4 proven ways to trade cryptocurrencies like a pro
Trading is one of the most lucrative businesses in the world. Those who are involved in the Forex trading industry knows how easily they can take advantage of the leverage and trade with a small account. But things are not so simple for the cryptocurrency traders.
Trading the cryptocurrencies has always been a challenging task. And things have become much harder as the market volatility has gone high due to massive embracement of cryptocurrencies. So, is it possible to take advantage of the market volatility and make some big profit from this market? The obvious answer is YES.
In this article, we are going to discuss four proven ways by which you can trade crypto like the professionals. Let’s explore the details.
Selection of the asset
The naïve traders often think they can only trade bitcoins. But this is wrong. You can also trade other popular cryptocurrencies like dash, litecoin, ripple, etc. in fact, choosing those assets is much more reliable since they might provide you stable price movement. Instead of jumping into bitcoin trading, you should monitor a few popular cryptocurrencies. From them, choosing the right asset so that you don’t have to deal with the complex asset. The selection of the trading instrument is very crucial as it can make your trading process much easier. If you chose the wrong asset you are bound to lose money even though you might have extensive knowledge about the advance risk management policy.
Importance of technical analysis
To trade the fiat crypto, you must have strong technical analysis skills. Technical analysis is the process by which you will find the potential trade setups. Those who are buying bitcoins or other digital assets in the deep doesn’t have any knowledge about support and resistance level. But these two levels are the most important parameters to consider while trading the bitcoins. And try to find your support and resistance level in the higher time frame so that you don’t have to lose money by placing trades in the minor support and resistance level. Try to learn the price action trading strategy so that you can place the stop without using a big portion of the trading capital.
The professional crypto traders are well aware of global news. News can cause a dramatic impact on the price of the trading instrument. So, ignoring the news while trading the crypto is a very big mistake. Does that mean you have to deal with the world economy? The obvious is NO. Just by learning about the high impact news, you can scale the trade. Since the cryptocurrencies are still to be accredited by many governments, news factors can create a heavy impact. But don’t have to be panicked thinking the news drives the price movement. If you are good at doing the technical analysis, the news data will favor the technical details in most of the time.
Managing the risk
The professional crypto traders are very good at managing the risk. They never take unnecessary risks to secure a big profit from this market. Due to their strong risk management skill, they can cover up the loss. Just like trading the traditional currency pairs, you have to consider the risk to reward ratio in the trade setups. Many naive crypto trades use negative risk to reward ratio thinking they are using a low leverage account. But the use of a low leverage account should not bring any change to your risk management policy. Take your time and learn more about the advanced method of managing the risk factors and soon you will become a good trader.