New to cryptocurrency trading?
Here are 5 tips to start 2022 on the right foot!
Trading stocks, currencies, and cryptocurrencies can be tricky, but here are some tips to get you started.
No matter your trading experience, nothing can be done to protect a person from the power of cryptocurrency price fluctuations. Currently, the volatility of Bitcoin (BTC), the standard measure of daily fluctuations, stands at 64% annualized. For comparison, the same measure for the S&P 500 is 17%, while the volatility for WTI crude is 54%.
However, it is possible to avoid the psychological impact of an unexpected 25% intraday price change by following five basic rules. Fortunately, these tactics do not require advanced tools or large sums of money in times of high volatility.
1.not withdraw funds for at least 2 years
Suppose you have $ 5,000 to invest, but it is highly likely that you will need at least $ 2,000 of that amount within 12 months for travel, car maintenance, or some other task.
The worst thing you can do is make a 100% cryptocurrency allocation because you may have to sell your position at the worst time of your life, possibly at the bottom of the cycle. Even if one considers using the product in decentralized funding pools (DeFi), there is still a risk of impairment or piracy that compromises access to funds.
In short, all funds allocated to cryptocurrencies must have a two-year concession period.
Even professional traders get carried away by the fear of missing something (FOMO), giving in to the urge to build a position as quickly as possible. But, if everyone is consistently earning returns of 50% or more, and even small-cap altcoins show stellar returns, how can you stay on the sidelines and just watch?
DCA’s strategy is to buy the same dollar amount every week or every month, regardless of market movements; For example, buying $ 200 every Monday afternoon for a year eliminates the anxiety and pressure caused by the constant need to decide whether to add a position.
Avoid buying all positions in less than three to four weeks at all costs. Note that the adoption rate for cryptocurrency is still in its infancy.
3. Do not abuse the indicators
There are countless technical indicators, including Moving Averages, Fibonacci Retracement Levels, Bollinger Bands, Directional Moving Index, Ichimoku Cloud, Parabolic SAR, Relative Strength Index, and more. If you consider that each one has multiple settings, the possibilities of tracking these metrics are endless.
The best traders have enough experience to know that it is more important to read the market correctly than to choose the best indicator. Some prefer to follow correlations with traditional markets, while others focus exclusively on cryptocurrency price charts. There is nothing right or wrong here except trying to track five different indicators simultaneously.
Markets are dynamic and for cryptocurrencies this is especially true given the speed at which things change.
4. Take a step back
Eventually, you will read the market incorrectly while finding altcoin funds or seasons. All traders make mistakes sometimes and there is no need to compensate by immediately increasing the bet size to recoup losses. It is precisely the opposite of what you should be doing.
Every time you spot a “leak,” step aside for a few days. The psychological impact of losses is a heavy burden and will negatively affect your ability to think clearly. Even if a clear opportunity presents itself, let it slip away. Take a walk or try to organize your life outside of business.
The truly successful traders are not the most successful, but the ones who survive the longest.
5. invest in winners
This could be the hardest lesson of all, as investors have a natural tendency to profit from our winning positions. As stated above, the volatility of the cryptocurrency market is extremely high, so aiming for a 30% profit will not cover your past (or future) losses.
Instead of selling to the winners, traders should buy more. Of course, you shouldn’t ignore market data or general sentiment, but if your expectations remain bullish, consider adding to the position until the overall market indicates some kind of weakness.
You will eventually make a 300% or 500% profit if you are brave and hold the most profitable positions. These are the returns you would expect from entering such a risky market, so don’t be afraid when they show up.
* All the rules are made to be broken!
If there was a roadmap to successful cryptocurrency trading, many people would have found it after many years and the returns would quickly fade. This is why you should always be prepared to break your own rules from time to time.
Don’t blindly follow investment advice from experienced fund managers or influencers. Everyone has their own appetite for risk and the ability to add positions after an unexpected setback. But more importantly, be sure to take care of yourself along the way!
Par Marcel Pechman, Cointelegraph
Marcel is a crypto analyst with 17 years of experience as a stock seller for UBS, Deutsche Bank, Pactual, and Banco Safra. Brazilian. Marcel has a graduate certificate in engineering and a bachelor’s degree in business administration.
The opinions and opinions expressed here are solely those of the author and do not necessarily reflect the views of Forex Quebec. Every investment and business move carries risk, you need to do your own research when making a decision.
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Disclaimer: The information and opinions in this report are provided for general information only and do not constitute an offer or a solicitation to buy or sell currency or CFD contracts. Although the information contained in this document has been taken from sources considered reliable, the author does not guarantee its accuracy or completeness, and assumes no responsibility for any direct, indirect or consequential damages that may arise from the fact that someone trusts such information. .
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