Cryptocurrency trading can earn you a fat cheque at the end of the day. However, it is not a jar of cookies that everyone can shove their hand in. Crypto coins are traded in a more dynamic and sophisticated market, which requires mastery of advanced bitcoin trading tips and tricks compared to traditional securities trading. Whether you joined the market to trade cryptocurrency or just exchange Bitcoin, we at Superorder take you through 6 cryptocurrency trading tips and tricks on how to become a professional trader.
The ultimate goal of any form of trading is realizing profits. Gaining profits in traditional trading is as easy as ABC as the securities are regulated by a centralized governing system, such as a bank. Gaining profits in crypto trading is a more complex task. First off on our list of cryptocurrency tips is understanding the risk-reward relationship between crypto coins.
Cryptocurrency is electronic money whose origin technology controls its creation as well as its transactions. They are currently the only publicly traded asset whose value can fluctuate in double digits. This means that the value of a crypto coin could rise or fall by 10% quickly, creating a complex web of arbitrages and trading options.
The frequent rise and fall in coin value result in a highly volatile market. Arbitrages create opportunities for traders to gain profits through short and long trading. In such a market, you could have a streak of luck or a streak of poor performing trades. One of our favorite crypto trading tips is: pro traders do not shy away from risk. They rely on risk management techniques to secure the positively correlated potential returns.
Risk management helps traders to place calculated risks and gain profits from them. It involves accurate position sizing, risk sizing, setting profit targets, and stop-loss orders as well as monitoring your portfolio across multiple exchanges and re-adjusting your position. Overall, the ideal risk-reward ratio should be higher than 1:2. And you should avoid deals with the ratio equal or lower than 1:1.
While the value of crypto coins fluctuates in double digits, traders can circumnavigate this ecosystem through technical analysis. Just like in securities trading, cryptocurrencies leave a trail of trends and patterns of how their values behaved in specific markets. Pro traders rely on such trends and patterns to find key support and resistance levels.
Trading terminals such as Superorder collect trading data over time and present traders with neat analytical trend charts. For instance, uptrends illustrate a series of higher highs and lower lows. Higher highs represent the resistance level, while the lower lows represent the support levels. With this, pro traders perform a thorough technical analysis which involves the following:
The beauty of crypto trading is its ability to be automated, which brings us to #3 on our bitcoin trading tips; special orders. Algorithmic trading, using bots and terminals, allows traders to develop trading strategies, which include specific orders that guide the trading terminal on how and when to buy or sell on your behalf. Orders can be defined as executable instructions based on pre-set parameters. Pro traders make use of orders to buy and sell within safe margins, to protect them from making emotionally driven mistakes and to prevent losing trades from getting out of control. Some of the useful orders pro traders can utilize include:
To be a pro crypto trader, you need to learn how to manage your money. With so many people praising the trade, the fear of missing out on such a profitable venture could lead you to make poor decisions. For our bitcoin trader tips today, we like to remind the phrase: never put all your eggs in one basket. The prices will not always go up; neither will they always go down.
One way of managing money is separating a certain percentage of your constant income from the amount you wish to trade. From this percentage, pro traders divide up their risk capital in 5 or 10 parts. This limits their bet to not more than 10-20% on each coin they purchase. With this crypto trading tip, traders can escape 100% loss on each coin.
There are hundreds of cryptocurrency coins, all with different values. Bitcoin (BTC) is the most valuable crypto coin with one going for as much as $10,000 by the second quarter of 2019, while Ethereum (ETH) is the 2nd most valuable crypto coin going for $170. Of course, the exact price varies by exchange. Besides, conducting each exchange comes with its fees. Pro traders learn to focus on specific coins rather than working with all of them. This helps in diversifying their portfolio. For instance, a trader can opt to buy a bulk amount of Ethereum or buy fractions of Bitcoins of the same value.
Traders have the choice of selecting the platform from which they can trade cryptocurrencies. They include:
Exchange platforms: These are merely web- or application-based platforms which support the exchange of one crypto coin for another. They are limited to exchanging coins.
These are more feature-packed platforms which offer traders access to multiple exchanges as well as extra tools and features required for the actual trading of cryptocurrency. Such features include the ability to set stop-loss orders, trailings, and even the ability to create trading strategies.
Our most-repeated crypto tips for traders include use of terminals due to the ease of access to useful tools and features. Due to the differences in features across terminals, traders should use one that supports the exchange platform they are used to.
Our terminal – Superorder – is a powerful API-based trading platform with the advantage of automation. It has a clean user interface that even new traders can use with ease. Additionally, Superorder grants traders access to trading bots at a monthly fee. Don’t hesitate to use this tech and our bitcoin trading tips for beginners!