As we all know, both the bitcoins and other cryptocurrencies have increased in terms of value and price and maybe this is why most people are getting more interested in them.
Well, this sudden unexpected rise in price and the coverage by most media outlets, sort of created a fear of missing out market also known as the FOMO. This is what is making people get attracted to the crypto market with a main aim of becoming rich almost instantly.
Anyway, before you join the crypto trading market, you need also to understand the risks that comes with it. For instance, the bitcoin volume in the crypto market is about 70%, this means that it can take down the whole market down with it if it crushes.
Of course everything usually have two sides, the good and the bad. Even though everyone wants and expect to get only the good side, you should also get prepared for when the bad side shows up even when using systems like the Bitcoin Loophole trading robot. If you are a beginner in this business, below are some tips you might consider keeping in mind before you start trading.
- Start small and think big
Well, if you have read most of the trader guide for beginners, you will notice that the first point to be put across is always to minimize the risks. For someone just starting out, this means that you need to study and know the market first.
If you fail to do so, you might one day find yourself losing a huge percentage of your investments. Reading the disclaimers are often very important as they help you to know and understand how volatile the market can be.
This is why you shouldn’t go by the market sentiments and start by trading with a small amount which cannot make you lose your mind when your investments get lost.
- Buy low and sell high
This is usually the basis of every business out here, right? For instance the retailers, they always aim to get more products at a lower price and then sell them to the consumer at a bit higher price to make a profit.
The same also applies in the crypto market. But why is it that more than 70% of the traders will end up losing their investments. If you need to understand this better, find the book “Predictably Irrational” written by Dan Ariely.
Well, this book doesn’t deal with any trading strategies but it explains better why most of the times you end up losing even though you thought you had made a wise decision. In short, it is always recommended that you set your profit or loss limits as this will guide you on when you should buy or sell.
Over the years, there has been a debate on whether the returns are better in investing or in trading. Well, there are people who are highly skilled in both sides and have made quite a lot of profits by executing the required strategies the correct way.
Well, trading targets to make the profits from continuous buying and selling of the assets so that you can profit from the price changes in the market. On the other side, investing aims at building profits after a period of time as it involves buying and hoddling of the assets.
This is why the new traders are always advised to try and balance their portfolio by simply investing in stable assets including the bitcoin, ripple, ether, litecoin and also trading in some of the less known assets like nem, iota and dash among others.
- Correlate the bitcoins and the altcoins
As said earlier, bitcoin covers like 2/3 of the crypto market and this is why even a slight change in its price can have a huge impact on the other markets.
Many traders seem to get attracted to the market liquidity and would always invest more on the bitcoin if it occurs that there is some increase in the price of the bitcoin. This in turn will see them reduce their position on other cryptocurrencies.
This is also a good tip for the beginners as it can help you maximize your profits in the crypto market.
- Spot the pumps and the dumps
Well, it is quite a shame that crypto exchanges are not yet regulated in most part of the globe. This can make it very easy for those huge players to move up the market simply by buying out the liquidity quickly and wait for the small investors to start joining the market.
When this happens, they will then proceed by selling out their stocks at a premium price and this causes the price to go back to where it was at the beginning.
You should have in mind that not all the time there is a sudden price deflection it will end up being a pump and dump situation.
- Follow the major events
You know how business men are always keen on anything that might affect their business? Well, this is how you need to be. As we have now known how the crypto market is volatile, it means that a lot of things can usually affect the market either positively or negatively.
This is why you need to be on the lookout for a lot of things, including the political events that are related to the crypto market. We have seen how political events have affected the market in the past.
Knowing about these events will help you plan on your trading and how you place your orders.
- Read the technical analysis
Since most of the cryptocurrencies are not yet incorporated in the real world applications, there is still not so much data that shows how good the technology has been adopted or what the sales figures are or even the balance sheet.
This makes it difficult for any sort of fundamental analysis to be done and determine whether the asset is currently underpriced or overpriced. This only leaves you with one choice, to read more on technical analysis if you want to be making informed decisions on cryptotrading.
In order for you to do the technical analysis, you will need the market data in the past, the volume and the primary price as you will get a lot of strategies on how to go about this. You can follow this link to see more on the crypto trading market and some strategies used https://medium.com/bitcoinblase/trading-strategies-for-crypto-beginners-a16f820b3fa6
- Do not overtrade
Sometimes it can happen that the trading volume isn’t enough to be able to move the prices up or down and this usually will result in an anxiety phase.
In such situations, a lot of traders seems to take sub-optimal positions which mostly end up in minimal loss because they didn’t meet the commission fees or the asset was going slightly slow than the buying price hence getting stuck.
In short, while you are trading, remember to always be placing orders when there is enough liquidity available in the market.
Before you invest, you need to know what you are getting yourself into. You don’t want to get into a business just because your friend invested in it and made a huge profit only to lose your investments.
The volatility of the market however remains an important thing to note and this way, you can always be able to find your way around the crypto market and perfect your trading practices. Know more about bitcoin here.