Over the years I have made many common mistakes, and so I hope that by listing what I have learned, it may help someone speed up their journey to becoming a successful cryptocurrency trader:
Don’t jump into trades without consideration. Evaluate, set buy/sell orders, and use stop losses!
Remove emotion, look to buy during periods of fear. Go against the instinct of only buying when the price is in green.
Analyse Micro & Macro trend - Look for historical support & resistance.
Close positions/set stop losses before bed - to avoid overnight surprises.
Take profits along the way at predetermined price points. (i,e 25%, 50% etc).
Calculate risk/reward ratio using measure tool.
Become familiar with the following formations as some can be deceiving (i.e look bullish but tend to break to the downside).
- Bull-flag (bullish)
- Bear-flag (bearish)
- Head and shoulders (bearish)
- Inverse head and shoulders (bullish)
- Rising wedge (bearish breakout)
- Descending wedge bullish breakout)
- Double top (bearish)
- Double bottom (bullish)
Use indicators to help with your decision making. Primarily:
MACD - this is a momentum indicator and can show signs of a trend reversal.
Moving Averages (MA) - Lines that plot the average price of an asset. (calculated in different time frames i.e 1-day moving average, 1-week moving average etc.)
Look for crosses in your indicators, often referred to as a ‘bullish cross’ or a ‘bearish cross’.
Summary: Don’t open a position if there is no position to be taken. Like poker, it’s a game of favoring a win by taking in the available data, to place a bet that is statistically in your favor. By considering all of the points above before each decision, you can maximize the number of wins you make, and reduce the amount that you lose on the turns that you do not win.
Note: I know much of this has become common knowledge to many of us, but I recently was asked for advice by a friend and I believed this to be a comprehensive list of everything he needed to know. Please feel free to add any additional advice in the comments below.
Don’t jump into trades without consideration. Evaluate, set buy/sell orders, and use stop losses!
Remove emotion, look to buy during periods of fear. Go against the instinct of only buying when the price is in green.
Analyse Micro & Macro trend - Look for historical support & resistance.
Close positions/set stop losses before bed - to avoid overnight surprises.
Take profits along the way at predetermined price points. (i,e 25%, 50% etc).
Calculate risk/reward ratio using measure tool.
Become familiar with the following formations as some can be deceiving (i.e look bullish but tend to break to the downside).
- Bull-flag (bullish)
- Bear-flag (bearish)
- Head and shoulders (bearish)
- Inverse head and shoulders (bullish)
- Rising wedge (bearish breakout)
- Descending wedge bullish breakout)
- Double top (bearish)
- Double bottom (bullish)
Use indicators to help with your decision making. Primarily:
MACD - this is a momentum indicator and can show signs of a trend reversal.
Moving Averages (MA) - Lines that plot the average price of an asset. (calculated in different time frames i.e 1-day moving average, 1-week moving average etc.)
Look for crosses in your indicators, often referred to as a ‘bullish cross’ or a ‘bearish cross’.
Summary: Don’t open a position if there is no position to be taken. Like poker, it’s a game of favoring a win by taking in the available data, to place a bet that is statistically in your favor. By considering all of the points above before each decision, you can maximize the number of wins you make, and reduce the amount that you lose on the turns that you do not win.
Note: I know much of this has become common knowledge to many of us, but I recently was asked for advice by a friend and I believed this to be a comprehensive list of everything he needed to know. Please feel free to add any additional advice in the comments below.