Bitcoin and Altcoins trading in simplified

Safety rules were written with blood. That statement sounds familiar to every soldier around. Although we are not dealing with a risk to human lives, losing your expensive Bitcoins by making mistakes trading is definitely not a fun situation.

So, how we can avoid those mistakes in our trading? How to be mostly on the green side? First, it is important to note that to trade right requires attention and your one hundred percent focus. Secondly, trading is not for everyone.

The following tips are easy to internalize because these tips were “written in blood” (my own blood). However, it’s still difficult to apply them in real-time. After all, we are not rational human beings.

Have a reason before entering each trade: Start a trade only when you know why you’re starting and have a clear strategy for afterwards.

Not all traders make gains from trading, since this is a zero-sum game (for everyone who benefits someone else loses on the other side).The Altcoins market is driven by large whales (yes, the same ones responsible for placing huge blocks of hundreds of Bitcoins on the order book). The whales are just waiting patiently for innocent little fish like us to make mistakes.

Even if you aspire to trade on a daily basis, sometimes it is better not to earn and do nothing, instead of jumping into the rushing water and exposing your coins to losses. From my experience, there are days where you only keep your profits by not trading at all.

Target and stop when starting a trade: For each trade we must set a clear target level for taking profit and more importantly, a stop-loss level for cutting losses. A Stop-loss is setting the level of loss where the trade will get closed.

Here again, it is important considering a number of factors when choosing a stop loss level correctly. Most traders fail when they fall in love with a trade or the coin itself. They may say, “Here it will turn around, and I will get out of this trade with a minimum loss, I’m sure”.

They’re letting their ego take control of them and unlike the traditional stock exchange where extreme daily movements are considered 2-3% in value, Crypto trades are a lot more riskier: in my life as a trader I’ve seen a coin dumping by 80% just in a few hours! And nobody wants to be the one who is left holding it.

Meet FOMO (fear of missing out): Indeed, it really isn’t fun to see such situations from the outside – when a certain coin is being pumped up like crazy with huge two-digit gains in minutes.
That bold green candle yells at you “you are the only one not holding me”. At exactly this point you will notice lame people flooding the Crypto forums and the exchanges’ Troll boxes to talk about this pump.

But what do we do now? Very simple, Keep moving forward. True, it’s possible that many may have caught the rise ahead of us and it can continue raising, but bare in mind that the whales (as mentioned above) are just waiting for small buyers on the way up to sell them the coins they bought in cheaper prices.

Prices are now high and it’s clear that the current coin holders only consist of those little fish. Needless to say, the next step is usually the bright red candle which sells through the whole order book.

Risk Management: little pig eats a lot, big pig gets eaten. This statement tells the story of the market profits from our perspective. To be a profitable trader, you never look for the peak of the movement. You look for the small profits that will accumulate into a big one.

Manage risk wisely across your portfolio. For example, you should never invest more than small percentage of your portfolio in a non-liquid market (very high risk). To those trades we will assign greater tolerance – the stop and target levels will be chosen far from the buying level.

The underlying asset creates volatile market conditions: Most Altcoins are traded according to the Bitcoin value.

Bitcoin is a volatile asset (relative to FIAT) and this fact should be taken into consideration, especially in the days when the Bitcoin value is moving sharply. Bitcoin and Altcoins have an inverse relationship in their value, i.e. when the value of Bitcoin rises then Altcoins are losing their Bitcoin value, and vice versa.

When Bitcoin is volatile, our conditions for trading are kind of foggy. During fog we can’t see much ahead, so it is better to have close targets for our trades or not to trade at all.

Fees, fees, fees: Multiple trade actions = More fees. It’s always advisable to post the command (maker) and not to buy from the order book (taker). In Poloniex exchange, the difference is 0.1% in favor of the maker. That’s quite a bit.

Traders with no pressure: Don’t start trading unless you have the optimal conditions to make the decision to start a trade and know when and how to get out of it. Pressure almost always creates losing trades. Wait for the next opportunity, you will get there.