How to maximize your profit potential on the cryptocurrency market?
April 23, 2021 6:45 AM Subscribe
buy Bitcoin The crypto markets are no doubt one of the most rewarding investment markets for new and experienced investors. With billions of dollars flowing into the market on a daily basis, the opportunities and profit potential are leading to massive disbelief and huge regrets of not joining earlier.
While large institutions are only ready to buy Bitcoin at example.com, retail investors have a higher risk tolerance and are thus more willing to invest in coins and tokens with a smaller market cap. And in times like the ones we are currently cruising (bull market), some of these coins have the potential to multiply 10 or even 100 times in value.
Yet, most traders seem to be losing money over longer periods of time. Even those with many successful trades end up losing in PNL to greediness, wrongful technical analysis, and an overall underestimation of market dynamics.
This is why we wrote this article. In the next few paragraphs, you will find out what causes most traders to lose money over longer periods of time and what you can do to maximize your profits in the crypto markets. Let’s delve in.
Why traders lose money
The most successful traders are still wrong more than 50% of the time. The difference is knowing how to manage risk and let your winners stack up profits. But not all investors are able to do this correctly. In short, here are some of the reasons that make traders lose money:
Short-time preference - While regular spot markets have proven to be extremely rewarding over the past year, new traders are quick to explore more complex investment products, like derivates and leverage trades. The latest often goes up to x125 on popular platforms. By choosing to invest in these products, traders have a small potential to earn more profit in the short term, but also choose to increase the risk paired with the trade. And in most cases, this leads to losses.
React vs respond - Human nature is complex, and emotional intelligence is the balancing factor that helps us make good decisions. That said, most traders have an underdeveloped ability to respond in face of uncertainty, and are usually affected by the opinions of others. In turn, they end up making mistakes in the short term, that they later regret. This refers to exiting a trade too early or deciding to hold onto their bags while their investment keeps losing value.
Failing to research and learn - Finally, it is important to understand that a market with such a low barrier of entry has many investors who skip the most important part of all - that of personal research and education in trading methods and pricing indicators. As a result, people are too affected by marketing and third-party opinions which leads to them losing money.
How to maximize your profits as a new trader
Maximizing your profits is something we cannot guarantee, as cryptocurrency prices are not linked with any other investment market. That said, there are many things you can do to improve your odds of earning money and building up a sizeable portfolio. Here are some of the things you can do.
Learn more about technical analysis, how to read candle charts, as well as all the important pricing indicators using in day trading. Technical analysis is the most frequent tool used when it comes to trading.
That said, it is also very important to learn about sentiment analysis (used in swing trading), as well as fundamental analysis (used when making long-term investments). Both methods are very important to make better investment decisions no matter the timeframe of your investment.
Avoid trading with margin and leveraged trades in general. While the profit potential may be higher with smaller price moves, the downsides are equally dangerous. Leverage trading should only be done after understanding market dynamics and, even then, never engage in trades that have a leverage of 3-5x or higher.
Consider creating a Twitter account and following traders with an established history in the crypto markets. These traders will usually have free courses or interesting resources you can learn from. Some of the ones we enjoy learning from are KoroushAK, Crypto Cred, Don Alt, and others.
Finally, it is important for you to not invest money that is meant to serve another purpose. Make sure you only engage in trading practices when your rent is paid, your bills are taken care of, and all your responsibilities are covered. In other words, do not invest what you cannot afford to lose.
Wrapping up
You should now have a better idea of the best trading practices you can follow to increase your odds of making a profit in the crypto markets. Make sure you continue your research before making an educated decision on the way you plan to invest your money.
Yet, most traders seem to be losing money over longer periods of time. Even those with many successful trades end up losing in PNL to greediness, wrongful technical analysis, and an overall underestimation of market dynamics.
This is why we wrote this article. In the next few paragraphs, you will find out what causes most traders to lose money over longer periods of time and what you can do to maximize your profits in the crypto markets. Let’s delve in.
Why traders lose money
The most successful traders are still wrong more than 50% of the time. The difference is knowing how to manage risk and let your winners stack up profits. But not all investors are able to do this correctly. In short, here are some of the reasons that make traders lose money:
Short-time preference - While regular spot markets have proven to be extremely rewarding over the past year, new traders are quick to explore more complex investment products, like derivates and leverage trades. The latest often goes up to x125 on popular platforms. By choosing to invest in these products, traders have a small potential to earn more profit in the short term, but also choose to increase the risk paired with the trade. And in most cases, this leads to losses.
React vs respond - Human nature is complex, and emotional intelligence is the balancing factor that helps us make good decisions. That said, most traders have an underdeveloped ability to respond in face of uncertainty, and are usually affected by the opinions of others. In turn, they end up making mistakes in the short term, that they later regret. This refers to exiting a trade too early or deciding to hold onto their bags while their investment keeps losing value.
Failing to research and learn - Finally, it is important to understand that a market with such a low barrier of entry has many investors who skip the most important part of all - that of personal research and education in trading methods and pricing indicators. As a result, people are too affected by marketing and third-party opinions which leads to them losing money.
How to maximize your profits as a new trader
Maximizing your profits is something we cannot guarantee, as cryptocurrency prices are not linked with any other investment market. That said, there are many things you can do to improve your odds of earning money and building up a sizeable portfolio. Here are some of the things you can do.
Learn more about technical analysis, how to read candle charts, as well as all the important pricing indicators using in day trading. Technical analysis is the most frequent tool used when it comes to trading.
That said, it is also very important to learn about sentiment analysis (used in swing trading), as well as fundamental analysis (used when making long-term investments). Both methods are very important to make better investment decisions no matter the timeframe of your investment.
Avoid trading with margin and leveraged trades in general. While the profit potential may be higher with smaller price moves, the downsides are equally dangerous. Leverage trading should only be done after understanding market dynamics and, even then, never engage in trades that have a leverage of 3-5x or higher.
Consider creating a Twitter account and following traders with an established history in the crypto markets. These traders will usually have free courses or interesting resources you can learn from. Some of the ones we enjoy learning from are KoroushAK, Crypto Cred, Don Alt, and others.
Finally, it is important for you to not invest money that is meant to serve another purpose. Make sure you only engage in trading practices when your rent is paid, your bills are taken care of, and all your responsibilities are covered. In other words, do not invest what you cannot afford to lose.
Wrapping up
You should now have a better idea of the best trading practices you can follow to increase your odds of making a profit in the crypto markets. Make sure you continue your research before making an educated decision on the way you plan to invest your money.
This post was deleted for the following reason: i don't even work today but i'm dropping by to ban you for spamming, that's how bad this spamming is -- cortex
« Older RIP Humpty Hump | “Does your cat’s butthole really touch all the... Newer »
This thread has been archived and is closed to new comments