Starting out in any trading environment, whether in crypto or in traditional trading, is never an easy feat and can seem overwhelming at first. It can be tempting to dive straight in with expectations of high return, however this can be extremely detrimental. In this article, we will discuss five tips that will help to trade crypto with more confidence.
Before making your first trade, you should first define your goals. Consider your financial well-being and ask yourself: how much am I willing to invest with the risk of losing? Many people want to make money fast, which can happen at times, however, you should not invest more than you are willing to lose. No matter how smart your strategy is, losing is always a very real possibility. Next, decide if you want to pursue an aggressive or passive investing/trading strategy. After defining these goals, you are able to build a strategy that will aim to reach those expectations.
When picking an exchange, it is important to consider security, supported currencies, fees, transparency, and withdrawal options. These online exchanges function similarly to stockbrokers in the traditional trading world. Cryptocurrency exchanges should make trading currencies and assets easy and clear to understand.
Cryptocurrency exchanges also come in two different formats: centralized and decentralized. Centralized exchanges are run by private companies whose rules align with financial regulations from governmental authorities and require the completion of an identification process. Decentralized exchanges have no central point of control and are hosted on distributed nodes that are owned by users. They offer transparency as they facilitate a direct exchange of cryptocurrency.
The most important thing to remember when trading and investing is to always have a plan that you stick to. A very helpful tip is to keep a trading journal outlining and documenting your decision making process. Regardless of whether you trade based on intuition, technical analysis, or value investing principles, you should record and reflect on a number of factors in order to further improve your strategy.
Do your own research (DYOR) is something you will hear very often in the crypto community. The goal of DYOR is to reduce the number of uninformed investors in the crypto space. It is important to DYOR because there are a large number of people who advertise their coins in hopes of positively affecting the price, a practice known as shilling. It is often difficult to tell the difference between a shill or an unbiased post, and it is important to make the decision to purchase a cryptocurrency based on your own decision and not because someone else has claimed that it’s worth it.
When recording in your trading journal, start with the idea, write down the date and time, and extensively outline the idea you’ve had. Then do some research, write down any observations that relate to your ideas. After that, record your expectations for the trade and your expected holding time. Whether you close the position in a profit or loss, it is important for you to revisit the journal and reflect on whether you were right or wrong, as well as any factors you missed initially.
The world of trading is exciting and ever-evolving. It is important to navigate the space consciously and with intention, so that you can benefit from all the possibilities to realize profits. The more you practise trading, the better you will get. Start with an exchange like Morpher, that gives you access to over 700 stocks, commodities, forex, and cryptocurrencies. You receive 100 free Morpher Token (MPH) upon signup so that you can practice trading without risking your own money.