As a beginner, everyone makes mistakes. The learning we get from mistakes cannot be acquired from reading or listening, no matter the quality of content you consume. You can be your own teacher by following a few tips and tricks that you are going to find in this article.
Set Your Goals
Before you start, like any other field in life, define what precisely how you want to multiply your investment and how much risk you want to take. The desire to get rich overnight can cost you heavily. Your goals must be realistic enough to keep you sane and unemotional. Emotional traders get in FOMO (fear of missing out) and lose everything. But if you already have a plan, it helps you remain reasonable.
Selection of Trading Strategy
There is a wide variety of choices available on exchanges when you embark on the journey of crypto trading. Scalping needs you to stick to your screens constantly as it involves taking advantage of immediate market movements that span for a few seconds to a few hours. Day trading usually lasts up to 24 hours.
Swing trading and trend trading are meant to capitalize imminent downtrends and uptrends. These trends can take from a few days to months to play out fully. Obviously, you can take a very small number of such trades per year. But if backed by proper analysis, these are more lucrative than scalping and day trading.
Buying and holding a cryptocurrency is the option for you if you believe that some coins are strong enough to remain in the market for the period of your holding. Not every coin is meant for holding as many are delisted by exchanges and go bankrupt.
Homework
If you like to be an expert in short-term trades, they are executed best with the help of technical analysis. On the other hand, long-term trades require fundamental analysis. Technical analysis requires thorough knowledge about candlestick patterns and the trend they form. For this, you need to learn how to draw trendlines, identify patterns before they are formed, use tools like moving average and Fibonacci Retracement Tool.
Fundamental analysis involves becoming aware of the project itself, the team behind the cryptocurrency, its use case, partnership, etc. Such an analysis is compulsory if you want to hold a coin for a long time.
Tokenomics and Inflation
Although swing trading and trend trading usually relies mainly on technical analysis, tokenomics may play a crucial role in shaping your trades. These days it is common for a project to be launched with only a fraction of its supply in circulation. The price of a coin is determined by dividing its market cap by the circulation supply. When the remaining supply is unlocked suddenly, the inflation usually causes the price to plummet headlong, destroying your position.
Reference Price
It is a common practice to look at the prices of cryptocurrencies against USD or $USDT. Professional traders take into account multiple points of reference in this regard. For example, it is useful to look at the price of $BTC against gold as it has come to be considered digital gold. For altcoins, in addition to weighing against USD, their value against $BTC is a very important technique. If your cryptocurrency is lagging against $BTC despite appreciating against $USDT, you are missing out on something. Traders shift to altcoins for higher gains. If this purpose is not fulfilled, it means that the decision needs to be revisited and revised for future trades.
Patience
Regardless of the result of your first trades, you should remain patient and sensible. Success does not mean that your plan was perfect. Failure does not mean that your plan was useless. Many professional traders state that their best trade is not necessarily the one that yielded the most profit. Rather the best trades are those that allow them to stick to their plan. In fact, the very difference between a good and a bad trader lies in the fidelity to the rules that are set before entering a trade.
Avoid High Leverage
It is a common piece of advice to avoid high leverage. If you have sufficient funds in your wallet, avoid leverage at all. The reason is that the leverage is a loan you get from the exchange, for which you are apparently not charged. But records reveal that high-leveraged positions are liquidated more frequently than the non-leveraged ones.
Journaling Your Journey
Always keep a diary in which you note down what you plan to do and what the outcome of the planning is. This is a great way to find your strength and weakness. The process of learning never ends, but we tend to forget many lessons that are momentarily minor in terms of one trade but may prove to be very significant in another. Finding your strength will give you extra confidence, and finding your weakness provides you with an opportunity to improve yourself.
Work-Life Balance
Crypto trading is a highly demanding task. It may drain your energy and time at an astonishingly quick pace. You may not notice but the whole process has this potential to drag you away from your family and friends. This isolation leads to emotional repercussions, leading to stress. This stress can affect your trades negatively. Therefore, it is always advisable to maintain a healthy balance between work and life.
One way to do it is to make a timetable on which you do the essential homework. The more you analyze, the less time you need to spend on screen. An unplanned trade will keep you clung to the screen as you have no set of rules to follow.
Conclusion
The long and short of the discussion is that you can develop yourself into a professional trader from a beginner with proper planning, homework, patience, calmness and introspection. Always be on the lookout to spot your weakness and be quick to transform it to strength. There is no reason you cannot become a pro trader if you work on your trading diligently.
