There are some basic rules of Bitcoin trading that can improve your chances of making profits through every trade. The idea is to learn from past mistakes so that you do not end up making the same mistakes again. While these trading rules cannot guarantee that you will become a millionaire overnight, you can hope to cut down losses by following these guidelines:
- To start with, it is a big mistake to engage in revenge trading, but sadly, many traders unknowingly do this. In case the outcome of a trade is not positive, you must not enter it again right away. You should ideally wait because there is always a reason why a specific trade closed. When you trade with emotions you end up making wrong decisions and engage in revenge trading. Since crypto traders keep monitoring Bitcoin prices continuously they get attached to every trade and think that by re-entering it they will be able to salvage the losses.
- Another important trading rule is to avoid Bitcoin trading during weekends. Weekend prices are volatile and the trades are low in volume. So, predicting prices is even harder. Besides, weekends should be utilized for spending quality time with your loved ones, and not sitting in front of the computer screen watching trade charts.
- It is a good policy to maintain proper trading hours, even though the crypto market is open 24×7. You must trade only when you are sitting in front of the computer for that purpose. You should not spend every waking hour following Bitcoin prices. This will make you emotionally exhausted and frustrated in case the results are not as expected.
- It is also a big mistake to get obsessed with any one crypto asset. To trade smart, you need to capitalize on inefficiency. There is no sense in getting overly attached to one crypto asset; while investors may benefit in the long run, traders will most definitely not.
- It is important to enter a trade only when you have the right mindset for it. This means staying away from trade-related decision making if you are angry, upset, or simply tired. It is therefore advisable to pursue sports and other regular hobbies to give your mind a break from time to time. Trading Bitcoins can be emotionally exhausting and recreational activities can help.
- To trade better it is a good idea to keep a trade journal. Here you can write down your trade successes and losses, stating why you may have suffered the latter. This gives you a valuable insight into what the past errors have been so that you can avoid these in the future.
- It is a wrong move to try and catch an asset when its prices are nose-diving. It usually happens when you are trying to compensate for some losses that you may have incurred because of a large trade. But you cannot time the bottom perfectly and much safer to wait.
- Overtrading is another trading mistake that you must avoid. It is wrong to assume that you will make more money if you keep trading.