Practical Tips for Cryptocurrency Traders

The world of cryptocurrencies is a financial jungle. It’s a dog-eat-dog

world, and you constantly have to be fighting to hold your own. A lot

has been said and a lot of tips given to help traders crack the esoteric

bitcoin code of trading. However, there are certain practical tips that are

commonly left out which, if implemented correctly, could both save you

a ton in losses and make you a ton more in profits.

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ICOs

The first thing you need to be well aware of is the public initial coin

offering (ICO) or the crowd sale. These are the chosen fundraising

vehicle for many new projects. Basically, a crowd sale offers investors

the opportunity to buy coins at a low price. The main motivation for

these investors is that as soon as the coins are launched, they will begin

to trade across major exchanges and the prices will surge, earning the

investors a tidy profit in the process. One example that is raising an ICO

for the public good, creating a tech that listens to Mother Earth, is flux.

See their ICO site here.

To be sure, there have been many successful ICOs in the recent years –

see the Top 10+ blockchain technology companies here. This is both in

terms of successful projects that managed to take off and coin yields

that made many investors rich. Coins ended up doubling, tripling, and

quadrupling in value compared to the price at which investors bought

them at the ICO. In the process, they made the investors millionaires.

A good case study, in this case, would be the preliminary crowd sale of

augur. This ICO yielded 1,000 percent of the initial crowd sale price.

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Caution Recommended

However, there’s a catch with ICOs. The ones that make money for

investors are few. They are the exception and not the norm. It can even

be argued that they are the unicorns of the ICO universe due to how

rare they are. To begin, not all projects are beneficial to their investors.

In fact, many ICOs turned out to be complete scams. The coins never

got traded on exchanges, and some projects even dropped off the map.

They disappeared with all the money that had been raised and were

never heard from again.

So, how do you know whether to invest in an ICO or not? First, you

need to find out just how serious the project is. Does the project have a

professionally done website? A website that looks like it was built as

part of a summer project by a middle schooler is a huge red flag. Also,

look at the team behind the project. Nicknames are a big no-no. Let

them give their real names and proudly present themselves on the

project’s website. Does the project have a Bitcointalk thread? Does it

have a growing Slack community?

For a great overview over different exchanges and the fees they charge,

have a look at this Cryptocurrency Exchange List.

Another thing to look at is the amount the project has already raised. If

the project raises too little during its ICO, then it won’t be able to

develop over time. On the other hand, a project that raised a huge

amount of money probably captured the majority of the market for

investors. There might not be enough investors left out there to buy the

coins on the exchanges.

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Most importantly, however, you should always remember your risk

management. Do not invest all of your fortune in a single ICO.

Practical Trading Steps

There are a few practical trading tips you won’t hear much about

elsewhere. It’s always better to learn them and begin to implement

them right away.

● Fees: You should always consider the fees you will be paying as

you trade. The more trade actions you take, the more fees you

pay. It’s always better to post the command or the maker than buy

from the order book, the taker. That way you will pay less in fees.

● Trading conditions: Never trade unless you’re in the right state of

body and mind to trade. The conditions should be optimal for

intense decision making, especially when it comes to knowing

how and when you will exit your trades. Trades made under

pressure almost always end up being losing trades. If you don’t

feel like you’re in the right state of mind, wait for the next trading

opportunity. There are endless opportunities in the market, and

they will always be there.

● Goal setting: Always set goals with your trades and start them by

placing a sell order. In other words, know your exit before you

know your entry. You never know when a whale will pump the

price up to meet your buy order. One way you take advantage of

this is to place low buy orders and wait for those times when a

coin suddenly plunges and then recovers. You can often make a lot

of money during these times. Be careful not to be left behind by

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the market, however, such as when a plunge was the beginning of

a protracted selloff.

● Watch the news: The market wisdom that tells you to buy the

rumor and sell the news isn’t wrong. The best time to get out of a

trade is when major news sites begin to publish articles.

● Murphy’s law: You placed your trade, set profit taking targets and

made money. Then, just when you sell, the price spikes up again,

and you feel tempted to get back in. Don’t give in to those

thoughts. Whatever can go wrong will eventually go wrong, as

Murphy’s law states. You’ve made your money already. Move on

to the next trade and forget about the FOMO.

● Leave your ego at the door: You’re not trading to be right; you’re

trading to make money. That said, you can always expect to lose

some of your trades. The point is to make more money than you

lose, so stop wasting your time trying to prove how right you are

about the market.

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