So you’re interested in starting to trade cryptocurrency. It’s certainly glorified as a luxurious lifestyle. Crypto traders are quick to show their wins and portray trading as an easy, lucrative lifestyle.
To the uninitiated, crypto trading seems very attractive – but before you dive in, there are some things you should know.
Cryptocurrency is volatile
All financial markets move up and down, but cryptocurrency is on another level. The crypto markets don’t care about your feelings. Ten percent changes in a single day aren’t uncommon here.
This means that as a trader you have to be careful. Extreme volatility provides ample opportunity to profit. It also vastly increases the trading risk if you don’t know what you’re doing.
Influencers won’t help you start trading cryptocurrency
Crypto influencers are a huge part of our culture. Something that you have to learn quickly is that they aren’t here to help you – they are here to help themselves. Not all influencers are malicious, but it’s best to stay vigilant.
Bottom line: don’t copy influencer’s trades and investments. Even if they are honest, copying trades is never the right answer because everyone trades under different circumstances and in many cases the position management is more important than the position itself.
Let’s talk about leverage
In cryptocurrency trading high leverage is not just normalized, it’s encouraged. As a novice trader you should tread carefully when using leverage. The higher leverage you use, the more risk you have on your trade.
Since cryptocurrency is so volatile, there is no rush to turn the leverage up. If you trade properly, you can make incredible gains while keeping your leverage low. It’s always best to keep the risk under control.
Risk management in crypto trading
Trading is inherently risky. Most new traders are blinded by the appeal of money, even if they don’t outright admit it.
As a new trader you have to realize that you aren’t going to get rich overnight. Successful traders aren’t trying to 10x their account in a week. They trade carefully and precisely to gradually compound their trading account.
Manage your emotions before you start trading cryptocurrency
Emotions cause the biggest losses in trading, especially for new traders. You may not even realize when you’re trading emotionally, but when you do your risk is much higher.
Most commonly emotional trades happen after a loss as an attempt to recoup the losses and more. In all actuality, trading emotionally usually leads to traders taking lackluster trades and spirals into more losses and bigger hurt.
Keep your emotions under control and stick to a strategy at all times. Do not divert from the strategy because you need to make your losses back or you need a fast profit.