In each passing day, we see many people flocking into the crypto space to trade and make investments with the hope of cashing out very big. However, it is important that we know certain things and I'm here to remind you of a few of the things you should consider in the crypto business.
Trading capital should be big enough that it hurts if you lose it.
There is a maxim that says invest what you can afford to lose but I'll like to differ a little. When you only invest what you can afford to lose, you are bound to be careless and unintentional with trading. Also, you may not take your risk management very seriously, after all, you won't be hurt if you lose the money.
Contrary, when you engage in the business with a capital that you cannot afford to lose, your risk and portfolio management will be top-notch. There will be no room for reckless trading or irrational investment decisions.
More so, trading with a capital that will hurt you badly if lost will give you enough skin in the game. But don't invest so much that it ruins your life.
Don't Borrow to Trade
Crypto trading involves a lot of emotions and is risky in nature. On this note, it is vital that you maintain the right frame of mind to be profitable. Trading with borrowed money may cause you to take risks that are not calculated because you are under some kind of pressure to make profits and refund money borrowed.
Try as much as possible to save from your job or current business to get trading capital. The size may not be very big but it will you play it safe. Also, your mental health and stability will be intact.
Invalidation Point
Invalidation is simply the act of proving that an opinion, argument, etc. is wrong. You cannot be right all the time. Your analysis and speculations won't be correct one hundred percent. You need to know that the trends and patterns in the market can change anytime maybe because of news or certain developments.
Hence, to be successful and profitable, you must be flexible in your decisions. If you don't have an invalidation point, you are just gambling and not doing actual business. You should exit swiftly as soon as the market structure changes; take some minimal losses and move on else you'll lose bigger because of your rigidity.
Leverage
Some say leverage is the greatest invention in the history of capitalism. Likewise, if you use leverage greedily then be sure to receive margin calls which eventually leads to liquidation. On the other hand, if you know how to use it whilst taming your position size, you'll be a king in the game.
With this, it is safe to say that leverage is a two-edged sword. It can increase/ enhance both profits and losses. It all depends on how the tool is being used by traders.
Don't be a Maximalist
In this case, a maximalist is someone who believes in only one project. To him, all other projects are not worthy of investment. Looking at the many opportunities in the space, it is not very wise to stick to just one project. There are many other profitable and solid projects.
It's okay to be a community member but don't limit yourself to just one community or project. You are here to make money and improve your life, for yourself and your family. Hence, go to as many places where you can get the money. Buy as many projects that can bring a tangible return on investment.
In other words, look for projects that make you money whether people say it is a good project or not.
Take Profit Range
Don't make the mistake of having a fixed price target. Your take profit target should be a range where you take profits incrementally. If you only have a fixed price for taking profits or closing trades then you may lose out in many cases.
Eg. If the target is 150, Take Profits in the range of 140-150 slowly. This is a more reasonable and safer way than only waiting for 150 to click.
I hope you found this useful.