Cryptocurrency

Cryptocurrency trading tips

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What is a business journal, and should I use one?

You keep a trading journal to keep track of your trading activities. Should you keep one? Maybe! You can use a simple Excel spreadsheet, or subscribe to a dedicated service. Especially when it comes to more active trading, some traders consider a trading journal necessary to be consistently profitable. Documenting your trading activities will help you identify your strengths and weaknesses, after all. Without a trading journal, you won’t have a clear idea of ​​your performance.

Keep in mind that biases can play a significant role in your trading decisions, and a trading journal can help reduce some of them. How come? Well, you can’t argue with data! Trading performance all comes down to numbers, and if you’re not doing something well, it will show in your performance. By carefully keeping a trading journal, you can also monitor which strategies work best.

How do I start trading cryptocurrencies?

If you have decided that you want to start a business, here are some things to consider. First, you will, of course, need capital to trade. If you don’t have savings and start trading with money you can’t lose, it can have a serious detrimental effect on your life. Trading is not an easy task – the vast majority of beginner traders lose money. You’ll need to expect that the money you’ve put into the trade may be gone quickly, and you may never recoup your losses. This is why it is recommended to start with a small amount to test the water.

Something else you will also need to think about is your overall trading strategy. There are many possible paths to take when it comes to making money in the financial markets. Depending on the time and effort you put into this task, you can choose between several different strategies to achieve your financial goals.

Finally, here is an additional point. Many traders are at their best when trading is not their main source of income. In this way, emotional burdens are easier to bear than if their daily survival depended on it. Eliminating emotion is a key trait of successful traders, and it’s all the more difficult to do when one’s livelihood is at stake. So, especially when you are starting out, you can think of trading and investing as a side project. Don’t forget to start small and practice with small amounts. It can also be beneficial to look at ways to make passive income with cryptocurrency.

If you want to learn how to avoid simple mistakes when it comes to trading and technical analysis, check out 7 Common Mistakes in Technical Analysis (TA). So, you have decided that you want to enter the world of trading cryptocurrency. What do you need to do?

Converted into cryptocurrency

Your fiat currency must first be converted into cryptocurrency. The easiest way to do this is by visiting the Buy Crypto page on Finance, where you’ll have plenty of options. You can buy crypto with debit and credit cards, using your bank account on P2P exchanges, and through third-party solutions like Simplex, Paxful, or Coinx. Once you’re done, you’ll be part of the new financial system!

 

Now that you’ve got your cryptocurrency, the potential options are many. Immediately, you can go to the Binance spot exchange and trade coins. If you have previous experience with trading, you can also check out Binance Margin Trading Platform or Finance Futures. There are also passive income opportunities, including stocking, lending your assets to Finance Savings, joining the Finance mining pool, and more.

So far, they all involve so-called centralized exchanges – such as Finance. These exchanges are where you deposit your crypto and conduct your financial activities within the exchange’s internal systems. However, thanks to the magic of blockchain technology, there are other options available called decentralized exchanges (DEX). In these places, your funds never leave your own cryptocurrency wallet, so you will have full custody of them at all times. You can also connect to your hardware wallet and trade directly from it.

Central exchanges are dominant in the cryptocurrency space. But many traders and blockchain enthusiasts believe that a significant part of cryptocurrency trading volume will happen on DEXs in the future. Visit Finance DEX and try the trading experience yourself!

How should I calculate my position size in a trade?

One of the most important aspects of trading is risk management. According to some traders, it is the most important factor. This is why it is important to calculate your position size with a standard formula. Here’s how the calculation works. Your first step should be to determine how much of your account you are willing to risk on each trade. Let’s say it’s 1%. Does it mean that you enter a position with 1% of your account? No, it means that if your stop-loss is hit, you will not lose more than 1% of your account.

It may seem like a lot, but it’s to ensure that some inevitable bad trades won’t blow up your account. So, once you have defined this, you need to determine where your stop loss is. You do this for each trade, based on the characteristics of the trade idea. Let’s say you’ve determined that you’re going to place your stop-loss at 5% of your initial entry. This means that when your stop-loss is hit, and you exit 5% of your entry, you should lose exactly 1% of your account.

Let’s say we have a 1000 USDT account. We are risking 1% with every trade. Our stop loss from entry is 5%. What position size should we use?

What online trading software should I use?

Chart analysis is a fundamental part of any technical analyst’s trading toolkit. But where is the best way to do this? Trading View charts are integrated into Finance’s web interface and mobile app, so you can analyze your trades directly on the platform. Through Trading View, you can also check all Finance markets.

Should I join a paid group for trading?

Most likely not. There is great free information about trading out there, so why not learn from it? Practicing trading on your own is also useful, so you can learn from your mistakes and discover what works best for you. Joining a paid group can be a great learning tool, but beware of scams and fake ads. Finally, it is very easy to fake trading results to get followers for a paid service.

A successful trader may also want to think about why he or she wants to start a paid group. Of course, a little side income is always welcome, but why pay for a large fee if they are already doing well? With that said, some successful traders run high-quality paid communities with additional services such as exclusive market data. Just be extra careful who you give your money to, as the majority of paid trading groups exist to take advantage of beginner traders.

What is Pump and Dump (P&D)?

A pump and dump is a scheme that involves increasing the value of an asset through false information. When the price has risen by a significant amount (“pump”), criminals sell (“dump”) their cheaply bought bags at a much higher price.

Cryptocurrency markets are prone to pump and dump schemes, especially during bull markets. During these times, many inexperienced investors enter the market, and it is easy to take advantage of them. This type of fraud is more common with small market cap cryptocurrencies, as their prices are generally easy to fluctuate due to the low liquidity of these markets.

Pump and dump schemes are often organized by private “pump and dump groups” that promise easy returns to participants (usually in exchange for a fee). However, what usually happens is that those who join take advantage of a small group who have already established their positions. In legacy markets, those involved in facilitating pump and dump schemes are subject to severe penalties.

Should I sign up for cryptocurrency airdrops?

Maybe, but be more careful! Airdrops are a new way to distribute cryptocurrencies to a large audience. An airdrop can be a great way to ensure that a cryptocurrency is not centralized in the hands of just a few holders. A diverse set of holders is critical to a healthy, decentralized network. Free lunches do not exist, however. Well, sometimes, maybe, if you are very lucky! Usually, though, what happens is that the promoters of the airdrop will try to directly take advantage of you, or want something in return.

What will they ask for? Airdrops often ask for your personal information as one of the “assets”. Is your personal data worth $10-50 a highly speculative cryptocurrency? It’s your choice to do so, but there may be better ways to earn a little side income without risking your privacy and personal data. When it comes to cryptocurrency airdrops, you should be extra cautious.

Stop thinking

So, we’ve been through a lot, haven’t we? Getting started with cryptocurrency trading can be a daunting task – there are many concepts to learn. Hopefully, this guide has helped you feel a little more comfortable with cryptocurrency trading.

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