in Bitcoins doesn’t mean that all traders are profitable. It is, in fact, a zero-sum game. This means that for everyone who benefits, there is someone else who ends up in losses.
The altcoin market is driven by large whales and they’re waiting patiently for innocent little fish, like you, to make a trading mistake. Even if you feel the need to trade every day, it might be better to do nothing instead of jumping into the rushing water and suffering substantial losses.
Most of the days, you won’t trade at all if you want to keep your profits.
Don’t Buy Simply Because the Price is Low
One of the most common mistakes for newbies in the cryptocurrency world is buying a coin because its price seems to be low and affordable. For instance, many beginners decide to choose Ripple over Ethereum simply because it is cheaper. This is a classic mistake. Hence, when considering to invest in a coin, you should never consider its affordability.
Instead, take a closer look at its market cap. Cryptocurrencies are gauged by their market caps, just like conventional stocks. This means that they are being evaluated using the formula Current Market Price X Total Number of Outstanding Shares.
So, you’ll notice no difference in owning a coin priced at $10 per coin with a total number of 1 million shares in the market and the same coin being priced at $100 with 100,000 shares in the market.
So, when thinking about whether or not to invest in a certain coin, consider its market cap rather its price. The higher its market cap is, the more suitable it is for investment.
Underlying Assets Create Volatile Market Conditions
You should be aware that most altcoins are mostly traded against Bitcoin. As a result, the underlying asset creates volatile market conditions. Bitcoin ends up as a volatile asset, which is an important thing to know, especially when its price is moving sharply.
Bitcoin and altcoins used to have an inverse correlation. However, since last year, this correlation became a mystery. Consequently, the trading conditions became foggy. So, when there is a period of fog, it might be best to consider not trading at all.
Identify Crypto Scams
Cryptocurrency in general, as well as, Bitcoin became a hot topic in recent years. As a result, their attracted many scammers into the field. The fact that a person is responsible for his funds and not a bank has been very revolutionary.
On the other hand, many newbies have sent their funds away investing in an ICO or IEO that will change the world. But this means that cryptocurrency has no insurance and as soon as you send your funds, they are no longer yours.
Therefore, it’s very important to learn how to identify a crypto scam because there are quite common these days. There are plenty of entrepreneurs who want your funds for the wrong reasons. So, when you consider trading and investing, think about your reasons for the endeavor.
Manage Your Risks
Even though you can never eliminate your risks, you can definitely manage them when it comes to trading cryptocurrencies.
The most important thing you can do to manage your risks is to remember never to run in the direction of massive profits. Instead, stay still and gather small but sure profits from regular trades. Sometimes, investing less is all the trading strategy you need to develop.
Ignore Financial News and Other Traders
Nowadays, there is financial news on a daily basis which might confuse you even more. What’s more, listening to other traders and their experience and advice will lead you to a wrong direction. You might not be aware but most of the published analysis and news posts are biased or promoted by a particular company or group.
So, instead of wasting time on reading the latest financial news and listening to your fellow traders, invest your time in learning the long-term trends. Moreover, never compare your story with other traders’ success stories.
Concentrate only on yourself and your skills will significantly improve over time. Don’t listen to your friends when they suggest buying coins, but always listen to your gut only.
If you want to improve your trading skills in Bitcoins, visit https://bitcoin-champion.com/ to learn more about how to do so.