5 Tips to getting into cryptocurrency trading
Despite the bullish performance that Bitcoin and other alternative cryptocurrencies have shown over the past few years, many traders and investors are still undecided as to whether they should start investing now or if they should avoid getting into this highly volatile market. Trading cryptocurrencies, in reality, has its own advantages and disadvantages; and you can only benefit from it if you strictly follow your strategies and if you have a couple of carefully-designed backup plans for every possible scenario.
Unlike the stock market, cryptocurrency exchanges operate 24 hours a day and seven days a week. There are usually no intermediaries and you can trade your cryptocurrency assets all by yourself. Additionally, its high volatility offers potential quick profits to intraday traders and also a possible loss if your risks aren’t properly managed.
And to help you get a head start in cryptocurrency trading, read more about these five useful tips that can give you a huge advantage over other traders.
1. Do your own research.
Before entering any trade, it is every person’s duty to research the market and the cryptocurrencies that you are planning to trade. As stated before, the cryptocurrency market moves very fast and has a very high volatility. Bitcoin alone is seven times more volatile than gold and eight times more volatile than the stock market. Research on the coins that you are interested in, including the function, technology, and community behind them. Avoid jumping into a FOMO (Fear of Missing Out), a term in a crypto space new investors buy a coin that is currently being pumped in hopes of getting quick and massive gains.
2. Set up realistic targets and don’t hesitate to cut your losses.
The first rule in trading is to try to eliminate as much emotions and bias as possible. Set up multiple and defined target price levels where you will start taking out your profits. If you are a swing trader, it is recommended to set up a tight stop-loss just below your entry point. Be strict in following your targets and avoid letting your emotions get the best of you.
3. Sign up with a trusted local exchange where you can buy and sell cryptocurrencies.
Another important thing that you should do first is to find a local exchange where you can at least buy and sell cryptocurrencies. If a cryptocurrency trading platform is not available in your country, you may consider signing up in trusted centralized or decentralized exchanges abroad. Some of them require KYC while others let you trade anonymously.
4. Familiarize yourself with the cryptocurrency market.
Although there are many striking differences in the behavior of the cryptocurrency market versus the stock market, there are still a number of similarities too. Technical analysis, Elliot waves, chart patterns, and other indicators also work great in cryptocurrency trading. Make sure to go over these tools that you can use to effectively monitor the movement of the market.
5. Consider using a variety of trading software.
Different trading programs are now used by most traders in the stock market. These computer applications are more effective in cryptocurrency trading where the market is fast-moving and runs 24/7. There are many programs that you can use to improve your trading performance such as when executing trades, taking advantage arbitrage trading, and analyzing market indicators. Crypto Trading Signals is one of the most complete and most reliable software in the market. The program includes complete historical data of cryptocurrency prices, composite performance, real-time market trends, and other useful tools that you can use.