5 basic rules for successful cryptocurrency trading

In this article we will walk through 5 basic rules for trading cryptocurrencies.

If you decide to get into cryptocurrency trading (or any other financial trading), you should always follow the first and the most important rule of them all!

Rule # 1: Never invest or invest in a trade that you cannot afford to lose

You should know how important this rule is. Especially in cryptocurrency trading, where losses arise not only when the market falls, you can completely lose your investment due to a simple typo when withdrawing funds or sending them to another exchange or wallet. Invest or trade only the funds that you can afford to lose!

Rule # 2: Don't Be Afraid to Miss Out

We've all seen cryptocurrencies that randomly spike in value over a short period of time. Sometimes even in a matter of hours. Note that this is not the right time to buy this cryptocurrency... Such large growth is usually a result of the "pumping" of the coin / token by "whales" or authorities in the cryptocurrency market, and they will be very happy to sell you a cryptocurrency that was bought earlier at a significantly lower price.

In trading, it is important control your emotions... When everything is in a rush, it may be too late to make big profits, or as Warren Buffett said: "Be fearless when others are greedy, and be greedy when others are fearless."

Rule # 3: Money Management

This rule is decisive in whether the trade will be successful. Of course we all want buy low and sell high. But this is not as easy as it sounds. Please note that 80% of traders lose their money, in most cases due to emotion. This is why money management is so important.

Start small. Never invest more 5% of your funds held for trading in one trade... Place multiple orders and don't buy everything at once... Start by posting limit orders at the price of 3%, 5%, and 10% lower than the current price... Write down your starting and selling prices. Take notes on each transaction and learn from your mistakes.

Remember no one wins absolutely every trade... Don't let defeat take over. Losses will make you a better trader if you choose to learn from them.

Rule # 4: Charting and technical analysis

If you want to be a successful trader, you really need to invest time in learning basic information about charts, various trading interfaces and technical analysis.

Cryptocurrency markets are relatively new and you cannot fundamentally analyze any asset. This is why reading charts and performing technical analysis is very important.

Graphs will provide you with numerical data as a visual representation.

We'll take an in-depth look at technical analysis in another article. In the meantime, you should start exploring information about moving averages, RSI, trend lines, ascending and descending channels, bullish flags etc.

Rule # 5: Collect Profits

Profit is always better than loss, right? When the value of your trading assets increases, collect part of the profit... You ndon't have to be greedy... Even if you expect a 20-30% increase in value, you should collect some of the 10% revenue. Cryptocurrency markets are very volatile and the value of your trading assets can very quickly fall to their initial price or even lower. You cannot lose funds by collecting some of the profits. But if you leave a position open for an extended period of time, or try to sell your assets at the highest price, it can lead to a loss (if the market falls). Nobody wants to lose a profit when it has already been earned. Awareness of loss even more painful than the actual loss. Remember this.

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