Lessons from the Best Crypto Traders: 10 Secrets of Success

Are you interested in getting into the cryptocurrency game? Why not learn from the best? Here are 10 secrets to success all the best crypto traders practice.

Are you looking to get into cryptocurrency trading? It is true that people who started with a few hundred dollars have made fortunes trading Bitcoin. But how do you go about making money with cryptocurrencies?

Why not learn from the best? Read on to find out the 10 secrets to success the most successful crypto traders practice.

1. Research and Educate Yourself First

Before you open an account and start trading, you should do your homework. Cryptocurrency trading relies on a range of modern technologies and financial concepts you must learn.

First, what is a cryptocurrency? It is nothing more than a form of digital currency that cryptography for protection. Cryptography makes cryptocurrencies almost impossible to counterfeit.

Another important concept is the blockchain. This is a decentralized currency ledger for cryptocurrency transactions. Simply put, the blockchain means that there is no central authority managing cryptocurrency transactions. It is all done over the network.

Other important concepts include the history of Bitcoin, as well as the technology behind the way cryptocurrencies are traded. These will help you understand where you will be investing your money.

Remember, investment without research is indistinguishable from gambling. Since you are reading this article, you have already began educating yourself on cryptocurrencies, so keep going!

2. Only Invest What You Can Afford to Lose

The cardinal rule of investing applies to cryptocurrencies as well. Never invest what you can’t afford to lose.

This might seem obvious to you, but you might be surprised to learn how many investors end up broke because they broke this basic rule. Hobby investors often make this mistake and use their savings to fund their investments.

During a market downturn, you will experience losses. If you can’t shoulder them, you will have to sell your investments, which will kick you out of the game. By investing only what you can afford to lose, you will be able to weather recessions and hold on to your investments until the market goes up again.

It is best to consider any money you convert to cryptocurrencies as effectively lost. You might have to wait years to get it back, and you might never get it back. Losses happen, and there are no guarantees.

If the above intimidate you, then you have to go back to step #1 and do more research. Yes, there is risk involved. But there is also incredible money to be made as well.

3. Leverage Tools and Bots

All serious investors use professional tools. The volume of trading and the technical nature of cryptocurrencies is such that you can’t handle it without the proper tools.

Tools like portfolio managers, calendars, aggregators, and automated traders. The latter are known as trading bots and can make or break your investment strategies. Trading bots can buy or sell on your behalf based on a set of predetermined parameters.

You program your bots and they invest for you. As with all things, bots vary depending on quality. Some bots are powerful and dependable, while others are useless and can even be dangerous.

For some of the best-automated tools for cryptocurrency trading, check out the binance trading bot at 3Commas.

4. Diversify Your Portfolio

Another important rule of investing, diversification will strengthen your portfolio. While it may be alluring to invest all your money in a single coin that is trending up, it is best to spread your investments.

The old adage “never put all your eggs in one basket” holds true here as well. By diversifying your portfolio, you are protecting yourself against market disruptions. If one coin goes down, another will go up. If you have invested in both, your assets will not change much.

When you diversify, you capture the overall growth of the cryptocurrency market. By investing in multiple coins, you can secure a stable increase in net worth. If the market grows as a whole, an investor with a diversified portfolio will get richer, even when individual coins trend downwards.

5. Pay Attention to all Cryptocurrencies

Today there are hundreds of different cryptocurrencies to choose from. Sure, Bitcoin is still the king, but there are other coins that outperform Bitcoin on a short-term basis.

Some of the hottest coins trend insanely high. This means that if you invest early, you can multiply your investments in a few weeks.

Coins like Etherium (ETH), Litecoin (LTC), Monero (XMR), and ARK (ARK) are all good choices for 2018. By investing in all the above, plus Bitcoin, you can have a fairly stable and diversified portfolio.

Keep in mind that the cryptocurrency market is interconnected. This means that when one coin goes up, other coins often follow. By keeping track of multiple cryptocurrencies, you will be able to predict market fluctuations and invest accordingly.

6. Never Lose Sight of Bitcoin

As the first in the market, Bitcoin is the most important cryptocurrency. All other cryptocurrencies are priced accordingly to Bitcoin. In fact, other currencies are pegged so closely to Bitcoin, that not investing in Bitcoin is perhaps the worst decision you can make.

Even if you manage a focused portfolio, you should never neglect Bitcoin in favor of one of the newer cryptocurrencies.

If Bitcoin ever goes down, all other coins will follow. The whole market is gauged based on Bitcoin performance, so this is one of the key indicators you should always pay attention to.

7. Make a Long-Term Plan

Even investors who get rich overnight have to have a long-term plan. Without a plan, you might end up losing all your assets before realizing it.

To make a plan, start by categorizing your portfolio in different investments. Some of your coins will have a great long-term projection. Hold on to these and make a plan to check them again in six months to a year.

Other coins might be hot right now, but their long-term projections might not be so positive. Plan a definitive exit strategy for those coins to avoid losses.

The goal here is to split your portfolio into long-term and short-term holds. When prices go down, you won’t have to worry about your long-term holds, since you already planned for this.

Your plan should also include future investments. You cannot afford to invest blindly in the next big coin. This is the surest way to drain your funds. Market projections for new coins are almost 100% speculation, so there is no way to know if a new coin will go up.

Consider studying risk management in order to develop a stable plan. Following your plan through will allow you to pinpoint mistakes in case you end up losing money. With a plan in action, you can easily identify your weak points and fix them.

8. Calm and Logic

Don’t trust your emotions when it comes to cryptocurrency investing. Sure, you might have a hunch, or a certain coin might feel just right, but that is no reason to invest.

You should always remain calm and logical when investing. As your portfolio grows, you might feel tempted to cash in your profits. This is a grave mistake as it will kill your growth. Remember your plan and stick to it even when you feel like being impulsive.

The same rule also holds true about greed. Investing in cryptocurrencies can make you rich overnight, but you should not treat it as a method to get rich quick. If you become greedy and impatient, you might lose your only chance to actually get rich!

9. Set Stop Losses

Before you start trading actively, you should set stop losses. These stops represent the point after which a loss is not acceptable.

By using your stop losses as a reference point, you can quickly measure how well your portfolio is performing and make any necessary adjustments.

Moreover, during a market downturn, stop losses can make you some good profit. When market dips and your stop losses kick in, they might sell your cryptocurrencies for money you can then use to re-purchase them at lower prices after the dip.

10. Don’t Stop Learning

Finally, you must realize that you will never know everything. You should keep on learning and growing your experience along with your portfolio.

If you do a mistake, roll with it and learn from it. Keep track of your mistakes and avoid repeating them. The market might be chaotic, but your actions will bring order to your portfolio and make you some profit as long as you don’t stop learning.

Remember that every trader makes mistakes. The key is to learn from them and keep going.

Lean From the Top Crypto Traders

If you wish to see how top crypto traders manage their portfolio, you have come to the right place. With more than 11 years of trading experience, our professional trading and mentoring community shares expertise with beginner cryptocurrency investors.

Come on in and check a plethora of trading articles, join our trading community, and download the tools and resources we use to trade!