What are the Keys to Crypto Trading Success?

Lots of references on the internet that say that the key to success in trading crypto currencies is a strategy and a little luck. Most newcomers try to avoid losses by looking for accurate strategies, then try to use them to achieve their goals. However, the more they insist on implementing it, the more they mess around with claims of accurate strategies both free and paid.

In fact, this is wrong because the long-term benefits of any trade, including crypto currencies, are good risk management and trading psychology. For this reason, this article will discuss these two factors as the key to the success of crypto trading.

1. Risk Management
There is not a single professional trader who skips risk management in his daily routine. In crypto trading, there are some specific tips for better managing risk management, some examples are:

Don't overtrading
Most beginner traders think that the more trades they do, the more money they will make. This sounds true, but in practice, the more you trade, the more risk is taken, because you spend more money to open each trading position.

Then what is the average number of trades per day that is reasonable? There is no answer to this question, because everything is individual and depends on many factors, including the number of trading opportunities, initial funds, the mental and physical condition of the trader, as well as various other factors.

Whatever the answer, it's clear you don't need to always trade just to be on the market all the time. The best crypto strategy for every trader is to find the ideal entry point for profit, not vice versa.

Determine Your Risk Level
When you are trading crypto currencies, you need to determine the level of risk for each position. This can help you determine the right point to close a trading position.

How does it work?

Let's say you have $ 10,000 in a trading account and determine the risk at a rate of five percent. You buy a number of crypto currencies for $ 1,000, but your estimate is wrong and the price drops. Based on the level of risk you have set, the maximum loss for each position should be only $ 50. That is, when your loss position loses, you can close the trade when the loss has reached $ 50; no more and no less.

Why is it necessary to determine the risk in each position? This is useful not only for risk management, but also for your trading mentality. Self-determined risks are usually within tolerance, so that when you lose position, you will not panic and take action "revenge" which results in overtrading.

Use Stop and Limit Orders as Needed
Most beginner traders will try to use all types of orders because they think they can increase yields by placing Pending Stop and Limit Orders easily. This approach is true and useful, but only when they understand what they are doing and certain targets.

Basically, a Limit Order is only useful when you have carried out an analysis and estimates that the asset price will go up before going down (Sell Limit), or down before going up (Buy Limit). Conversely, a Stop Order is only used when you are really sure if the price will strengthen further after going up to a certain level (Buy Stop), or going down further after going down to touch a certain level (Sell Stop).

Thus, you not only estimate up and down prices, but beforehand you also have to target the right level as a reversal point or price breakout.

Calculate your Risk / Reward Ratio
This is an important rule for traders and investors. The minimum RRR (Risk Reward Ratio) must be 1: 2. If it's not enough, you won't be able to increase profitability in the long run. If you do not determine this ratio, then you will have difficulty maintaining your profit level in the long run.

Then how do you apply the 1: 2 Risk / Reward ratio? Let's look at an example. A trader wants to buy 1 Bitcoin for $ 7,000. The maximum loss limit specified is $ 300 per position. If you use a 1: 2 Risk / Reward ratio, then he needs to target a profit of $ 600.

To set these targets, he previously needed to calculate the value per pips, then use automated trading features on platforms such as Stop Loss and Take Profit.

2. Trading Emotions
After we understand risk management and practice, let's move on to the understanding of the psychology of crypto trading. Professionals know that using emotions in investing is the worst enemy that is able to destroy their funds quickly. This is why, they always need to control themselves and try to improve discipline.

Eliminate Greed
There is a big difference between traders and gamblers; first, the trader always relies on the trading system, and secondly, the trader is not controlled by greed. In trading, greed can provoke a trader to increase trading positions without a clear base of analysis, deviate from the system, and ignore risk management.

Greed will arise when you are overconfident with your abilities. That is, with the results of a fairly high profit in some time, you will be quite confident with the accuracy of trading analysis. In fact, the situation will not always apply in the world of trading. Remember, there are always factors that cannot be taken into account in the analysis, so the risk of loss is always there. If you hurry to be arrogant and greedy, then when the price moves against your position, it's a big loss that will be obtained.

Control Fear
Another bad emotion that can negatively affect your results is fear. Usually, this emotion arises after you experience a continuous loss. In contrast to greed, fear cannot erode your funds, but on the contrary can prevent you from getting a profit that should be utilized.

Why do you have to control fear when trading? First, fear will make it difficult for you to make reasonable decisions. Traders sometimes lose real opportunities to open positions. In other cases, concerns can also cripple traders to make actual decisions that are very profitable.

Not only that, fear can affect even when the position is open. If influenced by the emotions of this trade, the trader will try to close the position as soon as possible, even though the price is still potentially moving further in the trend. This of course will cause traders to get less profit than they should.

How to control emotions in trading?
There are several ways to do this and some tools that can be used to minimize the emotional effects of crypto trading. The first thing is self discipline. Traders who have strong self-discipline always follow their plans in every position. Of course this is quite difficult to do, and it takes a long time to get strong self-discipline.

What are the main tools that help traders to control their trading emotions?

Trading plan. Here you can record all your trading tools including indicators or even your strategy. A trading plan can also include your notes in certain situations.

Risk management system. You must calculate all the risks and profits that may appear in trading before executing, not vice versa. Stay fit. In fact, traders who are exhausted or mentally fit will have fewer opportunities to recognize profitable opportunities in any asset market. Therefore, try to trade only when you are fresh, so that all possible decisions are made clearer. Exhausted traders have fewer opportunities to succeed because they make more mistakes at all stages of trading, including analysis, entry point searches, Stop Loss calculations, even at trading evaluation levels.

Stay patient while trading
Patience is one of the key factors for crypto traders to succeed. You must be patient not only when waiting for the opportunity to open a position, but also after your position is floating.

Why is patience important? Suppose you are currently monitoring BTC / USD and looking for a better price position to open orders. Most beginner traders will rush into the market without actually doing an in-depth analysis of the opportunities for price movements. Meanwhile, professional traders will be patient waiting for prices to meet the conditions of their trading strategy, before making an order.

What are the conditions? There are several trading conditions that are always thought of by professional traders, namely:

Testing at support or resistance. This is a signal that the price will move in the opposite direction. Beginner traders sometimes open positions when prices are close to that level without knowing whether the price will break through the area or reverse direction. On the other hand, professional traders will wait until there is a bounce confirmation or breakout of resistance support.

Candlestick pattern. Professional traders always wait until the candle is closed to get a truly valid signal from a pattern. Conversely, new traders sometimes open positions even though the candlestick is still in the process of being formed. This is a big mistake because the situation may change at the end of the candlestick formation period.

Oversold or Overbought condition. This is not a signal like many beginners think. This is only a warning to prepare for trading.

Final Word: Trading Is Long Term
The majority of new traders dream of getting hundreds, millions, or even billions of dollars every day. They think that one year of investing can change their lives forever. However, to become a successful trader, this kind of mindset must be changed to "what risk and rewards you can get from each transaction". If you succeed in implementing it, surely you are already on the right track to become a long-term crypto trader.

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