Achieving success as a cryptocurrency trader depends on many factors, but most of them are linked to the application of rules with discipline and consistency. For this reason, today we share with you, 3 important aspects that you should keep in mind if what you want is to achieve profitability in trading.
If you didn’t read part 2, you can do it from here.
Develop and respect your trading plan
Without a doubt, it constitutes a fundamental pillar for discipline in the routine of a cryptocurrency trader.
If you do not have any plan to follow, the strong emotions that cause the losses and gains in the financial markets can quickly lead you to a total lack of control, and as a consequence, a total bankruptcy of your capital, that which beginner traders fear so much .
You must understand that losses are part of the game, and it is impossible to eliminate them completely. You will ask yourself, then what should I do ?, simple, control them, and therefore there is a plan that specifies how to do it.
In addition, this plan must also contain rules for other important topics, such as:
- Strategy: Specifying each of the steps to follow for both entering and leaving a position.
- Maximum loss per operation, day, week: Use stop losses, also known as stop loss to minimize risk.
- Daily, weekly, monthly goals: Conformism may not be good for any aspect of life, but in trading it can be helpful to take profits and set goals that satisfy you.
- Logbook or trading diary: Use it to record all your operations. This way, you can learn from mistakes and eliminate them as soon as possible.
A cryptocurrency trading plan is totally personal, since it will depend on extremely individual factors such as time availability, personality, trading style, strategy, risk tolerance, among others. However, any plan can be developed taking into account the sections outlined.
Simplicity is key to success as a cryptocurrency trader
After explaining what a trading plan is and its importance, let’s give you some important recommendations that have to do with the development of it.
When choosing a strategy, keep in mind the simplicity it offers when making decisions.
Many traders think they will get the holy grail to achieve success, but this will not be the case. The only way to consistently achieve good results is through the experience gained through discipline.
When starting in the world of trading, we think that indicators are the key.
The beginner trader begins a tireless search for the indicator that he has needed so much, and generally fails.
They may be a great help, but it is best to use a strategy that needs little of them, or failing that, based on a simple signal thrown by one of these tools.
Imagine having to make a single decision, for signals that give you each of the indicators you see in the following graphic:
Doesn’t it seem impossible? Well, that’s right.. It is virtually impossible for all signals to converge at the same time for an exact purchase or sale alert.
You will probably end the day, the week, the month, without taking a single entry; and if you took it, it was losing because of the incorrect interpretation of the signals.
For example, a successful strategy can be the product of entries and exits to the market after a simple crossing of 2 moving averages; However, the only thing that will give you consistent results when using it is discipline and respect for the rules when executing operations.
And last but not least, let’s get into the issue of risk management.
As I said, losses are inevitable, and if you want to achieve success as a cryptocurrency trader you need to assimilate them completely.
You must keep in mind that trading is probabilities. The success rate must be measured by samples, the larger the better.
Then, you must be willing to perform 100 operations for example, to lose 40 and win 60, and thus know that your success rate is 60%.
In this way you realize that you cannot afford to lose your capital in a couple of operations, because you understand that you must perform many operations to achieve a return in the short, medium and long term.
Traders and professional investors agree that you should not risk more than 3% per operation, and will depend directly on capital, the larger it is, the lower the risk should be.
A correct percentage to start is between 1 and 2%, so you will have enough margin for consecutive losses, and it will not affect your psychology as an investor too much.
So we close this third lesson to help you achieve success as a cryptocurrency trader.
I hope you liked it. Stay tuned for the following of your publications, they will be very useful.
Creative editor and trader of cryptocurrencies, fiat currencies and commodities.