CryptocurrencyAccording to Jeff Gundlach, CEO of Doubline Capital, “Cryptocurrency is now leading global markets”. Hence, this is a good opportunity to grab hold of this profitable investment. However, several factors come into play while trading with cryptocurrencies and not everything can be served on a silver platter, ready to be devoured.

Certain things can be learned, while certain other things need to be grasped from experience and for this, you do not need to trade day in and day out. Rather adopting simple strategies, practicing consistently, and increasing your capability to take risks will help you trade better.

Here are a few insiders’ tips to bask yourself in the success of cryptocurrency trading.

 The Learning Stage

This is the crucial stage when you encounter anything new. Be it a new electrical gadget, an automobile or an asset selection, you need to learn about the product and how it performs. Similarly, as a trader who is interested in cryptocurrency, you need to learn and prepare well for cryptocurrencies. The best place to get started is reading news columns to get an idea of the current market trends. Jeff Gundlach has mentioned in one of his articles to the Express that “BITCOIN price fluctuation has a deep connection to the moves of financial markets”. Such news and basic what’s, who’s, when’s, etc… about cryptocurrency will give you the correct push in your action plan. Additionally, some basic knowledge about the financial markets and the Blockchain technology will add value in your trading venture.

The Execution Stage

Once you have a good understanding of cryptocurrency, you can start executing trades. This stage is further divided into two sub-stages.

  • Trading Plan Creation – A good trading plan will maximize your profits and cap your losses, says Johnson Gitonga, a cryptocurrency enthusiast, in his article on the FX EMPIRE. The trading plan serves as an outline for your trades, which specifically addresses risk criteria, trade goals, strategies, and rules.

  • Risk Management – Make use of the several available risk management tools and strategies to reduce your trading risks and to estimate your risk-reward ratio. One of the most proffered and common methods of managing risk is to make use of control parameter such as stop-loss limits, trade amount, number of trades, etc… Johnson Gitonga further adds to his article in the FX EMPIRE that “A stop-loss order should automatically close your position if the price of the given market moves against you to a level where you want to exit your position”.

 The Repetition Stage

Here your focus should be on the quality rather than on the quantity of the trade placed. For this, two factors are essential:

  • Discipline – Head of Exchange, Zebpay, Mr. Nischint Sanghavi, had mentioned in an interview to Moneycontrol that “It is also time to develop a certain discipline towards educating the users about the overall potential of cryptocurrencies.” Thus, proper knowledge and maintaining self-discipline when trading with cryptocurrencies will only help you place profitable trades that are in line with your trading goals. Disciplined trading prevents emotions from influencing your trade decisions, thus increasing your chances of wins.
  • Consistency – As “Practice Perfects All”, consistent trading practice using a demo account and then shifting to the live account will minimize your losses and help you learn better trading strategies.