With the recent completion of the 3rd Bitcoin halving event, many fresh faces are starting to enter the cryptocurrency market. Experienced day traders from traditional stock markets think they can create a Binance account and apply the same exact strategies to cryptocurrency day trading and expect the same results. That is not the case, however. Volatility, FOMO, FUD, and wide variety of other factors make it hard to avoid costly mistakes. However, a little education goes a long way so here are some tips to get you started.
Following the proper risk management techniques are perhaps the most important part of day trading. You can never avoid risk altogether but knowing how to properly calculate it will help you hedge your investments in the event of a negative event. Diversifying your portfolio, having multiple positions open on a variety of changes, and setting some sort of stop-loss order will all help you mitigate your risk and avoid big losses.
One could spend hours digging into different technical analysis opinions and reading chart after chart. Chart analysis is certainly a valuable tool of any cryptocurrency day trader but doesn’t just look at the numbers. One must understand the meaning of these numbers. Aside from that, if you are focusing too much on technical indications, you may miss out on important external news that’s affecting the market.
While you shouldn’t be too technical in your investment strategy, it’s also not wise to be too emotional either. It’s easy ot get caught up in FOMO and FUD from reading news articles. Look at the most recent Bitcoin halving as an example. For months leading up to the event, there were millions of articles playing towards the emotional significance of this event. As a result, many bought BTC and longed BTC with hopes of a crazy +100% bull run on halving day which never came. Instead, try looking at your performance and collecting data based on your wins and losses. Stay disciplined and avoid emotional FOMO triggers.
Even though cryptocurrency day trading makes you think you’ll profit each day, that’s not the case. As always, success never comes overnight. Patience is a key skill all traders must develop. Learn from your losses and see them as opportunities for growth and development.
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