Rule #1 Pay Attention to Bitcoin
Most altcoins (every cryptocurrency except Bitcoin) are pegged more closely to Bitcoin than Asian currencies were to the USD during the Asian Financial Crisis.
If Bitcoin price pumps drastically, altcoins price can go down as people try to exit altcoins to ride the BTC profits; inversely, if Bitcoin prices dump drastically, altcoin prices can go down, too, as people exit altcoins to exchange back into fiat.
The best times for altcoin growth appear when Bitcoin shows organic growth or decline, or remains stagnant in price.
Rule #2 Diversity Is Key
Another way to think about it is to look at the cryptocurrency market as a whole; if you believe that this is just the beginning, then more than likely the entire market cap of cryptocurrencies will increase.
What are the chances that this market cap increase will be entirely driven by one coin vs. being driven by many coins? The best way to safely capture the overall growth of cryptocurrency is to diversify and reap the benefits of growth from multiple coins.
Also, here’s a fun fact — Between January 2016 and January 2018, Corgicoin has increased by 60,000x, and Verge has increased by 13,000x. During the same period, Bitcoin has increased by 34x.
While you would have gotten impressive gains from Bitcoin, expanding into other coins could have landed you potentially larger ones.
Rule #3 Greed Can Kill You
As a coin begins to grow, the greed inside us grows along with it. If a coin increases by 30%, why not consider taking profit?
Even if goals are set to 40% or 50%, you should at least pull out some of the profit on the way up in case a coin doesn’t reach the goal
If you wait too long or try to get out at a higher point, you risk losing profit you already earned or even turning that profit into a loss. That ole adage rings true, “You will never find the top of a trade or investment, nor will you ever find the bottom”. Sometimes it pays to take your money and run!
Get into the habit of taking profits and scouting for re-entry if you want to continue reaping potential profits.
Rule #4 Don’t Trade Blindly
It’s highly risky and difficult to start a business without the proper knowledge and experience. There are people in this world who would sell a blind person a pair of glasses if they could make money. Those same people play in the cryptocurrency markets and use every opportunity to exploit less-informed investors.
They’ll tell you what to buy or claim certain coins will moon, just to increase the prices so they can exit. Due to the highly speculative nature of the cryptocurrency markets today, a good investor will always do his or her own research in order to take full responsibility for the potential investment outcome. Information coming from even the best investor is, at best, great information, but never a promise, so you can still get burned.
So do your homework and follow the path of your indicators.
Rule #5 Stay Away From FOMO (Fear Of Missing Out)
It’s highly risky and difficult to start a business without the proper knowledge and experience. This is a spot that people most frequently lose money on. A dash of manipulation, two tablespoons of media hype, and a generous handful of FOMO drove Bitcoin prices from $10,000 to $20,000 in December 2018, and guess where crypto is at the writing of this blog, $52,000 – $62,000!
Since that time, Bitcoin fell to less than $6,000. It’s easy to look back and say, “if only I waited one month, then I could’ve bought at $9,000 instead of waiting for Bitcoin to hit $20,000 again for me to break even.”
But the reality is, the combination of 1) being greedy, 2) investing blindly, and 3) FOMO were likely large contributors to the purchase at an all-time-high. Even in the crazy world of cryptocurrency, if a coin pumps that quickly, it will correct — it’s a matter of time. Speculative pumps are almost always followed by dips.
The POWR of strong and precise indicators will allow you to trade long and/or short depending on the trading winds!
Rule #6 Look At The Long Picture
In the process of your research, you’ll eventually realize you’re coming across a few different categories of coins. For some of them, you believe they have good teams, great vision, amazing publicity and a track record for successful execution. Great! Put these into medium or long-term holds and let them marinate into a delicious tenderloin.
When the price dips, don’t even consider panic selling because anything in your medium or long-term portfolio should remain untouched for a set amount of time.
BNB is a good example of a coin considered a long hold. Just recently it had dropped 20% almost overnight, but since then, has risen to at least 3X to where it was. This is a great example of looking at the long picture!
Rule #7 Always Learn From Your Mistakes
Never accept a total loss. Always evaluate the situation and try to figure out why it happened. Take that experience as an asset for your next move, which will be better because you are know more now than you knew before.
Many have lost a lot by selling at losses inspired by fear. No one is perfect, no one wins every single trade.
Don’t let the losses discourage you, because the reality is they’re making you better trader if you choose to learn from them. We would strongly recommend (if you are not already) using a trading journal. A trading journal for sure will allow you to grow from your mistakes!
Rule #8 As You Trade… Always Use Stop Losses
If you are trading cryptocurrency, always set stop losses.
This is important for several reasons — the most obvious is mitigating your losses. But more importantly, you force yourself to decide on a point of acceptable loss, and because you now have a reference point, you are able to measure your effectiveness to keep or adjust for future trades.
Sometimes, during a market dip, altcoins can plummet, and stop losses can lead to profitability by automatically selling for fiat that you can use to re-enter at lower prices.
Rule #9 Always Check The Ticker Symbol
For example, Bitcoin Cash trades on some exchanges as BCH, while it trades on others as BCC. BCC is also the ticker symbol for BitConnect, which is a coin out of business now. If you bought BCC under the believing you were buying Bitcoin Cash, you would’ve lost a lot of money.
We have all heard that ol saying, “rules were meant to be broken”! Well, I can promise you this, if you break too many of these crypto trading rules, you’ll be broken, at least financially.
So be smart, be wise, stick to your plan, use our indicators, trade cryptocurrency using each of these rules and you will have far more wins than losses!