Would you like to trade cryptocurrencies, but something is holding you back? Fear, lack of knowledge, lack of time ... These brakes are quite natural when you are a beginner and you discover such a risky market. Here are 5 tips that I want to give to all newbies before you go headlong into cryptocurrency trading.
1. Learn about cryptocurrencies, for fundamental analysis
The cryptocurrency market is different from the Forex market, although the basic rules are ultimately the same. This market is still very young, extremely volatile, and over-reacts to any information. If you want to trade cryptocurrencies, it is essential to follow the news regularly and to inform yourself of everything that could affect the price of a currency: regulation, partnership, launch of a testnet ... Each information is precious. You must gather this information before the others so as not to be surprised by a market downturn.
2. Training in trading, for technical analysis
Knowing the world of cryptocurrencies is far from enough to trade them properly. Trading is art in its own right, and if you have never traded before (stock market, Forex, or other), it is crucial to train yourself in technical analysis methods to enter the market at the right time. If you want to trade cryptocurrencies as an amateur, you can find very interesting tutorials online.
If you want to get into trading activities more seriously, consider investing in cryptocurrency trading training now. It is always better to sacrifice a few hundred dollars to accumulate knowledge, rather than to go it alone and make the worst mistakes of the novice trader.
3. Identify your trader profile
A good trading training will allow you not only to learn to master the analytical tools and to develop trading techniques, but also to acquire a psychology and an essential conditioning so as not to give in to the panic movements of the market. The trader's psychology is essential, and leads to several questions that will allow you to define your profile.
As you go along, you will learn to discover yourself and your stress resistance threshold. Ultimately, you will be able to know if, inside you, you are ready to take a big risk to gain more, or if, on the other hand, you do not take the risk well and prefer to minimize it, even if it means winning less.
It is important to get to know each other, not only to live your trading activity well without inflicting toxic stress, but also to maintain a distance and never make an impulsive decision in a moment of panic.
4. Choose the right trading platform
Choosing the right platform is essential for several reasons:
- The security of storing your cryptocurrencies is crucial.
- The ergonomics and functionality offered by a platform influence your performance.
- The fees applied can significantly reduce your margins.
- The withdrawal limits are sometimes binding.
- Not all platforms offer the same number of cryptocurrencies.
So be sure to take the time to choose your platform for trading cryptocurrencies.
5. Manage your risk well
It is normal to make many mistakes in trading. Often when we start, our technical analyzes do not go as planned, because the market is always full of surprises. But the consequences of our mistakes can and must be contained, thanks to efficient risk management. To do this, you can start by memorizing certain basic rules:
- Only "trade" with money you can afford to lose;
- Do not get into counter-trend trading, unless you are already experienced in other markets;
- Regularly secure your gains in fiat currency so as not to lose everything in the event of a general fall in the market;
- Never sell all of your tokens from a cryptocurrency. Always keep some of these tokens "latent", in order to diversify your portfolio as much as possible for a better dilution of the risk and to take advantage of an upward trend which would last.
- Always set a stop loss that would invalidate the scenario you have anticipated.