A lot of people make the same mistakes when they are trading cryptocurrencies. I have found that setting specific goals and monitoring my trading allows me to be the most successful. Here are my top 4 tips that you need to be following when you are trading:
1. Never chase after gains
Cryptocurrencies are some of the most volatile investments that you can make. One day a coin could jump 20% and then fall all the way back to where it started. If you miss a bounce, it is most likely not a good time to buy into that coin.
If I notice that a coin has jumped 10% within an hour, I will disregard it because I consider it a much higher risk trade. Focus on using technical analysis to get into trades before the jumps.
2. Never invest in coins that you do not understand
Sometimes coins are going to go down after you buy them. You are not going to win on every trade. Too many traders get involved trading coins that they do not even understand or believe in. If you do not believe in a coin, how are you going to expect that coin to bounce back? It puts traders in a tough situation they causes them to hold onto coins for too long. Create a watchlist of coins that you believe in and focus on trading those coins. Do not try and pick out the diamond in the rough because some guy on Facebook told you it was the next Bitcoin. Do the research yourself!
3. Do not trade to get rich. Trade to build wealth
I use a unique trading strategy that focuses on 3%-5% gain and 3% losses. I find that setting strict boundaries for myself allows me to capture gains while eliminating losses. Too many traders are buying coins hoping for a 500% gain in a week. Greed never wins. You have to make the decision yourself but I would suggest not figuring this one out the hard way.
4. Sometimes selling is the easiest way to make money
The strict guidelines that I set for myself about are a clear example of this. Do not become too attached to coins. It is human nature to hold onto coins for long periods of time. Remember, there is always a winning market. As a trader, you just have to find it.