When trading Bitcoin and Altcoins, it is important to observe various safety measures that will render your trade more effective. It is very discouraging to lose your cryptocurrency as a result of making micro mistakes. So, what are the best tactics and life hacks to ensure that you evade such mistakes? Such tricks will boost your trading experience and keep you on the safe side all the time. First of all, you need to place all your concentrations and attention in your trading. Complete focus should be maintained to make certain that the trading part of your brain is specializing with Bitcoin and Altcoins only. This helps to switch your moods to a serious trading environment. The following life hacks and tips are useful in advancing the level of your cryptocurrency trading.
– Many altcoins have the tendency of losing their market values unexpectedly within a given period. Their values fluctuate slowly or rapidly depending on the market condition. You should consider their behavior especially when selecting or making investment decision. Remember to understand what category of altcoins are favorable for short and term and long term investments. You should be able to classify the coins based on the volume of daily trades . The top traded coins on daily basis are predominantly; Monero, Ethereum, Dash and Facton. In order to make wiser decisions, you should understand and interpret different coin charts to learn the periods when these coins have low and stable values. Such information is useful because you can time the time when price of the coin will pump and this implies that they will sell at a profit.
– Have a rationale and objective before entering any trade. You should start a trade with a clear reason and systematic plan how you will respond to different market changes and signals. On this point, always keep in mind that any decision you make might have a huge impact on your final trade. Trading Bitcoin and Altcoins is highly risky, and for this reason not all cryptocurrency traders gain profits. For every trader who makes a profit at a given trade, another one loses. When trading Bitcoin and Altcoins, experts recommend refraining from trading when the market is more risky than to participate in a trade and make total losses. Does it make sense to rush over ocean and lose all of your hard earned coins? As a Bitcoin trader, there are periods whereby you have to keep your profits by avoiding all open trading positions. This is the reason you should have a clear strategy and reason before participating in the cryptocurrency market.
– Develop systematic risk management. As an achieving cryptocurrency trader, do you think managing market risks can play a vital role in your overall trades? Of course yes; “young pigs will tend to eat more while big pigs are consumed.” This saying reveals the situation of market returns based on our scenario. To become a successful cryptocurrency trader, you don’t need to look at open trades that will yield huge profits, but target on little but achievable profits that will build up to make large profit. This concept is mainly applied by smart investors who have a clear understanding of what the the cryptocurrency market demands. Manage all risks within your portfolio in a careful and wise manner. For instance, you should ignore ideas that lead you to investing more than your set investment amount, especially in a highly liquid market. In such trades, higher tolerance is assigned, such that end and target points are selected far from buying points.
– Target and close when you begin a trade. To ensure that you are operating more systematically and efficiently, you must establish a definite target point for collecting profits and more significantly, stopping any potential losses. A stop-point is setting a particular spot where the loss will be automatically stopped if the trade moves opposite.
On the same point, it is vital to reflect on several factors when determining stop loss points. The greatest mistake made by most traders is trading a given coin based on their love for it. But as an educated cryptocurrency trader, you must keep in mind that this market is very risky. A coin might fall by more than 80% just within hours, leading to massive losses on traders who failed to follow market movements.
-Make diversification when trading and investing. Executing the right strategies through technical analysis remains an assurance that more than 80% of your trades will give nice returns. The principle purpose of trading is to make profits from different market fluctuations. When investing, the major target is to accumulate profits over a specified period by purchasing and managing assets. You are advised to invest in the most firm cryptocurrencies such as Litecoin, Ethereum and Bitcoin, and trade the most unstable assets such as Dash, Iota and Neo. Application of this technique will give you a clear outlook and understanding of your portfolio.
-Understand the relationship between Altcoins and Bitcoin. Fluctuation in the price of Altcoins is mostly affected by Bitcoin, that form approximately 2/3 of entire cryptocurrency market. For illustration, when the price of Bitcoin is high, traders are usually reluctant to invest in Altcoins. This condition reduces trader’s investment in Altcoins since they are placing more capital on bitcoins which they have confidence in.
-Keep an eye on major political and economic issues affecting cryptocurrency. Various events occurring in different nations have led to increasing or decreasing of Bitcoin price. To understand this better, consider the following situations.
*After the banning of the Bitcoin initial offerings in China by the central bank, the value of Bitcoin dropped from $4,563 to $3,530.27 in the next week.
*Following the declaration of Bitcoin as a legal tender in Japan, the value of Bitcoin increased from $1,085.03 to $1,215.69 within in the next one week.
-Finally, to trade Altcoins and Bitcoin efficiently, avoid overtrading. In the cryptocurrency market, there are certain periods whereby the volume of traders is not enough to cause price movements. If you fail to understand the market appropriately, this may result to anxiety and confusion. During this phase, many cryptocurrency traders may end up adopting sub-optimal decisions leading to massive loses. To avoid such mistake, the trick is to make trades when market shows enough liquidity.
Proper trading and investing using these tips will improve your returns by placing your cryptocurrency expertise on positive edge of the market. Trading without efficient tactics and tips will render your trades inefficient and more risky.