So you know that stop loss feature that every exchange has to limit potential losses when the market turns against you? Well, it's free to use and it's there for a good reason. You should probably think about setting a stop loss next time you decide to FOMO all in on the next over-hyped DeFi token. It could just save you from catastrophic losses.
Also, once you've set a stop loss on a killer trade and it starts to pump, DON’T FORGET TO ADJUST IT. Lock in those gains and reset your stop loss higher. You’ll be thankful that you did.
As inherently emotional beings, our emotions can be a barrier to successful trading, and most newcomers to the cryptocurrency market tend to make this mistake time and time again.
The best traders are those that formulate plans and stick to them, no matter what happens. Do your homework on a particular trade, identify your entry and exit points, and then execute the plan. It’s difficult to resist the temptation to sell too early or buy in too late if the market begins moving against you, but if you’ve done your research properly you should be able to secure a profit.
Over-allocating funds to single trades is a mistake that a huge number of new traders make when they’re first getting started. As a general rule, you should never risk more than 1% of your overall account in any given trade.
For example: You have $10,000 in your exchange account. That means you should only ever risk $100 per trade.
This is difficult for a lot of beginners to stick to, as it’s often tempting to go all-in on a token that everyone’s hyped about, but this is by far the safest way to insulate yourself from getting rekt early on in your trading career.
It’s important to remember that with each successful trade your account will grow, and so will the amount you can place per trade. Alternatively, you can set yourself milestones and increase your risk accordingly. For instance, if you manage to successfully grow your account to $15,000 you can increase your trade allocation to 1.5- 2%, and so on.
As the old adage goes, don’t put all of your eggs in one basket.
Keeping your money on multiple exchanges will reduce your overall risk and may improve the average amount of fees you pay. Holding funds on multiple exchanges also means you’ll be able to take advantage of any arbitrage opportunities that may arise.
It’s also worth mentioning that certain exchanges list tokens that others don’t. Best to keep all of your options open so you can be ready to trade any token at any given time.
If you are serious about becoming a better trader, then keeping an accurate record of your trades is an essential part of the journey. A record of all your trading activities will become one of the most valuable tools that you have to ensure you make consistent progress. You will learn about yourself, what works best, and it will help you identify where the bulk of your mistakes are made.
For example, once you’ve collected consistent data on your trades you might recognise that on a number of your trades you’re getting consistently stopped out right before the market moves in the direction you wanted it to. From this, you might decide to set your stops lower or wait until the breakout is underway before entering a trade.