Cryptocurrency: How to Prevent Losing Your Money
It's presently possible for "everyone" to make money via cryptocurrency trading. Cryptocurrency brokers are easy to sign up with, and in certain situations, no ID verification is required. An email confirmation link is all that's needed once a user enters their email address and password for the first time before they can proceed to make a payment. There is no need to worry about this step taking too long to finish if you're depositing Bitcoin or another cryptocurrency.
Ordering and playing in the game are next, which is a lot of fun! Instead of merely learning to make an order, buying Bitcoin, then waiting for a massive return, crypto trading requires a lot more than only knowing how to place an order and waiting for that return. If you want to make a Bitcoin investment but aren't sure where to start, turn to ethereum-trader.io
You'll need to be able to respond quickly to price variations and have a well-thought-out plan for doing so. When, for example, the price suddenly turns against you. To minimize financial losses in Bitcoin, we've reached the first and most significant step:
- Be Concerned With Risk Management
What many inexperienced traders are unaware of is that a stop-loss order is not only an optional order type that experienced traders may employ from time to time - it is, from a professional standpoint, required for each transaction. Professional traders employ stop losses in every transaction because making a clear choice about the amount of loss they are ready to accept is just as crucial as making a strategy for where they want to collect their profits.
- Don't be distracted by the price
When newcomers see a coin's price growing on a chart, they are more likely to purchase it. That is a common response of the unprofessional population when they observe a rising price: they experience "fear of losing out." The assumption with cryptocurrency is that the price will continue to rise at an x-fold rate from the entrance point.
However, it often occurs that the purchase level of the novice was too low before to the high, resulting in the price falling back down for an extended period of time following the top. As a result, traders who are inexperienced are more likely to follow the erroneous bias.
- Limit the amount of money you invest in each trade
Inexperienced traders often overpay for a deal. It's simple arithmetic to figure out how much of your total money you should risk. Too much money in one transaction might result in a loss of entire trading capital. However, newbies are more prone to such blunders. This is unacceptable to an experienced trader. A single transaction should not use more than a few percentage points of trading capital. A maximum of 5% is permitted. A 10% loss on one trade equals a 5% loss on the overall trading capital if the stop loss is positioned 10% below the entry.
Once your whole trading capital is lost in a transaction that returns at least 150%, you will still have earned at least 7.5% on the total amount of your trading capital if the trade succeeds and returns at least 150%. Tell a Forex or stock trader this! In only a handful of this pump and dumps, your trading capital may grow by as much as 500 percent, even if you were sometimes stopped out with the tiny losses that have been disclosed.
- Keep away from Leverage!
A high-risk technique, trading with leverage (borrowing money that you must return, plus interest and fees) should only be used by experienced traders with years of experience in the financial markets. In the eyes of those with little or no trading experience, margin trading is effectively the same as playing on a casino table. It may be more fun to play a slot machine that at the very least has some attractive pictures and music while it is sucking up all of your money before you go down that road.
- Approach Trading Like A Business - Because That's What It Is
Remember that every company has both revenues and costs. You must be conscious of this. The issue is to minimize losses while attempting to maintain returns that are much greater over time. You must keep a record of all earnings and expenses in order to run a company, and this is also true in trading: you must record all accounting purchases and sales as well as income and expenses in a trading diary that constantly tells you where you stand.