Keeping Your Cryptocurrency Portfolio Profitable in the Middle of CrisisFinance | October 16, 2020, Friday // 08:50| views
There are plenty of trading rules, however, some adjustments are necessary. That is because cryptocurrencies are lacking liquidity and have uncanny volatility compared to well-established markets like oil, gold, and S&P futures.
Most retail traders end up committing mistakes when they apply conventional trading practices to crypto investments. For instance, it is common for them to take profits when the trade begins to hit their target and shift to buying cryptos that were considered lagging. However, this strategy is not effective for many investors.
If you want to stay away from fundamental mistakes when trading cryptocurrencies, consider the following ideas:
Avoid Mental Stress
Financial loss can be really terrible. However, many seasoned traders will agree that mental stress is even worse. After losing a trade, it’s a nice idea to focus on something else, such as personal well-being and loved ones for a few days.
Once in a while, you may make bad bets. However, do not feel frustrated because it’s part of the game. Instead, make sure that you will stay away from emotional attachment to a certain position.
Maintain Patience with Winning Trades
If you get only 30% of your pick, you will still be very profitable. Well, this trick is to have a tight top loss between 7-10% while adding a position on the winning trades. While the market trend is positive, and the position continuously goes up, take that opportunity to buy more.
Many experts suggest that it is essential to learn how you are going to stop orders for adding positions as well as limiting losses during bull runs. Besides, entering trailing stops manually is another interesting strategy.
Do Not Add to A Losing Position
Averaging down can make sense sometimes. That is especially true if you offset your losses the fastest way possible soon after the prices recover. For example, if you bought Ethereum at $230 and drops to $$150, doubling down may result to an average price of $190.
By following this strategy, you can reduce break-even up to 29% gain rather than the original 57%. Always keep in mind that you should never increase the losing positions.
Reevaluate Market Trends After Losing
Once a trade ends up with stop-loss, it simply means that investors failed to predict and read the market correctly. Not only that, but many traders also resulted to bankruptcy as they attempt to guess the bottom. In this situation, the best thing you can do is to reevaluate the market trends right after a loss. You will figure out whether the price is low or high after a few months. So, never try fighting the trend.
Do Not Argue with the Market Trends
No matter how confident you are about the price move, the outcome does not always favor you. It essential for you to respect the market sentiment. This means that you should not expect someone to alight with your vision regardless of how accurate you are. You can consider the confirmation bias that you can find on social networks.
Keep Everything Simple
Instead of observing the price action using dozen indicators, it is better to be effective in utilizing a few yet successful trading tools. The easier way for you to make a decision is through fewer variables. For a secure and straightforward trading experience, you can visit the cfd trader
Mind that you need to wait for several days or weeks to make the most profitable trades happen. In other words, no need for you to rush things. You need to exert effort in monitoring the price action regularly. Always remember that it’s easy to draw methodology. However, the challenging part is how you are going to stick with your plan. Do not work harder, but smarter.
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