Cryptocurrency trading, like any other form of trading, can seem very intimidating when you are new to the scene. While you may be eager to get involved, it’s crucial that you educate yourself on the best strategies and practices before diving head first into the world of buying and selling cryptocurrency. Here are four cryptocurrency trading tips that every newbie trader should know before opening his or her first cryptocurrency trading account.
Do Your Research
If you’re not sure how to get started with trading cryptocurrencies, you’ve come to the right place. Sentry Equity offers cryptocurrency trading services and is here to help with some of the basics.
Crypto trading is about buying and selling currencies and tokens with the goal of making a profit. There are many exchanges where you can buy and sell cryptocurrencies like Bitcoin, Ethereum, or Ripple. The first thing you’ll want to do before buying any cryptocurrencies is research your options carefully.
Have a Trading Plan
1. What is my trading strategy and what am I looking to accomplish with this strategy?
2. What are the assets I want to trade, how much of each do I want to trade, and what time frame will they are traded in (i.e., day trader, swing trader)?
3. When should I buy or sell an asset if it hits my predetermined price target?
4. Do I have an exit strategy for any trades that are not moving in the direction I anticipated or planned for them to go?
5. What is my risk management strategy – how many trades should be profitable before one can consider it a success, or what percentage of my total portfolio should be allocated to these types of investments at all times?
Use Technical Analysis
Technical analysis is the study of market actions and patterns to identify their trends and forecast their future. The patterns are typically plotted on charts, which are used to identify trends in price movements so that people can make informed trading decisions. For example, traders might look at a chart and see that the price movement has been steadily increasing over time. This would signal to them that the trend is bullish and they should buy this security because it will likely continue to rise in value.
Manage Your Risk
There are many ways you can manage your risk when trading cryptocurrencies. One way is to set stop-loss orders. For example, if you purchase Bitcoin at $5,000 and set the stop-loss order at $4,500, you would automatically sell your Bitcoin once the price drops below that threshold. Another way to limit your losses is to use limit orders. The difference between a limit order and stop-loss order is that with a limit order, you purchase cryptocurrency only after the desired price point has been reached (usually above market value).
Cryptocurrencies are a volatile market and you will inevitably face setbacks. But, if you stay disciplined and do your research, you’ll be able to make smarter investments that are less risky. To give yourself the best chance of success, follow these tips:
-Do your research about cryptocurrencies before investing. Learn about the history of cryptocurrency and what distinguishes it from other types of digital currency. Familiarize yourself with the different coins on offer and find out which one suits your needs best. Look at how much they’ve grown in value so far and read up on their potential future projections.
-Invest with small amounts of money to start off with – only invest what you can afford to lose – then add more money into your portfolio as you grow more confident.