Are you planning to start investing in or trading cryptocurrencies? Well, you surely have made the right decision. Cryptocurrencies are the next big thing in the digital finance world, and you sure wouldn’t want to be left behind. But, before you get all excited about it, make sure to know everything there is to know about the basics of crypto trading, including the Crypto Trading Do’s and Don’ts.
A proper, well-researched strategy can help you make the best out of your trading time and efforts. So, make sure to read and implement the tips given in this article to get the most out of Libra coin trading.
Libra Coin Trading Dos
Do this and your trading efforts will definitely pay off.
#1 Diversify your portfolio
That’s one way to say that you should not put all your eggs in one basket, i.e. keep your portfolio diversified across different asset types. Even if you are planning to invest in cryptocurrencies, don’t put all your money into it. Experts suggest that a person should not invest more than 10-20% of his/her folio into digital currencies. Other valuable investment options including equity, debt, real estate, businesses, etc.
#2 Limit your risk
The crypto trading market is highly volatile. One minute your folio is in profits and the next minute you could be under a severe loss. So, always manage your risks by using the options provided by your exchange, including the option to set a stop loss to limit the maximum amount of risk/loss you can take on a particular trade. Also, it’s wise to regularly book profits rather than waiting to reach the top, as the market can always & unexpectedly return back to the bottom.
#3 Stay informed
The huge price bumps and dumps in the crypto market happen when there is a major update or news. For instance, the recent launch of the Coinbase (exchange) IPO helped bitcoin price to boost to an all-time high of $63,000+. So, keep yourself informed of the crypto market events and updates. But, don’t completely rely your investment decisions on hype or news, as they can also be manipulated.
#4 Make and follow a strategy
Always have a plan when trading cryptocurrencies. This should include the maximum amount you’re going to invest, the maximum loss you’ll take and the maximum/minimum profit to sell. Having a trading strategy will help you limit your losses and ensure good profits. For instance, when you know you have only $100 to invest, you limit your loss to this amount. Also, you should know when to quit or what your target profit is.
Libra Coin Trading Don’ts
Make sure not to make these costly mistakes while trading cryptocurrencies.
Don’t invest when market is surging
The bitcoin booms are very frequent. Almost every year, the price of bitcoin touches an all-time high, sometimes multiple times a year. And when that happens, many new traders start putting their money in the crypto with the hope to earn some quick profits. But, most of the time, the market goes to the top only to fall back and wipe hundreds of billions of investors’ money while doing so. So, wait for the price to come down and invest only in drops and not when the price is surging.
Don’t trade if you don’t understand cryptocurrencies
In fact, there is a general rule in investing that you should not put your money into anything that you don’t understand. The crypto market is still new and many people have no idea what it’s all about. They only see profits and want to get a chunk out of it. This is a big mistake, and the market will most probably end up wiping your profits along with your investment. Take time to understand the crypto market before you start trading.
Don’t invest what you don’t have
Another big mistake a crypto trader can do is invest the money that they don’t own or trade on borrowed money. Crypto trading like gambling can be addictive, especially when you have won the first few trades. But, never ever make trading decisions based on sentiment and never borrow money to trade cryptocurrencies.
Hope these do’s and don’ts of crypto trading can help you get better returns out of your trading time and efforts. If you are looking for alternate ways to make money with crypto, you can buy Libra Coin or join our ‘refer and earn’ program to earn free unlimited coins.