Cryptocurrency trading is a rising fad. Then again, why wouldn’t it be? It’s interesting, challenging, and most important of all; it earns you money (see how). And out of all the people I’ve met in this world, nobody dislikes earning money. This makes cryptocurrency an addictive trading platform for many.
However, trading cryptocurrency is like a double-edged sword. You don’t always just win some and lose some. Sometimes, we get too greedy that we end up losing everything we’ve invested and everything we’ve gained through trading. This makes the whole experience a complete waste of time for us and we end up bashing the trading system, labeling it as a scam, fraud, or fake.
We know for a fact that this isn’t the case. We know fully well that whatever consequence we face is only a by-product of our own actions. So the first step to wiser trading is to accept the fact that we are susceptible to err and that we need to change.
In line with this, we have prepared the following tips to help you change the way you engage in cryptocurrency trading. If you haven’t started trading yet, then reading this might even help you avoid the common mistakes your seniors have gone through before.
If you have already traded before and lost a considerable amount of investment because of careless decisions, then reading this may help you set things right and gain back whatever you’ve lost little by little. Let’s all just take one baby step at a time – okay? Let’s start with the most important one.
#1. Only Invest Money That You Can Lose
Before you even get into cryptocurrency trading or deal with any trading software provider, define your objectives for trading very clearly and set boundaries as to how much you are willing to risk while trading.
If you’re someone looking for a way to escape the mediocrity of 9 to 5 shifts, then cryptocurrency trading may seem like the best thing that’s ever happened to you.
While we do agree that cryptocurrency is a very promising investment platform, we don’t encourage anyone to put his or her entire livelihood on the line for it.
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You have to understand that trading comes with a lot of risk. This means that having and maintaining a “fall back” is necessary when you trade. So don’t quit your job, don’t loan a million dollars, and don’t put everything you have into trading – only trade what you can lose.
When we go shopping for random items, for example, we make sure (well, I certainly hope you do too) that we only spend money that is considered extra. This means that the money we need to pay for rent, groceries, amenities, health care, education, and other necessities are already safely excluded from spending money.
We should practice this same thing when we trade cryptocurrency. We should only invest money that is considered SURPLUS. If we keep trading money that is supposed to be spent on our important and immediate needs, we’d find it hard to get back up after we lose a trade.
So, don’t overdo it. If $250 is everything you can shell out this month, so be it. There’s no need to force your wallet to spit out hundreds of dollars to trade.
#2. Understand That Robots Make Decisions Based on Probability
Next, you have to maintain caution while trading. You can grow confident with how well your trades are going and how competent your trading robot is performing over time. But just because you’re experiencing continuous success doesn’t mean you should bet everything you have.
We always tend to have that thinking “double or nothing.” When we see our trades getting better, we want to make the most out of the opportunity by maxing out our investments. This is because we keep thinking that we’ll get to earn twice or thrice the amount of our usual profits in a shorter period of time. And so, we become greedy and impatient.
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Always catch yourself whenever you think along these lines because it can be very dangerous. Although trading robots like Crypto Code are regularly tinkered to improve data processing and analysis functions, they can never be immune to error. They base all trading decisions based on what probability tells them.
And as you may already know, probability typically refers to chances or the “likeliness” of something to happen. It is never an exact answer. So, always trade with caution. Guard your assets committedly. Don’t let several, consecutive successes lure you into making one big trading decision you’ll regret for the rest of your life.
#3. You Won’t Always Win So Don’t Let It Get You Down
Also, always maintain a positive attitude. You’ll lose some trades but don’t let it get to you. Thousands of other traders may even be losing bigger investments as we speak so don’t ever think that you’re unlucky or unfortunate.
Bad trades simply happen and there’s nothing you can do about it. You have to understand that cryptocurrency and the manner in which we trade it is a very volatile system. It rises and falls, jumps up and down, and excites and disappoints quite intermittently. This is simply the nature of cryptocurrency.
Sometimes, your failure doesn’t really have anything to do with how skilled you are or how expensive your trading program is. Sometimes, it all comes down to luck. No matter how unfair that sounds. The best thing you can do to avoid losing any more trades is to keep your trading systems in check always.
If you feel like there’s a better program that can accommodate your trading activities better, make the switch. Although you can’t prevent losing, you can minimize it to an almost micro level. Just get more wins than losses – simple, right?
#4. Never Let FOMO Get the Best of You
FOMO is a dreaded attitude among crypto traders and it is almost, always the cause behind every bad trade. FOMO, an acronym that stands for “Fear Of Missing Out,” happens when a certain coin or cryptocurrency shoots up in value (characterized by the green percentage growth on the charts) and people are compelled to sell other currencies in fear of missing out of the golden opportunity (read more).
Although you may term this as “seizing chances” you should also be very wary of making rash decisions. Swing trading can be very dangerous in the world of cryptocurrency. The sudden shoot up in market value may only be temporary and it can dwindle back down the next minute. And you can end up losing assets, money, and other more serious opportunities because of it. So be careful; don’t let your emotions cloud your decisions.
Always look at things rationally and know how to weigh opportunities in terms of gains and losses. Don’t jump the bandwagon train – especially when it’s heading to the other direction fast. For all you know, you got in only to tumble right off.
Well, we may end here for today but I’m pretty sure I’ll bump into you again soon. After all, the cryptocurrency trading community is a tight one. See you around!