Crypto Trading tips, where and how to start:
“Be fearful when others are greedy and greedy when others are fearful.” – Warren Buffet
Becoming a trader:
Becoming a successful trader is harder than you think. What’s the secret formula? It’s 70% mentality, 30% skill. Why is mentality so important? It’s because the success of your next trades heavily rely on it. In trading, you will ALWAYS have losing trades. Not every trade will be a win. This is the first thing you’ll need to accept to become a successful trader. How you react to a losing trade determines whether your next trades will be successful or not. If you lose a trade, never go into your next trade thinking these things:
1. “I need to make up what I lost on the last trade”
2 “I need to make ____% profit and then I’ll get out”
3. “I have to make this next trade work”
These things will instantly set you up for another loss. Instead, you should always go into your next trade with a clean slate. Learn from your losing trades and then forget about them. Go into the next trade objectively and let the data do the talking. If you follow our last trading tip of “Knowing when to sell”, this is the data that will help you determine how much profit you can get out of each trade and when to get out. Practice, learn, and be patient. Patience is another very important aspect of trading mentality, which we will cover in one of our next tips.
Knowing when to sell:
Knowing when to sell is a tough call. Will the coin keep going up or start heading down? There are 4 key things to help you determine this.
#1 – The RSI indicator. Get familiar with this and you can tell when a coin is Overbought or Oversold. Check longer time frames such as 30 min, 1hr, 4hr, and 1d. If the coin is Overbought on multiple timeframes, there’s a good chance it will be heading down soon.
#2 – Always keep an eye on the order books. Look for where the biggest sell walls are to help determine where to place your sell order so it can fill.
#3 – Buy volume. A drop in buy volume on longer time frames can indicate an upcoming drop. This is especially good to look for with Bitcoin.
#4 – This is the most important one of all, which is watch Bitcoin closely. A drop in Bitcoin usually always means a bigger drop for alts, which can slow momentum and break nearly any pattern for alts. So when trading, keeping an eye on what patterns are playing out on Bitcoin can help you determine whether to enter or exit a trade.
Time is money
A week in the crypto market is equivalent to three months in the traditional capital stock exchange, in terms of events and occurrences. One who wants to jump right into the deep water of crypto trading has to follow it not just on a daily basis, but on an hourly basis. It’s not everyone that can play this game. Nevertheless you need to consider the amount of time invested in the process. Sometimes it pays off to be a long-term investor, rather than a daily trader. By the way, as a daily trader it does not necessarily mean you are bound to buy and sell and trade every single day. Trades can reach their destination within minutes, as well as within months. Think about the time you are willing to invest in studying and tracking the market. Remember your time has marginal cost, or in other words – your time has a price tag. If you have decided to put your time and effort into trading on a daily basis, it is better to start with small doses and examine the performance prior to increasing invested amounts. This is yet an additional benefit of crypto – the possibility of trading on micro-transactions. Unlike the capital market, where if you put an eye on Apple stock, you would need to buy a minimum share equivalent to a couple thousand bucks, in crypto you can perform transactions of a few cents.
Don’t put all of your eggs in one basket
Crypto is really unpredictable. While reaping profits of hundreds of percent, the section withstands now and will continue getting dozens of billions of dollars erased flat out in the future. When Bitcoin loses its value against the US dollar Altcoins usually go through the same process. Simple math shows that even holding a part of the portfolio in Altcoins, such as Ethereum and Litecoin, is usually not enough to avoid getting a big chunk of the portfolio’s USD worth wiped out following a Bitcoin dump.
In 2015 and the beginning of 2016, when Bitcoin held solid – as solid as Bitcoin can be – shuffling around $300 per one BTC, the game was trading Altcoins in order to gain more Bitcoin. It was expected that Bitcoin would grow higher in the future (the Pygmalion effect). Having a rather volatile base asset, such as Bitcoin, raises our need to compare our portfolio performance both in terms of its Bitcoin’s value and its dollar’s value. Many traders decreased the number of Bitcoin they are holding during the past year (hey, and it wasn’t hard when Ethereum got cut 70% from its Bitcoin all-time high…) although it had a nice dollar yield. Bitcoin’s growth made a lot of money for the crypto market, causing its total market cap to increase 30 times during the last year! As traders, it is important to keep Bitcoin as your base asset, but also not to forget the dollar value, and to take profit sometimes. You should always see the bigger picture – crypto is only one tier of your investment options. There are also the stock markets, real estate, bonds and many more investment opportunities. It is important to spread the risks among the crypto portfolio, as well as in the whole household investment portfolio.
We highly recommend Binance as your first trading site due to the easy approach and lower fees if the Binance coin is used.
More info on Binance soon !
What’s the best way to handle a stop loss? Many recent short term trades have hit stop loss due to large sell offs of alts and dips on BTC. If a trade hits stop loss, does that mean you’re at a loss for the trade? Not if you use a method we use called “Averaging down”.
Hitting stop loss does not always invalidate the trade, it simply allows you to sell at a minimal loss and average down your buys at lower prices to increase your holdings. Doing this can maximize your profit and keep your losses at a minimum, as more often than not, the pattern will reverse.
The best time to re-enter for higher profit, but higher risk, would be when the coin is very Oversold (RSI Indicator) on longer timeframes such as 1hr, 4hr, and 1 day and when the MACD is nearing a bullish crossover. A lower risk re-entry would be on confirmation of a reversal pattern along with a bullish MACD crossover on longer timeframes.