What is your suggestion for a new cryptocurrency trader?
If you are just thinking or have just recently entered the cryptocurrency market as a trader, remember, you are first and foremost a trader, and what you trade is secondary to certain truths about being in that position.
Some of these truths are:
- Never invest/trade more than you can afford to lose.
- This is regularly ignored, to the detriment of many individuals. Not just because putting in all your money and losing it is catastrophic. There is also the psychological element. If you, the trader, know that one wrong decision can spell financial ruin for you and your family, are you going to have a clear head? Doubtful.
- Always Do Your Own Research (DYOR)
- This is not to be confused with reading the research of others, who have their own biases, agendas, and may be trying to convince you of their opinion for their own financial gain. It means going to direct sources (in the case of cryptocurrency, it could be the whitepaper, price history, social metrics, etc) and collecting data yourself, then evaluating that data yourself
- Don’t Chase.
- This is as true at the poker table as it is at the trading screen. Chasing, or the attempt to force positive outcomes in a system that is information imperfect (that is to say, you, the individual, do not and cannot have access to all the relevant information moment-to-moment), almost always ends up poorly, if not disastrously, for the individuals involved.
- You Only Realize Gains/Losses When You Realize Them
- This seems obvious, but isn’t to many. If you are up or down on paper, that is not the same as being up or down in reality. Don’t spend money you haven’t cashed out yet. Don’t lose your mind over losses that haven’t been realized yet either. If it is unrealized, it’s unrealized. Internalizing this truth can help a trader, especially a new trader, keep perspective in the face of dynamic and at times intimidating circumstances.