How to Catch a Wave in 2022? Look at The Basics of Crypto Trading
Anyone can start trading cryptocurrencies, but it is worth remembering that digital assets are in the area of high risks.
Beginners make a lot of mistakes more often due to the excitement generated by the constant fluctuations in cryptocurrency prices. In 2021, the volatility of Bitcoin was 64%, while the volatility of the S&P 500 and WTI crude oil was only 17% and 54%, respectively.
In order to help novice traders avoid big losses at the beginning of the journey, The Cointelegraph named several “magic principles”.
It is better not to withdraw funds for the next two years
It is best not to invest 100% of your savings in cryptocurrency. One day, you suddenly may need money to travel or repair your car. In this case, you will have to withdraw some money from the cryptocurrency. This can happen exactly at the moment when the rate of your chosen currency is lower than the purchase price. Therefore, you will lose part of the invested funds due to difference in exchange rates, instead of earning.
In addition, there is a risk of loss from hacks, which will make it difficult to access your funds.
Therefore, it is best to leave the invested money in cryptocurrency for two years.
Many traders, even with significant experience, may succumb to the fear of missing out (FOMO). Of course, when many cryptocurrencies, even meme coins, sometimes fly into the clouds, it’s hard to resist the temptation.
In this case, make it a rule to buy cryptocurrency for the same amount in dollars about once a week, regardless of the market movement. For example, $ 100-200 every Monday. Thus, the pressure on the nerves will decrease and unnecessary anxiety will go away.
In addition, refrain from buying all positions in less than 3-4 weeks.
Don’t overload your head
There are many tools, indicators, charts and patterns for market analysis, and therefore it is impossible to keep track of everyone, even with super-advanced programs.
Experienced traders know that the natural flow of the market is more important than choosing the best indicator. Some follow the price charts of cryptocurrencies, others follow the correlation with traditional markets. There is no absolutely correct way! Everything is individual!
The main rule is perhaps that you cannot monitor all or five different indicators at the same time. It is better to choose 1-2 accompanying, rather than contradicting, tools and understand them as much as possible.
The cryptocurrency market is especially dynamic, so everything changes very quickly.
Know when to step back
Every trader makes mistakes sometimes, but there is no need to rush to compensate for this by increasing the rate to compensate for the losses.
It is best at such a moment to just step aside for a couple of days to clear your head and regain your ability to think soberly. Stay out of the market, get distracted, go for a walk or hike. Any change in activity that will help you relax and recharge will be hundreds of times more rewarding than chasing ghosts.
Invest in winners
Instead of selling “winners”, it is better to buy more of them. You shouldn’t neglect market data or general sentiment, but if your sentiment for a position remains optimistic, consider increasing the position until the market indicates a weakening.
If you hold the most profitable positions long enough, you can make more profits than trading it back and forth.
Don’t be afraid to break the rules
There is no one-size-fits-all key to trading success. The rank, as mentioned earlier, is changing dynamically. Therefore, you need to adapt to it constantly. Do not blindly follow the advice of large investors or experienced traders. Everyone has their own appetite for risk, their own capabilities and their own mindset.
Learn, observe, try and take care of yourself!