New to crypto trading? Here are 5 tips on how to start 2022 on the right foot

No matter how skilled you are in trading, nothing can be done against the volatility of cryptocurrencies’ prices swings. Bitcoin’s (BTC), volatility, which is the standard measure of daily fluctuations, currently stands at 64% annually. The same metric is used for the S&P 500 at 17% and the volatility spec for WTI crude oils at 54%.

Using five simple rules, you can avoid the psychological effects of unexpected intraday price swings of 25% or more. These strategies don’t require sophisticated tools or large amounts of money to withstand periods of high volatility.

Avoid withdrawing funds in less than two years

Let’s say you have $5,000 to invest. However, there is a good chance that you will need $2,000 within 12 months to travel, car maintenance, or other tasks.

A 100% allocation in crypto is the worst option. You might have to sell your position at a bottom or at the worst possible time. Even if one intends to use the proceeds for Decentralized Finance (DeFi), there is always the possibility of impairment losses and hacks that could compromise access to the funds.

The two-year vesting period for any cryptocurrency funds should be at least two years.

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Professional traders can be swept away by FOMO (fear of missing out), and feel the need to get as much as possible in order to secure a position. If everyone is receiving 50% or higher returns on a consistent basis, and meme coins are showing stellar returns, how can we stand by and watch?

DCA is a strategy that buys the same dollar amount every week or every month regardless of market movements. For example, $200 each Monday afternoon for a whole year eliminates the pressure and anxiety caused by having to decide whether to add to a position.

Avoid purchasing all positions within a span of less than three to four weeks. The adoption rate for crypto is still very low.

When conducting an analysis, don’t use too many indicators

There are many technical indicators available, including the moving average and Fibonacci levels of retracement, Bollinger Bands, Bollinger Bands, directional movement index, Ichimoku Cloud, parabolic SAR, relative strength index, and many others. There are many ways to track these indicators, and each setup can be used in multiple ways.

Experienced traders know that it is important to read the market correctly before choosing the right indicator. While some prefer to track correlations with traditional markets, others are more interested in crypto price charts. There is no right or wrong in this, other than trying to track five indicators simultaneously.

Markets are dynamic and crypto is no exception. This is particularly true when you consider how quickly things can change.

Learn when it is time to step aside

You will eventually misread the market and miss bottoms or altcoin season. It happens to every trader, and you don’t need to immediately increase your bet size in order to make up the losses. This is exactly the wrong thing to do.

Take a break for a few days if you get a “bad deal”. Losses can have a negative impact on your ability to think clearly and psychologically. Don’t lose heart if you have a great opportunity. Take a walk or organize your life.

Truely successful traders don’t have to be the most talented, but they do have the most longevity.

Continue to invest in winners

This is the most difficult lesson because investors are naturally inclined to profit from winning positions. As we have discussed, the volatility of crypto markets is very high. Therefore, aiming for a 30% increase will not cover any losses (or future).

Instead of trying to sell winners, traders should consider buying more of them. While one shouldn’t ignore the market data and overall sentiment, traders should consider buying more winners if their expectations are bullish.

If you are brave enough to hold on to the most lucrative positions, you will eventually see a 300% or 500% increase in your profits. These are the expected returns when you enter such a risky marketplace, so don’t be afraid to take advantage of them.

Each rule is intended to be broken

A roadmap to success in cryptocurrency trading would be a common resource that many would have discovered after years of searching. However, the returns would soon fade. You should be willing to make mistakes from time to time.

Don’t blindly follow advice from money managers or influencers about investing. Every person has a different risk appetite. Importantly, take care of your own health along the way.

Risk is inherent in every investment or trading move. Before making any investment or trading move, you should do your research.

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Eileen Wilson

Eileen Wilson –Technology and Energy My Name is Eileen Wilson with more than 5 years of experience in the Stock market industry, I am energetic about Technology news, started my career as an author then, later climbing my way up towards success into senior positions. I can consider myself as the backbone behind the success and growth of topmagazinewire.com with a dream to expand the reach out of the industry on a global scale. I am also a contributor and an editor of the Technology and Energy category. I experienced a critical analysis of companies and extracted the most noteworthy information for our vibrant investor network.

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