4 Principles of Crypto Trading You Should Learn in 2024

Crypto trading is one of the modern trends that has led many investors to achieve financial independence. However, this does not mean that it is a simple process, as it needs a great deal of research and experience to achieve the goal of making a profit.

The movements of these markets are volatile and are greatly affected by various aspects. This type of volatility is what ends up making learning how to short crypto and how to identify currencies that will rise in price invaluable.

However, every professional in the area has a starting point and should have a guide with principles to take into account. This way, you will be able to focus your efforts in the right way and start gaining experience while minimizing losses.

In this article, we will give you a list of the basic principles of crypto trading that every newcomer should take into account before starting to invest heavily in the cryptocurrency market.

1. Look at the market you’re entering

Trading Crypto Market
Look at the market you’re entering

Although it is not a unique crypto trading tip, it is one of the most important when starting to work with crypto. If you are about to enter the world of cryptocurrency investments, you must be properly informed about its functioning and trends.

The cryptocurrency market is extremely volatile, which makes reaction times limited. This makes it imperative that you learn how the market behaves rather than following financial advice from other investors.

At the same time, you must remember that this is an unregulated and completely decentralized space. Every decision made will generate consequences for which you will be fully responsible, so in the case of losing money, you will not be able to blame anyone else.

Also, cryptocurrencies work in a complicated market style. Their volatility does not affect the economy much, but they are very affected by changes in it. This makes it necessary to be aware of possible falls, interest rate increases, devaluations, or situations that may generate variability in the prices we manage.

2. Balancing risk/reward is the key to success

Balancing risk and reward
Source: pymnts.com

One of the biggest things to keep in mind is that there is no investment without risk, and most of the time, the higher the risk, the higher the reward. More volatile cryptocurrencies can end up making you large amounts of money, but you can also lose a significant amount in the blink of an eye.

Of course, investing in safe and stable options will also have repercussions — your losses will be minimal, but your profits will also be minimal. Learning to manage risk and to spread your portfolio between very volatile cryptocurrencies and stablecoins will help you obtain profits for each transaction you make.

The most important tip when you are a newbie is to protect your capital and survive the initial investment stage. As you learn how the market fluctuates, you will improve your transaction record of buying and selling. This is especially important at the beginning of your entry into this market so that you can increase your investment down the road.

3. Don’t underestimate the state of mind when investing

state of mind when investing
Source: altcoininvestor.com

In the world of cryptocurrency trading, buying and selling will put your mental capacity to the limit. It is common for many emotions to intermingle when working within this market, so you must learn to cope with them.

Feelings of euphoria for having made positive deals can lead you to impulsive and unplanned purchases. Also, fear or insecurity can lead you not to make transactions that may cause you to miss great opportunities. Investing requires great mental fortitude and keeping a level head focused on data collection and logical analysis is the way to go.

If you are not in the right state of mind, it is better not to make quick decisions. Take a break and then think carefully about your next move. This will help you make you have objective discipline thereby avoiding mistakes. So you should not make decisions based on emotions but rather objectively.

4. Learn to trade less and make each trade more effective

Learn to trade
Source: masterthecrypto.com

Many users who claim to be dedicated to trading often spend hours in front of the computer trying to make a profit, relying on their reaction time in buying and selling. While this is an effective method, it is not the right approach.

A good trader can identify the projects that will generate long-term profits through their analytics and does not depend on being online all the time. Although a quick project can generate some profits, most of them will depend on your luck and availability.

You won’t always be able to react in time or be present, which is why you should learn to make fewer trades and make each one more effective. That way, you won’t need to worry about watching the price of each coin you invest in every 10 seconds or so. Using higher time frames for spotting long-term swing trade opportunities will help ensure that you won’t get caught in seas of short-term fluctuations.

Also, we recommend you use a bot that can indicate strong variations in prices. This type of basic program can send you notifications only when it is extremely necessary, allowing you to act with more tranquility and to adapt little by little.

Other tips to consider

tips to consider when trading
Source: news18.com

For the most part, you will learn more about how the cryptocurrency market works as you enter it. However, some additional principles will keep you on our toes as novices, such as not investing in the so-called meme-coins or verifying how viable some options are as a payment method.

The truth is that the more you learn, the more profitable your investment will become, so don’t be afraid to inform yourself before making these big decisions.