Is there any book of rules that one can follow to trade smartly? There are thousands of online guides and tutorials that will teach you ways to make money by trading in cryptocurrencies. The truth is unless you trade smartly you will end up losing a lot of money by trading.
8 Ways to Trade Bitcoins Smartly
- To begin with, you must identify a reason for executing a trade. So, before you enter a trade there must be a clear strategy. Not every trade will earn you profits. When you are new to crypto trading you are vulnerable and the bigger players wait for inexperienced traders to make errors. While you may hope to trade every day, it is perhaps safer to stay away than jumping into the deep end of the pool and exposing yourself to danger.
- For every trade that you plan on making in 2020, ou needs to have a proper well-defined plan of action. So, there should be a target to achieve at which you will take profits home, and a stop-loss target for reducing losses. To fix the latter, you should consider many factors instead of getting carried away with emotions.
- You must invest only the amount that you are prepared to lose. This is a basic rule for successful Bitcoin trading and one that can ensure that you trade smart. You have to understand that losses may not be the result of market price dips; they can also be due to government regulations, hacking incidents and breaches. So, if you are planning to put in money that you cannot afford to lose, you should rethink your finances and stop acting desperately. If you are planning to use automated bitcoin trading bots to speed the process of trading, you should be aware of speculated news like bitcoin era scam and know what the truth is.
- A good rule of Bitcoin trading is keeping yourself abreast of whatever is happening in the crypto space. For instance, when Bitcoin prices take a dip. Altcoin prices go up and investors rush to take advantage of this.
- You must diversify your crypto portfolio to prevent all your money from getting lost in one bad trade. Although it is true that if you invest more in a single crypto asset, the potential for profits increases, it is also risky. By spreading out your finances across multiple portfolios you can gain from some coins even when some prices are falling.
- It is important not to let greed rule us or make decisions for us. When a coin is doing well it is important to take your profits. If you find that prices are still soaring, you can at least take out some profits rather than waiting too long and then losing out more money.
- You must not make investments blindly, without undertaking proper research. It is important not to follow what others are saying or trust hearsay or rumours. Since the market is volatile and prices are speculative, smart investors will always do their own research.
- You must not even make investment-related decisions based on the fear of missing out on good opportunities. Just because crypto trading is on 24×7 does not mean that you will earn more profits if you sit in front of the computer throughout the day and night. Instead, it will cause fatigue and make you take wrong decisions.