You need to always keep in mind that when it comes to trading Bitcoins, it is important for you to avoid the behavior of an impulsive trader. Only when you’re trading thoughtfully, you can be sure that you will be able to make some good returns. Otherwise, it will not be a profitable proposition to trade Bitcoins.
We will today share with you some tips which will help you in understanding when you should trade Bitcoins.
Reason for trading:
Before entering each and every trade, you need to have a proper reason for trading. Only once you are having a proper reason for trading, it will become easier for you to conduct profitable trades. If you’re being an impulsive trader, you will not be able to make a significant amount of profit. You will be exposing yourself to a significant amount of losses.
When you have a conclusive target in stop loss levels:
You have to only enter a trade when you have conclusive target and stop loss levels. When you are able to see these levels on the chart, it will, in turn, become much easier for you to abide by those levels. Only once you are able to abide by those levels, it will become easier for you to conduct profitable trades.
When risk management allows you to:
Instead of entering into trades frequently, it is important to look at your risk management strategy. Only when according to your risk management strategy, it is okay for you to enter the trades, you should think about doing so. If indeed, the volatility levels are above normal and you are not able to fit those volatility levels into your module, it will be a good idea to skip trading for that particular day.
Understanding the underlying market conditions:
Many times, the market conditions are not normal. They are rather news driven or event driven. In such a case, it is a good idea to avoid trading altogether. When you’re trading in such conditions, you are bound to lose. That is why it is a good idea to avoid trading in such a condition.
Thus, when you’re trying to figure out when to trade Bitcoin, it is important to look into these few factors. Only once you are able to look into these factors, it will become easier for you to read in Bitcoin. You have to follow these trading principles over a longer period of time in order to enter more profitable trades as compared to loss-making ones. Keywords: trading bitcoin for profit, trading bitcoins for beginners, how to trade bitcoin stock, bitcoin trading strategies, bitcoin trading platform, trading bitcoins for beginners pdf, bitcoin day trading software, cryptocurrency trading for beginners
8 must read tips for trading Bitcoin and Altcoins
Safety rules were written with blood. That statement sounds familiar to every soldier around. Although we are not dealing with a risk to human lives, losing your expensive Bitcoins by making mistakes trading is definitely not a fun situation.
So, how we can avoid those mistakes in our trading? How to be mostly on the green side? First, it is important to note that to trade right requires attention and your one hundred percent focus. Secondly, trading is not for everyone. The following tips are easy to internalize because these tips were “written in blood” (my own blood). However, it’s still difficult to apply them in real-time. After all, we are not rational human beings.
Have a reason before entering each trade: Start a trade only when you know why you’re starting and have a clear strategy for afterwards.
Not all traders make gains from trading, since this is a zero-sum game (for everyone who benefits someone else loses on the other side).The Altcoins market is driven by large whales (yes, the same ones responsible for placing huge blocks of hundreds of Bitcoins on the order book). The whales are just waiting patiently for innocent little fish like us to make mistakes. Even if you aspire to trade on a daily basis, sometimes it is better not to earn and do nothing, instead of jumping into the rushing water and exposing your coins to losses. From my experience, there are days where you only keep your profits by not trading at all.
Target and stop when starting a trade: For each trade we must set a clear target level for taking profit and more importantly, a stop-loss level for cutting losses. A Stop-loss is setting the level of loss where the trade will get closed.
Here again, it is important considering a number of factors when choosing a stop loss level correctly. Most traders fail when they fall in love with a trade or the coin itself. They may say, “Here it will turn around, and I will get out of this trade with a minimum loss, I’m sure”. They’re letting their ego take control of them and unlike the traditional stock exchange where extreme daily movements are considered 2-3% in value, Crypto trades are a lot more riskier: in my life as a trader I’ve seen a coin dumping by 80% just in a few hours! And nobody wants to be the one who is left holding it.
Meet FOMO (fear of missing out): Indeed, it really isn’t fun to see such situations from the outside – when a certain coin is being pumped up like crazy with huge two-digit gains in minutes.
That bold green candle yells at you “you are the only one not holding me”. At exactly this point you will notice lame people flooding the Crypto forums and the exchanges’ Troll boxes to talk about this pump. But what do we do now? Very simple, Keep moving forward. True, it’s possible that many may have caught the rise ahead of us and it can continue raising, but bare in mind that the whales (as mentioned above) are just waiting for small buyers on the way up to sell them the coins they bought in cheaper prices. Prices are now high and it’s clear that the current coin holders only consist of those little fish. Needless to say, the next step is usually the bright red candle which sells through the whole order book.
Risk Management: little pig eats a lot, big pig gets eaten. This statement tells the story of the market profits from our perspective. To be a profitable trader, you never look for the peak of the movement. You look for the small profits that will accumulate into a big one.
