There is a ton of information online regarding crypto trading, including tips for coins, exchanges, trading styles and strategies, as well as reviews that claim different coins are scams, so it’s always hard to filter all that information and decide what is truthful.
Whether you are a beginner and just starting your adventure in the crypto world or an intermediate crypto trader, this summary of some of the most important things to always keep in mind may prove of great use to you.
1. Understand the risk and start small
Advertisements for different coins and exchanges are everywhere. Don’t let the flashiness and the promises fool you. Trading is far from fun and games. If you want to even have a shot at making a profit, you need to understand it as serious business.
You also need to understand your risks and only invest what you can afford to lose, because the bottom line is, even though trading is not completely the same as gambling, they have a lot in common.
2. Education
This point is related to the previous one. You can’t just ask a website or a community member for wisdom, and then make millions with that. Stay away from offers that promise you quick money overnight, whether it is an exchange, a crypto bot, or a “trading guru” that charges people for tips.
If you really want to learn how to trade, get ready to study hard for a long time. Experienced traders have years of learning behind them and still can’t guarantee profit. You need to approach trading as a science and take your time mastering it.
3. Learn about trading options
Cryptocurrency can be traded in different ways and there are different approaches and strategies. We will list some examples here:
- Arbitrage trading is achieved when you take advantage of different prices of the same coin on two or more exchanges. Large investments are needed for small gains, but they are usually guaranteed.
- Scalping is picking up small changes in price with precise timing and alternating buying and selling hundreds of times during trading.
- HODLing means buying and holding a coin for a long time. This is long-term trading that avoids high volatility, but needs a lot of market movement knowledge to make it profitable.
4. Security
The most you can do to secure your accounts is to always enable 2-factor authentication, which is not 100% safe, but comes pretty close.
Secondly, your recovery phrase is everything. It is best not to keep it in a digital form, but rather in a physical form and locked in a safe.
Finally, it is best to spread your money across different wallets.
5. Passwords
Use a strong password and don’t use the same one across multiple exchanges. Pro tip: A long string of characters is mostly safe, but you can actually get the safest password by taking four random words from a dictionary.
Also, it is best if you decline your browser’s offer to remember a password because if you don’t, you rely on your browser’s resilience to attacks, which is usually not that high.
6. Beware of scams
For every legit crypto entity, there is at least a double of fraudulent websites, exchanges and apps. Unfortunately, scammers thrive in the crypto niche because it is still largely abstract to many users, and it is easier to sell a fake story. This is especially true for crypto trading bots because people easily fall for promises of big, automated trades. You can find an example of a probable fraudulent bot by reading a Bitcoin Billionaire review at scammerwatch.com.
There are a lot of other scammer bots and you can find more about them at Scammerwatch. Just be careful and take even review sites like these with a grain of salt.
The bottom line is to always stay alert and trust no one a hundred percent. For example, this is a review stating that the Bitcoin Champion trading bot is a scam. However, the reviewing site Marketwatch.com is rated only 1.6/5 at TrustPilot.com and all reviews must be approached with high caution.
7. Diversify your assets
In addition to dividing your assets across different coins and platforms, it is best to learn about two main types of crypto wallets, hot and cold, and use them both to your advantage.
You can store your funds offline in a cold wallet, which increases your safety from hacker attacks. On the other hand, hot wallets are faster, easier to use and can generate better trades overall. A combination of the two is the best way to spread your funds.
8. Be careful with leverage
Leveraging can be a great asset to multiply profit because it gives you a higher return than your actual capital capacity. However, it is one of the riskier endeavors you can try, because leveraged trades may lead to liquidation if the market does not work in your favor, and your losses can grow exponentially.
Learn about this strategy and try it from time to time, but remember, it is just for the most experienced users.
9. Master your emotions
If people would take control of their emotions, they would probably outperform most crypto bots. No discipline and straying away from the original strategy is what destroys your stability, increases volatility and variance, and usually kills your profit.
The psychological aspect of trading is often neglected, but it is at least as important as the technical aspects.
10. Stay in touch with the community
You can’t live offline and understand the market movements. Social media, forums, crypto news and contacts with other traders are vital.
Even if your strategy is good, you will lose money if you don’t adapt to the ever-changing conditions. Make sure to always stay updated.