Investing in Cryptocurrency - Trading
Last but certainly not least, another way to make money from cryptocurrency is trading it on a Crypto Exchange. While I will not be discussing the “how” of trading, I will cover the basics.
The Crypto market is highly volatile and it makes it possible for traders to leverage on the price swing to make a profit off the market.
At the same time, you can lose a lot of money if you don’t know how to take advantage of the market volatility. In other words, understanding market volatility is very important if you want to make a profit trading on any crypto market.
As a beginner trader, you want to make sure you’re trading with the required guidelines to enable you to minimize your losses and maximize your profits.
Generally, cryptocurrency exchanges are marketplaces that match buyers’ and sellers’ orders. On the crypto marketplace, you will find both traders and investors seeking gains.
However, while investors are long-term gain seekers, traders thrive to make profits within a short period of a price swing.
Here are a few reasons why you should trade cryptocurrencies:
Volatility: The change in the price of crypto assets happens rapidly, you can make a great profit if you are well-positioned for the ride.
24/7 Market: Unlike the traditional market, cryptocurrencies are traded 24/7 days a week around the clock. The crypto market never sleeps like other financial markets.
Liquidity: Traditionally, this is the ability to convert assets to cash. Trading crypto assets with high liquidity like Bitcoin on a crypto exchange is a great deal.
Common Mistakes to Avoid as a Beginner Crypto Trader
Risking More Than you can Afford to Lose
Only risk an amount of money you can afford to lose. A lot of newbies run into frustration after losing so much money from the market.
Trading Pump and Dump Markets
These markets are highly manipulated. Most people who trade in this kind of market are just seeking quick profits so they sell off quickly and if you’re not fast with the trend, you’ll be badly wounded on this market.
Wanting to Make All the Profit Before Exiting the Market
Don’t be greedy. If you have made a profit from a trade, you don’t need to wait to make all the profits before exiting. Sell off the trade unless you are holding it for a long period of time.
Trading Without Using Proper Stop loss
Chances are that a trade may not go as expected but instead reverses. Without a proper stop loss you stand the risk of losing your capital on that trade if the market dumps massively. The bottom line is that always use proper stop loss to safeguard your trade from bigger losses.
Not Setting A Clear Trading Plan
A clear trading plan should guide you on how to diversify your trading portfolio, your risk to reward ratio and your do’s and don’t. Strict adherence should be given to them if you want to trade successfully.
FOMO and FUD
The Fear of Missing out (FOMO) and Fear of Uncertainty and Doubt (FUD).
FUD is undoubtedly the two emotional setbacks the beginner trader is likely to face.
As a beginner trader, you can easily be carried away by the feeling of “missing out” to buy the peak of a market. The danger of this is that you might end up catching a falling knife.
On the other hand, the fear of uncertainty and doubt will constrain you from taking action. You’ll only make a profit when you are able to cautiously risk your money in the market.
Not Investing in your Education
To trade successfully on any financial market, you need some level of education that requires your investment in personal research or mentorship. Joining a Crypto Community gives you an opportunity to learn more about crypto trading, Blockchain technology, and a lot more. Most beginner traders who skip this step end up learning it the hard way in the market. Keep reading all the way to chapter 10 for more information on a way to trade and grow your crypto whether the market goes up, down, or sideways.