Risk Management, Trading Psychology As Key Factors For Crypto Trading Success
When you hear somewhere that your trading success depends on a good strategy or luck, it is not true. The key factors of long-term profit in cryptocurrency trading are money and risk management as well as trading psychology.
Most newcomers try to avoid those subjects first thinking that will learn some strategies and use them carefully in order to reach their goals. However, they start to lose money and the more they waste, the closer is the moment they open such articles as this one looking for answers to their numerous questions.
We have gathered here the most important key aspect that help professional traders to succeed. First, we are going to cover money and risk management and give you several recommendations on how to use them in practice.
Money and risk management
The importance of those aspect is hard to overestimate as they play an important role in trading in general. There is no a single professional trader who skip money and risk management in his or her daily trading routine. Lets see some useful advice:
Do not overheat your trading account
This is one of the main rules of money and risk management. There are several ways to overheat your trading account including overtrading, breaking money management rules and the others. What does it mean to overtrade?
Most beginner traders and investors think that the more orders they place, the more money they will earn. This sounds obvious, but in practice, the more you trade, the more risks you take as you have less money in reserve.
What is an average number of trades per day? There is no answer to this question as everything is individual and depends on many factors including the number of trading opportunities, initial funds, traders mental and physical state and the others.
Many beginners think that they always have to stay in market in order to take advantage of every crack. However, this is the best way to overheat your account by overtrading. There is no need to place a trade just in order to be in market all the time.
The best crypto strategy for every trader is to find entry points before placing orders and use them in order to gain profit and not vice versa.
5 Ways to Earn Passive Income with CryptocurrencyDetermine your risk levels
When you trade cryptocurrencies, you need to determine your risk levels for every single order meaning you will close your positions manually or automatically once this point is reached. How does this work in practice?
Lets say, you have $10,000 on your trading account and determine risk at five percent level. You buy a certain number of cryptocurrency for $1,000 but your forecast was wrong and the price went downwards. Your risk level is $50 meaning you can not lo ...Read full story on u.today