To make money out of trading Altcoins or another cryptocurrency is not as easy as it sounds. It takes time to learn and to really understand the market. We are going to give you tips on how to effectively make money from trading cryptocurrency.
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What is cryptocurrency?
Before we start talking about the trades we will give you a quick update on what cryptocurrency actually are. The most famous cryptocurrency is Bitcoin and this is the one that people trade the most.
Cryptocurrency is a medium that is completely online-based and that use crypto graphical functions. Cryptocurrency is a very transparent and immutable currency because it uses so called blockchain technology. The goal with cryptocurrencies is that it one day will replace todays fiat currencies.
The first difficulties you have to overcome
There are some basic difficulties every trader needs to overcome to become a great trader. It can take a long time to overcome all different types of difficulties, but it is really important to be aware of them.
· Setting aside your own emotions.
· To not be afraid of the risk of losing money.
· The feeling that you don´t know enough about the market.
The guide of trading
There are two basic skills you need to be able to handle before you are able to make money. The first thing is that you need to let go of the fear of losing money. The second thing is how you handle situations when you actually lose money.
If we turn our eyes over to Wall Street and the world’s best traders. These traders win 50% of their trades, which means that they also lose 50% of the trades. They idea is this –
“When you lose, you lose small and when you win, you win big.”
There are two different ways for how you can limit your losses.
· Use a tight stop loss
· Place smaller positions sizes.
Which one you choose is your own choice based on your preference. To make the right decision you need to make a huge number of different setups. When choosing to place smaller size on your positions you do not need to worry about big losses.
How you should handle losses
The worst way to handle a trade loss is by getting stressed. It is important to keep calm even when you lose your coins. Remember, even the world’s best traders lose 50% of their trades.
Try to see a loss as if you are one step closer to a win. Learn something from every time you lose. When you see a loss as an opportunity to learn something you will not be afraid of losing again.
“You should have a curious approach to every trade and ask you self, I wonder if this will be a winner or a loser.”
Never base your trade on emotions
You are only human and it is impossible to not feel emotional by some trades. Maybe excited, curious or afraid. As a beginner, it is hard not to place bets based on these emotions – but watch out. As a trader, you should never make trades based on human emotions.
When you have evolved as a trader this will feel obvious, but as a new trader it is hard. You should always only make trades based you your analysis of the trader’s market.
How does one make money?
The one key thing you need to know before you can start making money on trading Altcoins is how the market behaves.
The cryptocurrency market has two main things that drives it.
· Human emotions
· Feed back loops
How human emotions drives the market is quite easy to understand. When a price rises people easily gets excited and starts to trade in a more aggressive way.
Feed back loops
A feed back loop is a kind of a snowball effect. The loop will itself create an alarm and later send this alarm to other traders. It could either be about selling or buying. The snowball effects are created when more and more traders join in on the alarm.
To make money out of trading Altcoins takes time. You really need to be patient and never let your emotions decide over your trades. Learn by your mistakes and always analyze the cryptocurrency market.