Lest week we published an Article discussing the different ways to get into Cryptocurrencies and how https://www.coinstreet.limited/should-i-get-into-cryptocurrencies/
Now we will delve deeper into the trader category.
So let’s start off with the usual advice you always get just to get that out of the way and make sure that if this is the first article you read you get the standard important messages first:
- Are you ready to lose a lot of money while you’re learning the ropes of the trade? The timeline and the amount you lose are different for everybody, but almost everybody will take time to learn the craft and get the right mindset and until you do, expect to lose a lot of money. Even if you start off in an extremely bullish market where everyone is winning, the moment the market turns if you haven’t learned to trade well yet you will just give all your profits and some of your initial investments back. We’ve seen this both times the Bitcoin market retraced. Even though it never went as low as before the pumps the retracements were very low and many people just lost the money they won during the pumps.
- Are you a self-motivator? As a trader, at least one not working for a large trading firms, you need to find the motivation in yourself every day to do the work that needs to be done. It is easy to be motivated when everything that is going your way, but can you stay motivated 5 days in a row in which you might not be able to find any trades that fit your strategy? Or in the case you are following our trading course, can you stay motivated after taking a few stop losses in a row? Trading in the end is a game of numbers and you might have a bad streak and you need to be able to stay motivated in the meantime.
- Can you survive periods of drought? If the markets you trade in drop, there might be a period of time in which you can’t pay yourself. Or in the worst case, if you decide that trading is not for you, can you survive the period looking for a new stable income? Make sure that besides the funds you trade with you want to have some savings as well to ensure that you will never have to take desperate measures.
- Do you have a sound and tested strategy? We see that a lot of people start trading based on their feelings. Most websites will teach you the basics of trading, they will teach you indicators you can use to look at the market and they may even talk about the mindset, but it is very rare for an actual strategy to be shared. Most new traders decide to trade based on an extremely bullish market. They will see that it is easy to make a profit and decide they can easily live just of these profits. However, once the market turns these feeling based strategies won’t work anymore and you will lose these funds. That is why we are sharing our trading strategy with you, so you have a place to start from: https://www.coinstreet.limited/product-category/e-learning/
- Can you ignore all the other voices out there? When you start trading you will most likely read up on what other people are doing. However, trading in the end is you vs the rest. When you make profit that money must first be brought into the market by someone else and that money is now not available anymore to someone else. Be very careful when you read other people’s opinion that you follow what they do, and not what they say or at least that it is a source you trust. Somebody on a forum telling people to sell might just be looking to buy cheap coins himself or enjoy trolling people by giving them bad advise.
So now for Cryptocurrencies specifically:
- Are you ready for the extended risks of your governments changing stances on cryptocurrencies? As we discussed in the previous article, governments are constantly changing their opinions and stances based on their current needs. Examples of this are if you were trading from New York City you may have suddenly have had to close your accounts on exchanges that were suddenly not legal anymore.
- High risk, high reward. Cryptocurrencies are very volatile and alt coins can be delisted from your exchange. With this high reward possible with over 100% increases in a day comes the same on the downside. This can be extremely stressful and just following the forums and chat boxes you will see the big mood swings of traders. If you join the group of traders, be ready to also join the trader mood swings.
- Do you understand the underlying value? Don’t worry, we can help you here with our articles. But do you understand why the currency you invest in goes up or down at some point? There are many ways to trade and especially if you use technical analysis this may not be required for you to be profitable, however, it helps to know when to drop a currency from your portfolio. With your trading strategy you should be covered from taking big losses and you should have plenty of entry positions. When choosing which coins to look at though an understanding of value can be helpful.
In short: are you ready and willing to take the risk and become an independently motivated trader with your own tested profitable strategy that you can keep and the funds to stay safe for a longer period of time?