Manage risk wisely across your portfolio. For example, you should never invest more than small percentage of your portfolio in a non-liquid market (very high risk). To those trades we will assign greater tolerance – the stop and target levels will be chosen far from the buying level.
The underlying asset creates volatile market conditions: Most Altcoins are traded according to the Bitcoin value.
Bitcoin is a volatile asset (relative to FIAT) and this fact should be taken into consideration, especially in the days when the Bitcoin value is moving sharply. Bitcoin and Altcoins have an inverse relationship in their value, i.e. when the value of Bitcoin rises then Altcoins are losing their Bitcoin value, and vice versa. When Bitcoin is volatile, our conditions for trading are kind of foggy. During fog we can’t see much ahead, so it is better to have close targets for our trades or not to trade at all.
Tips for trading Altcoins: Most Altcoins lose their value over time. They simply bleed their value away slowly (sometimes rapidly).
Take this into account when holding Alts for the medium and long term, and of course choose them carefully. What kind of Alts are recommended for the long term? Remember, this is only when there is a reason for making a trade. The projects/coins that have a higher daily trading volume and which have a widespread community behind them, with continuous development, are here to stay with us:
Ethereum ETH, Monero XMR, Factom FCT, DASH, are all leading coins and traded the most volume daily. You should follow the coin’s chart and identify low and stable periods. Such periods are likely to be a consolidation period by the whales, and when the right time comes, accompanied by a good press release of the project, the pump will start and they will sell in profit.
A word about public ICOs (crowd-sales): Many new projects choose to make a crowd-sale where they offer investors an early opportunity to buy a share of the project (tokens or coins) in what is meant to be a good price for the tokens.
The motivation for the investors is that the token will be traded from day one on the exchanges and would yield a nice profit to the ICO participants. In recent years, there have been many successful ICOs, both the project itself and especially in measuring the yield for investors. Coins doubled, or tripled, their value and much more in relation to their value on the crowd sale. Augur’s preliminary crowd-sale (we reported on it previously here) yielded investors a phenomenal 1,000% for their investment. Okay, but what’s the catch here? Not all the projects benefit their investors. Many ICOs proved to be complete scams, not only were they not being traded at all but some projects disappeared with the money and we have not heard from them right up to this day.
So how do you know if you should invest in an ICO? It’s not about science, it is important to pay attention to the level of seriousness of the project and its team. Look for the project’s website (does it look like a child has built it during computer school?), Who is the team behind the project – Are they hiding behind nicknames or proudly present themselves on their website? Pay attention to the Bitcointalk thread (does it exist at all?) and how the team members respond to technical questions. Is there a large community behind the project? Expect to see a Slack gathering its community. Watch out the amount raised: A project which had raised too little will probably will not be able to develop over time, a project which had raised huge amount – there won’t be enough investors left out there to buy coins on exchanges. And most importantly is risk management. Never put all eggs in one basket and invest too much of your portfolio in one ICO.
A final tip – practical steps to implement right away:
Fees, fees, fees: Multiple trade actions = More fees. It’s always advisable to post the command (maker) and not to buy from the order book (taker). In Poloniex exchange, the difference is 0.1% in favor of the maker. That’s quite a bit.
Traders with no pressure: Don’t start trading unless you have the optimal conditions to make the decision to start a trade and know when and how to get out of it. Pressure almost always creates losing trades. Wait for the next opportunity, you will get there.
Setting goals and placing sell orders: always set your goals by putting sell orders. You don’t know when a whale will pump your coin up to catch your command (and pay a reduced fee on the “maker” side, remember?).
A successful strategy regarding this is placing very low buy orders. About a week ago a crazy dump occurred, selling off Augor coin down to 25% of its value! After a short while the market recovered slightly and anyone who had low buy these low orders could easily double or triple their investment. Placing buy orders requires special care, don’t wake up when you’re far away from the market to find your buy order is suddenly higher than the current market price!
Buy the rumor, sell the news. When major news sites publish articles it is usually exactly the right time to actually get out of the trade.
You have made a good trade, but as always, the moment you sold your coin runs up again! First, meet this guy – Murphy’s Law. Secondly, read over what was written previously here and never enter position again under pressure. As long as there is profit – you are ok. Go on to your next trade and don’t find yourself losing it.
Leave your ego aside. The goal here is not to be right on your trades, but to make a profit. Do not waste resources (time and money) to try to prove that you should’ve been entering that trade. Remember, there is no trader who never loses, at least sometimes. The equation is simple – get the total profits to be higher than the total losses.
What is short? long? how to leverage your trades? Follow here to our crypto margin trading for beginners
Follow our special article about five must have Crypto websites.