Crypto trading is the fastest way to increase (or lose) your money in crypto.
When people think about investing in crypto, the first thing that comes to their mind is trading.
If you've been a stock or Forex trader in the traditional markets it will be easier for you to just adapt your strategies to the crypto market and leverage your skills and experience to profit.
But not everyone has that skill set and experience to bank on.
But does not that mean they've got no chance at making money with crypto trading?
Not really!
In this post, I'm going to share with you the basic things you need to do if you want to be a successful cryptocurrency trader from scratch.
How to Be a Successful Crypto Trader
TL;DR:
- Study and understand (be a student of) the crypto market
- Choose a crypto trading strategy and master it
- Choose a few coins you're going to be trading
- Choose reputable exchange(s) to trade on
- Keep learning and adapting your strategy to the market
- Keep your emotions in the freezer while you trade
Let me explain each of the above recommendations and how to go about them.
Understand the Crypto Market and Trading
Cryptocurrency trading is a zero-sum game and the market is extremely volatile. More volatile than a jealous and hot-tempered girlfriend (pun intended).
What that means is that the market can move in either direction by a high percentage (-95% or +2500%) in a few hours, or days and for you to make money, someone else must lose and vice versa.
These are just the tip of the iceberg of what makes the cryptocurrency market special and you will be doing yourself a great favor by learning up and staying updated with the happenings in the market.
Understand the technology and the combination of factors affecting and moving prices generally.
If you fail to educate yourself nobody will and you'll end up learning the hard way by losing your money over and over again.
So your first assignment if you want to be a successful crypto trader is to educate yourself about the market and the various factors affecting price movements.
You may find these resources helpful to start with:
- A quick and simple summary of the Bitcoin whitepaper
- The Developing Story of the Future of Money
What Type of Trader Do You Want to Be?
You can attempt to be a jack of all trade and master of none.
But to become a successful crypto trader all you need is just one winning strategy that you can master and perfect.
There're over half a dozen crypto trading strategies.
Learn about them and find the one that fits your personality, schedule, trading capital, and unique preferences.
Once you have identified a trading strategy that you're most comfortable with, the next step is to learn EVERYTHING you can about that strategy.
Read articles, listen to podcasts, watch videos, and soak up as much knowledge and other traders' experiences about your chosen trading strategy.
But please avoid paying for any crypto trading online courses. Most of the time, they're not worth it and everything they'll teach you is already freely available on Google, YouTube, Twitter, Quora, etc.
This will help you to identify what works and doesn't work for most traders, why what work works, and why what doesn't work didn't work for each individual you learn from.
This knowledge will help you know the things to avoid and what to adopt based on the knowledge and pre-experience you have acquired.
Choose the Coins You Will Trade
According to CoinMarketCap, there're over 7,800 different cryptocurrencies (coins and tokens) currently trading on various crypto exchanges as at the time of writing this line.
You're definitely not planning to attempt trading all of them.
That's why you must select a few coins you're going to be trading.
The fewer the better, so that you can thoroughly study the coins, understand the various factors affecting the price of that particular coin, monitor and analyze any identifiable pattern and use your deep knowledge and understanding of its market to profit off of lousy traders.
Personally, I wouldn't trade more than 7 different cryptocurrencies and that's even when I'm doing it full time.
Otherwise, I will stick to one or two maximum. 3 if I want to go extreme.
More so, I wouldn't trade any coin that I would not be willing to HODL for longer in case the market moves against me unexpectedly.
And that's why part of the process of selecting the cryptocurrencies to trade is performing a full fundamental analysis of the project to see if it has a future in the first place. Click here to learn how to perform a cryptocurrency fundamental analysis all by yourself.
By now, you will easily understand that I am a conservative trader looking to make the most profit while keeping my capital secure at all costs. If you're the James bond type feel free to degen into any shining crypto that you find and get prepared to lose your money.
Choose Reputable Crypto Exchanges to Trade on
One of the most important decisions you're going to make and one that will significantly affect your success as a trader is choosing a cryptocurrency exchange to trade on.
According to CoinMarketCap, there're currently about 386 different cryptocurrency exchanges in the spot market, 19 in the derivatives market, and 44 decentralized exchanges (DEX).
Of course, the derivatives markets are not for you.
Why?
Because it's a casino and you ain't here to bet, are you? No!
My favorite crypto exchanges are Binance and KuCoin (spot) and Uniswap (DEX).
I may frequent other exchanges to take advantage of arbitrage opportunities, buy or sell coins that are not available on my chosen exchanges but all trading funds eventually return to these three.
My choice of exchange is based on security, reliability, liquidity, availability of the coins I want to trade, availability in my country, among others.
But you don't have to use the same exchanges as me.
Click here to discover the top 9 cryptocurrency exchanges you can’t go wrong with and then choose the one that offers everything (or at least, most of the things) you need.
Evolve or Die
The cryptocurrency market is not just extremely volatile, it's equally dynamic.
In this space, things change very fast, and to maintain your competitive advantage, you need to constantly keep learning, relearning, unlearning, and adapting to the changing market conditions.
What works last week or month may not necessarily work today and it doesn't have to be your fault before it affects you.
So you got to be prepared for all eventualities and be ready to change when the circumstances dictate so.
You need to keep honing your trading skills and perfecting your strategies EVERY DAY to stay on top of your game.
Remember I said this is a zero-sum game.
Your profit is another trader's loss and your loss is someone else's profit.
This is a huge jungle where you're either the prey or the predator. Therefore, you can't afford to slack.
Sounds like war right?
Yeah! It's because it is.
Kill Your Emotions
Your emotions (fear, greed, escalated commitment to a particular coin, etc) are all your enemies in trading.
Ditch them before they rekt you.
But does that mean I have to be a stoic to become a successful crypto trader?
Not really!
However, you only need to ensure that your analyses and trading decisions are not being influenced by your emotions but by the truths and facts of the market.
Conclusion
Becoming a successful cryptocurrency trader is no rocket science and anyone can do it.
All you need is to educate yourself on the market, master only one trading strategy, select a few coins and exchanges to trade, and constantly strive to remain updated on the changing market conditions to stay ahead of the competition.
That's enough from me. Over to you.
What strategies do you use to become a successful trader? What have been your experiences trading or learning how to trade crypto so far? Share with us in the comments section below.
