Safety rules were written with blood. That statement sounds familiar to every soldier around. Although we are not dealing with a risk to human lives, losing your expensive Bitcoins by making mistakes trading is definitely not a fun situation.
So, how we can avoid those mistakes in our trading? How to be mostly on the green side? First, it is important to note that to trade right requires attention and your one hundred percent focus. Secondly, trading is not for everyone. The following tips are easy to internalize because these tips were “written in blood” (my own blood). However, it’s still difficult to apply them in real-time. After all, we are not rational human beings.
- Have a reason before entering each trade: Start a trade only when you know why you’re starting and have a clear strategy for afterwards.
Not all traders make gains from trading, since this is a zero-sum game (for everyone who benefits someone else loses on the other side).The Altcoins market is driven by large whales (yes, the same ones responsible for placing huge blocks of hundreds of Bitcoins on the order book). The whales are just waiting patiently for innocent little fish like us to make mistakes. Even if you aspire to trade on a daily basis, sometimes it is better not to earn and do nothing, instead of jumping into the rushing water and exposing your coins to losses. From my experience, there are days where you only keep your profits by not trading at all. - Target and stop when starting a trade: For each trade we must set a clear target level for taking profit and more importantly, a stop-loss level for cutting losses. A Stop-loss is setting the level of loss where the trade will get closed.
Here again, it is important considering a number of factors when choosing a stop loss level correctly. Most traders fail when they fall in love with a trade or the coin itself. They may say, “Here it will turn around, and I will get out of this trade with a minimum loss, I’m sure”. They’re letting their ego take control of them and unlike the traditional stock exchange where extreme daily movements are considered 2-3% in value, Crypto trades are a lot more riskier: in my life as a trader I’ve seen a coin dumping by 80% just in a few hours! And nobody wants to be the one who is left holding it.
- Meet FOMO (fear of missing out): Indeed, it really isn’t fun to see such situations from the outside – when a certain coin is being pumped up like crazy with huge two-digit gains in minutes.
