It’s never been simpler to trade! Due to the 24/7 nature of the cryptocurrency markets, anyone can trade and invest. Trading is now generally available to everyone due to the growth of the cryptocurrency market and its increase in popularity.
Do you intend to start your own bitcoin trading business? Check out the list of helpful hints we have put together for you before you get started.
A word of caution, though, before we continue. Cryptocurrency trading is still a risky endeavour even if it can be profitable when done correctly. Start out slowly and only invest money you can afford to lose (as advised by Immediate-edge.io). By doing this, you may be sure that your finances won’t be badly harmed if you do make a mistake.
Be a Responsible Trader and Stay Updated
Knowing when to day trade or make long-term investments is essential for a competent trader. The various forms of trading each have their own benefits and drawbacks, so be sure to research them beforehand.
The internet currently contains all the information you require, including news, market trends, and general information regarding cryptocurrencies.
The most crucial skill you must acquire is knowing when to purchase, sell, trade, or hold. Additional research on Bitcoin and alternative cryptocurrencies will also help the trader decide which coins to acquire and when.
Keeping up with market trends is beneficial since it raises knowledge of how volatile the cryptocurrency market can be. To prevent errors and failure when trading or investing, we need be conscious of our limitations.
Avoid Trading with Emotions
Only invest what you are willing to lose, keeping any feelings of greed or impatience in check. Trading with emotions only does more damage in the long run.
Never invest emotionally while trading; to avoid this, a strategy should be developed, and traders should be disciplined enough to follow it.
Since the crypto market is active 24/7, unlike the stock market, which follows formal business hours, we are used to actively monitoring our portfolios, and because of this, we tend to be impulsive with decision-making and get very emotional when it comes to trading. Cost averaging is one technique investors use to avoid decisions that are emotionally driven.
Underestimating the risks related to speculative trading is one reason why investors at times settle on problematic choices. The volatility of the market, i.e. the changes in the value of the coins, depends on supply and demand. At the same time, the money invested and the assets are controlled by the trader. The key is to comprehend the causes driving overly-enthusiastic investments and to keep away from both euphoric and burdensome venture traps that can prompt regrettable decisions.
In order to avoid this, we must set a stop-loss strategy to limit potential further losses. There are three different types of stop-loss: full, partial, and trailing. Full stop-loss liquidates all assets, while a partial stop-loss only liquidates a portion, maybe 50% of the assets. On the other hand, the trailing stop-loss is set at a distance that will only be triggered when that value is reached. You should practice with stop-loss orders and try to always use them when you trade.
Follow the 10% Rule
When trading, there should be a limit on where we can take profit. When a coin starts going to the moon, anything above 10% is considered profit. This is the time we can sell without having to risk anything.
Since we cannot say when the market will be stable, day traders need to always take profit because the market might go down anytime. Traders usually take advantage of bullish market trends, but it’s not every day that coins soar high. Most of the time, they remain the same or even lower.
Price trends depend on what season it is, whether you’re trading Bitcoin or an altcoin, and many other factors. So, being updated with the trends and news comes in handy.
Limiting orders should also be implemented, and determining the trade size in relation to the total investment on the portfolio should also be considered. Some people decide to swing trade or wait for a few days until they reach their goal to make a profit. No matter how much you invest in your portfolio, 10% is already considered a great profit.
Trading Based on Technical Analysis
Market trends, price patterns, and fluctuations are what we learn from doing technical analysis. It may seem difficult at first, but when we get a hold of it, technical analysis won’t be as hard anymore. Instead, it can become one of the most reliable tools at a trader’s disposal.
Technical analysis is a trading discipline utilized to look at trends mathematically and identify potentially profitable trade opportunities by investigating factual patterns accumulated from price action, like price spikes/descreses, or changes in volume.
However, some people would think that technical analysis won’t be sufficient, and there should always be a proper risk management strategy in place when trading because it cuts down potential losses and helps the trader to avoid losing all their money on the market. Furthermore, the risk-reward ratio should also be considered.
Not all newbie traders believe in the power of technical analysis. Some people prefer to make mistakes to learn from their experiences. The main goal of technical analysis is to predict the future price of a coin based on its historical data and keep those kinds of mistakes to a minimum.
How to Look at Candlesticks: Bullish vs Bearish Engulfing Patterns
Candles are the ‘units’ of a trend distinguishable on price charts and are made by unpredictable developments in the price. While these value developments here and there seem irregular, at different times, they form patterns that traders recognise and use.
Candlesticks are present to determine the rise and fall of prices. When the market turns green, it means that the prices are high, red when it’s low. Candles track market sentiment by visually representing price changes with various shadings. Traders use the candles to make decisions in light of consistently occurring chart patterns that assist with anticipating the direction of prices.
Patterns can be divided into bearish and bullish ones. Bullish examples show that the price is probably going to increase, while bearish ones demonstrate that the price is likely to fall.
Price trends usually consist of combinations of many different patterns that replace one another over time as momentum shifts. For instance, an engulfing pattern on the bullish side of the market happens when buyers dominate sellers. This is reflected in the graph by a long green rectangle overwhelming a little red candlestick body. With bulls having gained up some control, the price could head higher.
On the other hand, the bearish engulfing pattern creates an upswing when sellers outnumber buyers. This activity is reflected by a long red candlestick body engulfing the little green body of the bullish trend. The example shows that sellers are back in charge and that the price could keep on declining.
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