What is crypto trading for a trader? 🤔 It is the thing, bringing the highest highs and lowest lows, depending on your account state. When it bleeds, you are literally smashed to the ground, but when the rocket rises… your spirit rises as well.
Today my aim is to share some things, I wish I knew when I just started trading. I do hope that my article will save you from the mistakes I have made, simply because there was no such an article to make a warning or at least to point out where I went wrong. So, today I am about to share those very truths, which I had learned the hard way:
- What kind of trader are you?
- Market Psychology is extremely powerful
- Calculate a coin prices
- Beware of Twitter (your best friend and worst enemy)
- General tips
- Never trade alone
#1. What kind of trader are you?
No, it is not a mere question from one of thousands of tests and polls. It is important indeed, but for self-reflection. Look inside yourself and make a decision, what kind of trader you want to be. The most common dream for the beginners is an image of so-called Hollywood day-traders. These guys are supposed to get huge scores in one day and get immense profit at the same time. Are these fantasies real? Well, it depends. Day-trading is stressful, so you can lose your money in one day, especially if you are a beginner and do not have the full understanding of what you are doing.
From my experience, I would point out three types of traders:
· Day Trader (you make a daily trade or more);
· Swing Trader (trade takes up to one week and longer if the trend requires it);
· Investor (buys the dips, holds long term).
There’s no “best” type, they all are valid ways to make money, and you can pick any, the difference is in the strategy which is required. Sometimes a trader finds himself in a blend of all three types, and it’s OK too. I prefer the Swing Trader and Investor strategies.
❗️ It is ok to not make a trade daily. In case of trading, it can happen that the best trade is the one, not made. New traders often start overtrading, trying to get as much profit as they can. The trade should come to you, and you should understand, clearly, what you're doing and why. If you cannot answer the simple question of why you made that particular trade, you are literally gambling.
#2. Market Psychology is extremely powerful
TA, or Technical Analysis, helps to make educated decisions, 100%. But it is a mistake to rely on it all the time, thinking that you have picked the crystal ball.
There are two powerful psychological moments to be considered - FUD (Fear, Uncertainty, Doubt) and FOMO (Fear Of Missing Out). Even the most textbook chart can be broken. The only way to protect yourself to some extent is to practice risk management and utilize stop losses.
✔️ Put some time into understanding some basic concepts, echo chamber in particular. In case you are participating in a coin official channel or talking to some guy called “(insert coin here) Whale”, keep in mind that they are interested in the coin’s going up, and you're buying. It works as follows. A lot of people are yelling the same statement in this or stat variation, let's say, “This coin is going to $1 USD!”. Thus, this statement is reinforced into your brain, so you start to believe it. And here’s FOMO starting to kick in. Is there a way to omit it? Sure, and the way is to learn how to calculate a coin’s price. It’s not that hard and leads to the third point to remember.
#3. Calculate a coin prices
So DigiByte ($DGB), is the coin I mentioned before that I was burned on. I heard again and again that it will reach $1 USD by the end of the year. Back in, I had no idea of how the coin price or how market caps worked. As a result, I threw a lot of money and paid the price for my lack of knowledge. ☝🏻
#4. Beware of Twitter (your best friend and worst enemy)
Twitter can be a great helper and a powerful source of information… or the biggest enemy. When you follow the twitch, always keep in mind that the ones, posting their posts, have already made either bids and now are trying to influence the market, so it shifts to the direction they want. If the guy shows you some coin or piece of information, be sure - he has already bought it and informed the rest of the members of the group he is in.
📝 Doubt and question everything you see and read. First and foremost, always ask yourself what indicators people used to get to this or that conclusion regarding the market. Ask, research, look up, investigate. I am here not to teach you to be a TA, there are a lot of resources with better content about it.
