Crypto trading is still in its early days of development and it can be tricky to have an idea of what you should be doing. New markets take time to find their footing and it takes even longer for people to figure out how best to operate within these new markets.
In this blog post, we’ll go over 5 practices that will help you get the most out of your cryptocurrency trading!
Trade What You Know
There are a lot of cryptocurrencies for a trader to look into. Bitcoin, Ethereum, Ripple, Litecoin are the big cryptos, but you can trade a lot more than just those.
However, just because you can trade it doesn’t necessarily mean you should. So how do you know what you should trade?
Well, if you want to give yourself the best chance at succeeding then you need to trade what you know.
What we mean by that is having a baseline knowledge of the cryptos you want to trade. That includes two broad baselines:
The first is a general understanding of the cryptocurrency itself. You don’t need to know the math or all the smaller details behind the coin. Just the general purpose, value, and popularity of the coin.
The second baseline you need is aided by the first. Your awareness of major and general news of the crypto(s) you are trading. News impacts prices and it will have an impact on your trading.
If you read a piece of news it helps to understand what it is telling you. By having that basic understanding of the coin(s) you are trading, you can quickly get the information you need from news releases!
Trade what you know and you will be setting yourself up for success.
Know Your Broker Fees
There is no best fit for crypto trading fees at the moment. Some brokers use maker & taker fees, others use spreads, and some use fees that are intentionally vague and difficult to figure out.
If you stay up to date with your own brokers fees and the competition’s fees, you are only going to be doing yourself a favour.
Brokers are reducing their fees at an almost monthly rate. There is fierce competition to reduce the costs for crypto trading and you can take advantage of that.
You can also be taken advantage of through fees. We strongly recommend crypto traders to understand broker fees because it does impact your trading costs.
By reducing your trading costs, you increase your profitability. Get in the habit of checking broker fees every few months – it is going to make/save you money!
Use Your Weekends!
The crypto market is 24/7 – that is rare and it’s incredibly useful!
It means you don’t miss out on nearly as much progress than you would with other markets. Most people have a regular work week which means they can’t get as much from trading.
But a 24/7 market means your weekends are just as valuable as the week days. In fact, they are arguably more valuable.
The crypto trading week is busiest in the first half. If you have time constraints, your weekends are going to be incredibly useful. Even if you don’t have time constraints you are going to want to utilize your weekends.
If you get in the habit of analysing and preparing for the upcoming week over the weekend, you are going to see results.
Even if it is just 30 minutes of looking at your charts, it will pay off. This is going to mean that you can be more efficient with your trading midweek when it matters most.
It can be the difference between catching a trade or missing a trade. You need to get into the practice of checking your crypto charts on the weekend. A 24/7 market is a rare thing, so don’t waste it!
Demo Trade & Live Trade
One of the common issues we have seen in our general trading experience is staying consistent with your trading.
A lot of new traders find it hard to keep trading, especially through losing streaks. Everyone will experience a losing streak at some point so don’t panic when you have yours!
With crypto trading, you are going to be able to live trade sooner than most markets because cryptos are available to trade 24/7.
When you do go live, you should maintain trading on a demo account alongside your live account. There is a simple reason for this…
It keeps things engaging and fun! You will likely find yourself trading a small pool of cryptos when you first start live trading.
If there is a slow week, you might get bored! Perhaps you have a losing streak and don’t want to trade.
A very simple but effective way to offset these kinds of issues is to keep demo trading. Experiment with other cryptocurrencies, try some of your new ideas out with them.
Consistency with your trade activity is something you need to practice. You can do so without putting your capital at risk every time.
It’s important to track your progress with both of your accounts. You need to be able to assess your trading in order to improve your results.
Using a separate trade tracker (trading journal) is going to be useful in staying on top of your results. Feel free to check out our video on trade trackers for more info.
You are allowed to enjoy yourself when it comes to crypto trading. This is a new space with so much undiscovered potential! A demo account is the perfect tool to take advantage of that and keep your trading interesting.
Following on from our previous practice slightly, we encourage you to start exploring the crypto space if you aren’t already!
There is more to cryptocurrency than just trading it. Fascinating ideas and uses with cryptocurrency and blockchain technology are popping up at an alarming rate.
Incredible uses of this technology are just starting to come into wider public knowledge. This space is a fast-changing one that is interesting to explore.
Consistency and longevity are trading’s best friends. Both of these are harder to maintain than you might think.
One of our best practices is to stay interested in the crypto market in general. Overtime it not only keeps you interested in the space, but it will also increase your general knowledge in a way that isn’t boring.
So, that sums up our 5 best practices for cryptocurrency trading. Let us know in the comments below what some of yours are!