New crypto traders enter the marketplace and often feel overwhelmed with everything. They don’t understand the mechanics of blockchain, cryptocurrency is volatile and no one really knows why, and new projects come and go faster than the changing weather and yet, I will say that there are three crucial practices that will stand the test of time no matter what, but the biggest hurdle to putting them to work is you.
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I’m going to wax philosophical for a moment to say that there are only a few things in life that are set in stone but, it seems that everything else is pretty relative and dynamic; changing with the passage of time.
One of the many characteristics of our post-modern culture is relativism. We are in a period in history where a popular school of thought is that nothing is absolute and that there is no universal truth. Naturally, countless of arguments have raged for and against the validity of such claims. Whatever your beliefs, I would argue that beyond death and taxes being the only guaranteed things in life, we also know, without a shadow of doubt, that humans are fallible creatures that must be ever-vigilant to be successful.
So, let’s speak of vigilance and what we can do to practice good trading habits to be successful.
Only Risk What You Can Afford to Lose
Whether you are a beginner or a pro trader, only stake an amount of money that you can comfortably lose. Mindset is a kooky thing. If you are afraid of losing money, you are likely going to lose it because your confidence is low and you’ve lost the stomach for an aggressive move to buy or step out.
Trading addictions and bad habits have the same pitfalls of gambling problems. So, if you’re on a losing trend and keep throwing money at the market in the hopes of a big win, you’ve already lost the war and probably your rent money.
Herein lies the crucial lesson: Only risk what you can afford to lose. Like a casino, the house wins. Be smart with your liquid assets!
The market can and does turn. The exchange is cold and impartial to your emotions and problems, but it will feast on your money if you allow it. If you are at the point where your trades are earning, consider trading with the earnings and leave your principal balance alone.
More aggressive traders will risk a percentage of their wallet, but that is recommended for more seasoned traders. That still doesn’t erase the first crucial practice of never risking more than you can lose.
Maybe you don’t want to hear the hippy dippy stuff, but positivity goes a long way in the lonely world of trading.
Because every trader goes through spells where the struggle is real and everything in your world feels like it’s blowing up. There will be times when it seems you can’t do anything right as a trader. It happens.
Earning is fun, but everything else about trading is analytics, monotonous, endless research, adjusting your charts and market tools. It’s mundane, really. But with so much work involved with no guarantees that you’ll be on the right side of a trade, it’s very easy to lose heart and get frustrated.
Stay positive. There may come a day where your winning attitude is the only thing keeping you in and not rage quitting.
Have a Trading Plan
Your trading plan is important to being a successful trader. It’s not something to be taking lightly because it helps you stay within certain boundaries and has a path moving forward. It also takes the emotional aspect out of the equation.
Temptation is out there. So is FOMO. Much of the time, that temptation is based on what you hear on the social media platforms, the news, or in chat channels like Telegram or Discord. Just keep in mind that a lot of the shillers are doing that because they’re looking for an air drop or some other form of reward. A lot of the time it’s not based on any actual news or real development, but rather what the marketing team is blasting out there to feed on your emotions.
Your plan sticks to facts, analytics, charts, history, and if you keep one, your trading journal. Your trading plan does not make emotional decisions. It’s a guide to help you traverse the volatile crypto markets with a steady hand.
The trading plan is not static either. Based on circumstances, it’s actually wise to review your plan and make adjustments to keep it relevant to market movements. Now, the truth is no trading plan is 100% reliable but the more trading experience you have the more informed and in-depth your plan can be.
Sticking to your plan will help you to manage your emotions while you trade and will also prevent you from over-trading. A plan brings discipline into your trading and gives you confidence and a level of control over your actions while trading. By all means, stick to your strategy.
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