When it comes to crypto trading, especially Bitcoin, there are a number of things that you should be doing as well as things that you probably know you shouldn’t. We are looking at some of the do’s and the don’ts when it comes to bitcoin trading. Take a look and see how many of them you are doing, if you are doing some of the things you probably shouldn’t, it is not the end of the world, simply use this to help understand what you can do a little differently to ultimately improve your bitcoin trading.
Do: Trade With A Strategy
It can be tempting to simply follow what other people are doing when it comes to trading bitcoin. There are a lot of people out there making a lot of money of fit, so there is no harm in just following them right? Well no, first they will certainly be trading with a strategy, secondly, you do not know what that strategy is and so blindly following trades is never a good idea in that situation. Also, you will not be getting the trades at the exact same time, so by the time you take the trade the optimum time may have already passed. So this is why you need a strategy, a strategy that outlines what you will be trading, when you will be trading and how you will be protecting your account. You should always trade with one and you should only put on trades that are properly in line with the strategy that you are using.
Don’t: Blindly Follow the Trades of Others
As mentioned above, you should not be blindly following other people’s trades, as tempting as it may seem. You need to remember that they have been doing this a long time, they have a strategy that they are following, they may even have information from sources that you do not know about, so blindly following their trade will basically mean that you are allowing them to trade for you, but with a delay. Even 10 minutes can mean a lot when you are placing a trade that long after they have put out the signal or that you have seen that they have traded. You also may not have the risk management in place that they do in case things go wrong, so their account may be safe from a drop, but yours is not. So only trade trades that you have found, not that you have funded posts somewhere on the internet.
Do: Use Risk Management
Risk Management is key when it comes to any form of trading and it is certainly the case for bitcoin too. You need to use it, things like a proper risk to reward ratio will enable you to remain profitable, things like stop losses need to be used with every single trade, no matter how sure you are that the trade that you are putting on will be successful, you need to use stop losses. They are there to protect your account and to enable you to remain profitable. If you do not use them, then a single trade could cause you to lose your entire account, something that you certainly do not want to do. So use stop losses, with every single trade, every single one of them.
Don’t: Trade Too Much
It can be very tempting to trade more when things are going well, especially when it is bitcoin due to the massive profit potential that it offers, but you need to be wary of this, you do not know what to overtrade. Overtrading is basically when you place more trades than you should. Overtrading can decrease your account’s margin, and when the margin gets too low, it will only take a small movement the wrong way for your account to blow and for your broker to close all of your trades in the negative. Only trade what you need to, do not get greedy, if you are being profitable, accept that, do not try to push too hard for more.
Do: Keep An Eye On the News
When you are trading bitcoin, it is very important that you keep an eye on the news that is going on around you. Bitcoin can be heavily influenced by the news, if a country decides to ban its use it can have a very strong and very quick drop, if a major company decides to start accepting it, it can have a huge spike upwards. You do not want to miss out on the opportunities that the news can present, but maybe more importantly, you do not want to get caught out by a huge drop, which even with stop losses in place, can cause an account to blow if the price jumps passed the stop loss. If you are going to trade bitcoin or any other form of cryptocurrency, then it is very important that you keep an eye on the news and know what is going on in the crypto world.
Don’t: Let Emotions Overtake You
It is very easy to let emotion take over, especially when there is money involved. This is no different for crypto and bitcoin trading. There is a lot of money to be made, the markets can move up and down a lot which can play havoc with your emotions, in fact, it can cause a lot of stress and anxiety. Things like anxiety can make you not want to trade at all, maybe this has come from a loss or consecutive losses. Then there are things like greed and overconfidence, these can make you start to place more trades, or larger trades, each of which will be putting your account under more and more pressure. If you feel that any form of emotion is starting to build up and that it has the potential to affect the trades that you are making, then you need to take a step back. Take a break, go out for a bit, clear your mind and then come back with a fresh view of the markets. Whatever you do, do not place a trade based on an emotion, it won’t end well.,
Those are some of the do’ and don’ts when it comes to bitcoin trading. There are of course many other things that you should or shouldn’t be doing, but we can’t go over all of them. As we mentioned at the start, if you are doing some of the don’ts, do not worry, we have all done some of them at one point in our trading career, simply learn from them and try and turn that don’t into a do.