Everyone wants to be the diamond hands that hold for 100x but in between these pumps are crazy and healthy corrections that can get traders emotional and have many sell their positions in losses just to avoid further and more complicated losses.
Have you sold an asset before for a cheap price expecting that the market will see the price move downwards only to have the asset so pump big?
Crypto assets valued at high prices and pieces of art selling for thousands of dollars are proof of emotions in crypto trading.
Prices of crypto vary and are driven by lots of factors. Important world traders are familiar with the Fear of dump, which incites or marks the beginning of bullish trend reversal or a crazy market dump on most assets.
Traders all have a pattern that works for them and most times, knowing what works for you is the best way to stay profitable trading digital assets.
Many traders are caught in buying overvalued assets and selling at lower prices and keep moving in this circle till they are in total bankruptcy.
In this article, here are practices for becoming a better trader and learning how to deal with your emotions as a digital assets trader.
Here are practices for you to become better at trading cryptocurrencies and other digital assets like tokenized stocks.
DISCLAIMER: Nothing in this article should be considered as financial advice.
Do you have a home to go to if the hard goes wrong?
Understanding that the market will not be green all day helps in making better decisions, while it is important to invest, it is important to be conscious of the life outside trading and the necessity to live well. While this is not to be considered as financial advice, most crypto traders advise against taking loans just to invest in cryptocurrency or going too hard on any position.
Cryptocurrencies can easily go down by a high percentage due to just someone’s tweet as we are still in the early days of crypto trading and valuation compared to other financial markets.
Before you think of investing hard in any Crypto, think about the possible downsize and what effect losing such positions will have on you. Prices can easily go down 100% or in the case of rug pull where holders are unable to sell the tokens.
- Manage your risks properly.
Cryptocurrency doesn’t just provide an investment opportunity; it acts as a hedge of funds against diminishing fiat currency and a store of wealth during global crises and pandemic that affects most businesses.
- Have rules for investing in cryptocurrency and a trading plan.
Through research methods such as fundamental and technical analysis, see if assets are worth investing in and what percentage of your portfolio you will be willing to risk on it.
In Writer’s choice, it is considered wise to have a percentage of your portfolio in stable coins that allows you to maintain your portfolio during the dip and help you buy more at a cheaper price without having to sell an asset to jump on what is considered as the next 100x.
- Dollar-cost averaging
The market most times is in dip or correction, even during the bulls, corrections are necessary and healthy for the market to go up further. One best way to avoid buying the top is using dollar-cost averaging. Rather than buying into a position all at once, a trader can choose to buy in bits to avoid missing out on opportunities to buy more at a cheaper price.
The formula to be determined by the trader ensures that he buys into a position at different prices and different time intervals. Immediately after buying an asset, traders oftentimes experience a correction price before the bulls continue, and rather than gnashing during these corrections, DCA ensures there is still more money to buy more and reduce the overall loss or pump impact by using the average of the tokens bought at different prices.
- Learn how it works
Understanding how it works and getting constant updates about the ever-changing market narratives helps in making good trading decisions, recognizing a trend, and having the best predictions on when the trend becomes too weak to drive prices up, seeing FUDs and general market sentiment helps in getting the best out of trading.
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Above all strategies, A trader is the most important factor in trading after money and patience. He decides on all numerous indicators and executes the trade and hence the need for proper and healthy living and keeping emotions at bay and ensuring to be mentally aware. There are always coins yet to pump, chase what is pumping with caution.
Check out other articles on NFTs and more exciting topics here.
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