6 Tips To Reduce Your Risk When Trading Bitcoins And Altcoins

When you are looking to start trading bitcoins and altcoins, you’ll need to understand that trading involves risks, including of losing.

The truth is that you’re going to lose sometimes. However, the most important thing is that when you win, you win big, just like when you lose, you lose small. This will allow you to grow your account.

Nevertheless, it’s important to notice that you need to be completely focused when you are trading. Plus, trading simply isn’t for everyone. If you don’t feel comfortable with the risk, if you feel very anxious, or anything similar, you need to understand there are other ways to make money in the crypto-economy.

Below, you are going to find 6 tips. However, and even though you can assimilate and understand each one of them very easily, implementing them is a different story. And this is why you need to be completely focused.

#1: You need a reason before entering each trade

You should only start a new trade if you know exactly why you are starting it and you know exactly what you need to do afterward.

One of the things that many new traders tend to do is that they are so anxious for placing a trade that they end up placing it and losing a lot of money in the end. You need to remember that it is better to do nothing than to have a loss.

#2: Have a clear target and a clear stop loss

When you start any trade, you need to make sure that you have a clear target defined. But having a well-defined stop loss is even more important.

This is something that should be done as soon as you enter the trade. And the reason is very simple. Most traders tend to fall in love with a coin or with a trade. So, when they are losing, they just say “wait, it will turn back up”, and let it sank ignoring, many of the times, the stop loss they had established in the first place. However, when the trade is going in their favor, they just keep congratulating about it and don’t exit the trade on their initial target price. So, when the coin suddenly starts falling, they get very surprised and not even at this point they think about selling it. They just think that the coin will go back up there again.

The truth is that these traders aren’t trading; they are being taken over by their emotions. However, trading doesn’t need emotions; only reason and rationality. And you just can’t ignore discipline.

#3: Fear

Fear is one of the emotions that will try to attack you when you are trading. And this can happen when you are in a trade or when you don’t have any trade open at all. In this last case, you’ll be afraid of missing out a good opportunity.

One of the things that you’ll see when you’re trading coins is that suddenly, a huge green candle appears on your screen and it almost seems it is saying “you’re the only one who isn’t in”. However, don’t let this big green candle fool you, as it fools most of the little traders. The truth is that, usually, after such a big green candle comes an even larger red one. So, when you see one of these candles appear, just wait and see what happens. Don’t enter the trade.

#4: Risk management

When you want to be successful at trading, you need to be aware that a huge profit doesn’t mean you are already a professional trader and from now on, you’re only going to have profits. The truth is that the best traders in the world aim for small and consistent profits. They know this is the only way to success.

One thing to have in mind is that you should never invest a big part of your portfolio in a non-liquid market.

#5: The underlying asset creates volatile market conditions

One of the things that you definitely need to take into consideration is the fact that bitcoins are a volatile asset. Plus, Bitcoins and Altcoins have an inverse relationship in their value. For example, when the Bitcoin value is increasing, this means that Altcoins are losing their Bitcoin value, and vice-versa.

When you see that the Bitcoin is moving even more sharply than on a regular day, make sure that you stay out of the market. And this becomes even more important if you’re just starting to trade.

#6: Most Altcoins tend to lose their value over time

When you decide to enter an Altcoin trade for the medium or longer term, you need to make sure that you are fully aware that Altcoins tend to lose all their value over time.

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