HOW TO BECOME SUCCESSFUL IN CRYPTOCURRENCY TRADING
INTRODUCTION
Trading the cryptocurrency market has always been one of many ways a lot of people make money in the crypto space.
The cryptocurrency market is a highly volatile market that encourages traders to benefit from the short-term changes in prices of assets such as bitcoin, altcoins, and other value tokens for the sole purpose of making a profit.
This type of online trading is almost the same as stocks, currencies, or commodities trading. The main task is to buy when the price is low and to sell when it is higher.
As simple as this may sound, cryptocurrency trading can be quite complicated for some as this has resulted in the loss of funds or getting completely liquidated. This happens to a lot of traders, most especially new traders and one of the reasons is, they are eager to make a profit.
Here Are a Few Things To Note Before You Trade
First, you need to know that starting successful crypto trading with zero experience is impossible. You must understand the following :
- You must be able to analyze crypto coins/tokens you want to trade
-You must be able to use study and understand chart patterns
-You must know how to open deals on crypto exchanges.
Reasons why many traders are not successful in cryptocurrency thereby leaving on a sour note
- Wrong orientation
Many a time, adverts that talk about cryptocurrency trading give a distorted orientation about it, thereby leaving a lot of people with the wrong mindset of turning $10 to $10,000 overnight. You need to have a considerable amount of knowledge while trading and a lot of time practicing to improve your trading skills
Secondly, you need to be able to use meaningful capital when trading to be able to get significant profits. Once you can put these two things in mind then you can have the right idea about crypto trading.
- Impatience
This is another way many lose money in cryptocurrency trading, this is because like every other form of trading you are expected to sell higher than when you bought an asset to make a profit. However, when you are impatient, you are then constrained to sell your coins at a loss this is usually one of the easiest ways many lose money in crypto. Being patient with the market by allowing the market to come to you instead of chasing it gives you a better chance at success.
However, whether you are trading spots or futures trading in crypto, to be consistently profitable and successful trading, there are a few steps you must consider ;
1- Have a strategy
2- Define your entry and exit point. you need to know when to buy (entry) and when to sell (exit)
3- Risk management/money management
4- Understand technical and fundamental analysis
- Have a strategy:
To be successful in cryptocurrency trading, having a strategy is one of the most important parts of your trading as this will help you in making the best of your crypto journey. Your strategy must include the type of trading you want, the crypto exchange to trade on and the amount to trade with.
Types Of Trading
We have mainly three different types of trading, these are day trading, swing trading, and scalp trading ;
Day trading: this form of trading is done within 24 hours. It involves entering into the market at the lowest point within the last hours and exiting the market within the next 24 hours by studying the daily time frame charts and other indicators and profits are taken within that period
Swing trading: this type of trading is done by studying the weekly time frame chart and this can be achieved by entering the market at the lowest point within the week and exiting at the highest point within the same week
Scalp Trading: this form of trading involves studying the chart in a much lower time frame compare to day and swing trading, it looks to take advantage of the market at the slightest opportunity to make a quick profit multiple times during the day.
Choose A Crypto Exchange
An exchange is simply a website or service where cryptocurrency can be traded or converted your fiat to cryptocurrency. You must ensure you sell on a reliable exchange to guarantee the safety of your funds. examples are Binance, Houbi, Coinbase, Kucoin e.t.c
Trading Capital
this is a very crucial aspect most people don't talk about when it comes to trading, as the saying goes “cash is king”. Having enough trading capital helps you to control your risk, this will ensure you don't use high leverage while trading. “100% profit on a $5,000 trading capital is the same as 5% profit on a $100,000 trading capital”. Instead of chasing high profit, focus on increasing your equity.
2- Define Your Entry And Exit Point
To be successful in trading, you must know when it's best to enter the market and exit the market. this is simply knowing when it's best to buy and sell for profit.
3- Risk management/money management
this is an integral part of your trading. you must keep track of your trading and stick to your plan. Ensure you don't use more than 5% of your entire trading equity per time and never be willing to lose more than 10% of your trading equity on a particular trade. In case the market goes against you, proper risk management will save you from getting liquidated from your entire portfolio.
4- Understand Technical And Fundamental Analysis
Fundamental Analysis: this involves the thorough investigation into the intrinsic value of a coin
Let’s say you see an innovative coin/project that has many real-world applications. If you feel the coin’s price is undervalued in comparison to its intrinsic value, you could invest in it and, in theory, make a profit.
At the same time, if you see that an asset is overvalued, you could trade it to make a profit when the price decreases.
Technical Analysis: this involves the use of historical market data (trading volume, past pricing, etc.) instead of looking at the specific purpose of a coin/project.
Technical Analysis gives a clear picture of the market’s sentiment by looking at historical data of the market from the price charts.
Conclusion
Trading cryptocurrency has never been easier than it is now with the advent of advanced technologies, analyses are done in real-time with the data provided. But to become consistently profitable in cryptocurrency trading is more psychological than it is physical and it requires a lot of discipline and constant practice to be able to achieve this.
If you find this article interesting, do give a clap and follow me. thanks
