Currently, dealing with cryptocurrency trading can be compared to a raging river. This is due to the fact that this process does not stop, it changes rapidly, and sometimes significant consequential events happen. It is important for all the people who consider to start dealing with this online investment business to learn how not to swim against the current. Many specialists recommend, therefore, that beginners should start learning from the others’ mistakes and avoid repeating them.
In the following couple of paragraphs we are going to provide our readers with some interesting and valuable information regarding the crypto trading field. If you would like to get additional details, read the tips we have prepared for you. You will also find info about some common mistakes that you should avoid.
1. Learn How to Work With The Order Book!
This is maybe the most important yet the most difficult thing you should learn to do in order to start generating more satisfying results. Let us start by saying that the value of a particular crypto coin is determined by the last executed transaction and in accordance with the supply and demand forces. All the commands are arranged in a table, which is actually the order book. In the field of cryptocurrency trading, the most important factor is the severe volatility. This is why every trader should set the levels of some factors such as sell level, risk level, and a stop-loss level. To identify both resistance and support areas, you should first analyze the graph at the most basic level.
2. Keep Track of The Graph – Altcoins vs Bitcoin vs USD
All the most popular and successful Altcoins have the most volume traded again the USD. This comes to show that when analyzing the graphs of those currencies you should compare their value to their Bitcoin and USD value graph. Not forget to follow all the value graphs as if you only stick to the Bitcoin value chart then you will miss some valuable information that could cost you funds.
3. Do Not Involve Emotions When Trading
This is one of the most important rules that should be strictly followed when one deals with online trading. You should never allow your emotions overtake you when considering your moves and placing your trades. It has been proven that emotions affect us as they can completely disturb our plan of action. This is why you should be able to always get over your emotions even in case of a losing trader or after you have sold a coin which is sky rocketing just a few moments later. As a result, you should not regret missed opportunity and don’t feel guilty about lost trades.
4. Don’t Try to Predict the Future
Here, we mean that in many cases what goes down does not necessarily go up again. This is why it is not recommended for people to start investing in recently crashed cryptocurrencies and hope they will return to the successful path and experience new peaks in their value. Many people actually do exactly this mistake. And the main logic that should be comprehended here is never to consider a coin being lower than its peak price as an opportunity rather than a losing card.
5. A Great Mistake!
Many inexperienced investors tend to only take into consideration the price of a cryptocurrency rather than the market cap. And this is important as the total amount of existing crypto coins in circulation times the coin’s price.
For example, there will be no difference whether the price of 1 Ripple is 1 USD and there are a billion Ripples available or if one Ripple costs 1000 USD and there are one million Ripples. This is the most simple explanation with an example about why every crypto trader should focus on following the market cap rather than the price on a particular digital currency.
We hope that the information that we shared herein above will be useful and helpful to all the readers who are willing to start dealing with cryptocurrency trading. Remember that everything is possible as long as you are prepared for the quickly changing environment in this business.