📝 Do your own research (DYOR). Perhaps, some guy told you that the market goes to the moon. So what? Do you know him? Have you heard about the group and the coin? Keep in mind another point - almost all twitter traders are cartoon avatars. Who they are, what they really do apart from trading? You don't have a clue. To be honest, can you look your friends in the face and say, “I bought this coin because a Doge in a Navy Uniform said so.”? Think about it. The number of followers can be just bots and these figures have nothing to do with the level of credibility and experience in trading.
📝 To ask questions - it’s ok. It is another marker - if a person willingly explains and answers your question “why”, most likely he knows what he does. But be careful - “why” questions can help, but if you ask “Target, sir?” it can lead to mutual disappointment. Personally, I ignore these questions. I am not a licensed financial adviser. So I have no desire to see haters at the end of the day in case I am wrong. And yes, I have been rest plenty of times, and I am not ashamed of it, I can talk about it easily If the person claims he has never been rest - he lies. Or his rest is around the corner.
#5. General tips
⭐️ Slow down. Missed a rocket? It’s fine, there will be another one soon. Breathe. On the other side, that coin you bought is now bleeding, is the team legitimate and does the coin have a real use? If you are holding it, it will come back in time, they in most cases do. Exceptions do exist, but in perspective it’s not a bad practice to hold during the storms(exception is the bear market). I kept coins and was selling them when the price began to rise, making profit out of them. My personal example - $DOGE. I bought it for 15–17 sats and was holding it for a couple of months, having sold them later for 100+ sats. Chasing pumps all the time, you will bleed dry pretty soon. Worries become less significant when your position is good.
⭐️ Having altcoins is NOT the same as having BTC. Always keep in mind what your final goal is - to get BTC, to invest or to get altcoins for later use. In case your goal is to get BTC, be careful - having a lot of coins will play a joke on you. Bitcoin is King. Your investing eye should be kept on it all the time. In case it is not watched, your alt parties will be destroyed pretty soon.
⭐️ Invest in a hard-wallet. In case you have long-term, non-trading coins, keep them off the exchange for safety reasons. Imagine, that exchange suddenly shuts down and all your funds with it. How would you feel?
⭐️ USE TWO-FACTOR AUTHENTICATION and not SMS, but a device based authenticator (like Google Authenticator). The thing is, SMS Authentication has been hacked before and if it happened once, it might happen again. Good and strong authentication is your best protection against being hacked or compromised. In case you keep different devices and strong passwords, your chances to protect coins become pretty high. It is a pain - to manage it all, but this pain is worth the game.
⭐️ Use bookmarks for exchange sites. It is also safer than to google all the time. There are so-called phishing sites, spoofing exchanges and paying for ads to get to the top of Google results. These websites look like the original ones, but they are not, and the users can poor money to them instead of the original platforms.
#6. Never trade alone
Trading alone is not just stressful. You have no possibility to ask questions, to get help or consult in time. Tastes differ, and some people like paid groups, some consider them to be overrated. If you think that a paid group could be a good idea, I would strongly recommend to start not with a signal group, but with an educational-based one. The first and foremost thing you need to do is to learn how to protect your interests and how to read the market. Even if the group shuts down, you will have to pay. The payment varies - you can pay the group with money or pay the market with your mistakes, getting necessary experience. As for me, I started with a paid educational group when I just started, and I have never had even a hint of regret regarding it. Moreover, I am pretty sure that I wouldn't have reached the level I have today without that group
If it is difficult for you to join the paid group, try some free ones (just like Trader Make Money Chat), because of the size but beware of the echo chambers. Paid groups cut this noise so the news, traders and investors are more serious and mature.
There are a lot of moving parts involved in crypto, it’s true, but the key here is one and its name is patience. The environment has a lot of opportunities to get money, so do not be stressed too much if you have missed this or that opportunity. To keep money is easy. What is really hard is to keep it. If the trade is opened, it’s not yours until it is closed. Greed should not drive you, so when your position is firm, sell it slowly. 🙏🏻
And, I will repeat it again and again, there is always another rocket! 🚀