I am not an expert trader by any means but along my crypto journey there are some things that have helped me. I want to share this information to all the new crypto traders out there and hopefully it will help you out as it has for me.
The 90-90-90 Rule
First is learn to trade by using a small amount of money, like $1 to $5. You are not going to make any significant money by investing small amounts of money but it will help you become familiar with the patterns of the market. There is 90% chance you are going to lose all your money trading if you are a beginner. There is a rule among trading experts called the 90-90-90 rule, and the rule states that 90% of new traders lose 90% of their money withing their first 90 days of trading. I didn’t learn this until recently and looking back it is very true. If you read my previous blog post on crypto, I wrote about my experience trading. So if you are going to lose money learning then it is better to lose a small amount of money.
It’s Difficult To Not Give In To Emotion
You might think you are a level headed individual that will not give in to they hype when the prices start rise or conversely you won’t panic when the prices drop. But if you are looking to make money quickly or want to earn a steady income from crypto you will be more susceptible to giving in to the emotional rollercoaster of crypto trading. If you make one good trade you will try it again and if you make another good trade you will try another and so on. But when do you stop? Bull runs don’t last forever and even if you are aware that the rise is temporary when will you know when to stop?
Crypto Markets Are “Relatively” Volatile
Don’t expect 100%, 50% or even 30% increases every day. While it is entirely possible to hit these gains it doesn’t happen on a daily basis. There are times when crypto will stay near the same price for weeks. Crypto is extremely volatile when compared to the stock market and other assets such as gold and silver. But don’t expect extreme price fluctuations every day.
My Ideal Starting Point
First make sure to know if we are in a long term bull market. Then I would ideally start with $1000 dollars. It is much more feasible to make a bunch of trades with 1% gains than to expect 10% increases or above. If you make 10 trades that net you 1% gains each that will result in about $10 profit per trade. Which is about $100 dollars if you trade successfully 10 times in a day. However even this could be very challenging for a beginner but I do believe it is doable if you know what you are doing.
Learn Resistance, Support and Trend Lines
There are many trading strategies and algorithms that you could learn but for me some of the best indicators are resistance and support along with trend lines. When learning how to read graphs make sure to learn how to identify support and resistance on a graph. Also make sure to learn how to mark and identify trend lines. Marking and trend lines and identifying support and resistance zones are crucial for me when making trading decisions. However they are not the only indicators you should use.
Don’t Invest In No-Name Altcoins
That’s not to say that all altcoins are bad because there are definitely some good ones. But you never know when an altcoin is going to shut down. One day a trading platform could announce that a coin is going to be delisted and you won’t be able to sell it because everyone knows that it is going to be delisted and no one will buy. They are to risky and from my experience they tend to move very slowly because people will just sit on them for long periods of time.
Resources That Helped Me
www.tradingview.com – this website has graphs and graphing tools for many cryptocurrencies and exchanges available for free.
https://www.investopedia.com/terms/m/macd.asp – Learn how to read the MACD (Moving Avarage Convergence and Divergence) indicator.
https://www.investopedia.com/terms/e/ema.asp – Learn the 4EMA indicator
https://pro.coinbase.com/ – Use Coinbase Pro instead of a regular Coinbase account to buy bitcoin. Coinbase Pro is absolutely free but it allows you to make limit orders which will save you money from transaction fees.
https://coinmarketcap.com/coins/ – This website is good for seeing the market capitalization for cryptos. And daily performance of many cryptocurrencies. They also have cryptocurrency converter tool that is very helpful.
Keep up with crypto news. It is extremely important to know what is going on even if you are day trading. For example BitcoinSV is going to be delisted very soon. So it is important that you do not buy that coin because if you do you will lose a lot of money.
This is not a comprehensive guide but just a few lessons that I learned along the way and I know I still have much more to learn.
*BTW we are at the start of a new 4 year cycle. – https://www.youtube.com/watch?v=PZvOhJYW_Hw