The most significant challenge that any trader faces in the market is greed. If you trade in the market out of greed and want to earn quick money, you are on the verge of blowing your account and funds. Greed is a very regular occurrence in the cryptocurrency market, as it affects all traders at some point.
Even if you are a wealthy individual, you will want to make more money at first. However, the feeling of earning more will catch up with you. Greed is an inevitable human emotion, and you must learn to manage it. It will be impossible to trade the market with rational thought unless you have reasonable emotional control. In fact, you’ll make a majority of your transactions out of a desire to make more money.
Many traders can control their greed and, as a result, become successful. However, there are traders who succumb to the feeling of making more and more money and end up losing their entire account. This post will provide you with some advice on how to manage your greed. So, read on to understand more about the systematic method of Cryptocurrency trading and how you can behave more prudently.
1. Make a Strategy
The most crucial thing to consider before beginning to trade cryptocurrencies is to understand your objectives clearly. Before purchasing any cryptocurrency, consider the following:
- How does buying cryptocurrency fit into your overall financial picture?
- Do you have any other funds?
- Is investing in crypto the most incredible way to get started with trading?
- Isn’t it better to start with a safer asset class?
- Can you afford to lose the money you’re considering investing in cryptocurrency?
- Are you aware of the risks and volatility associated with bitcoin markets?
- Will you buy and hold your cryptocurrencies, or will you trade them?
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2. Risk Management
Risk management is an essential technique for all traders, including cryptocurrency traders, to follow because it protects the portfolio from significant losses while still allowing for calculated profits. Volatile risk, price hype risk, and other hazards are all present in bitcoin investing. Risk-aversion tools such as fundamental and technical analysis might help you control your portfolio from getting squandered in the future.
You should research the price of a cryptocurrency before purchasing it through an exchange. You must determine if the market is bullish or bearish and then proceed to buy or sell in accordance with the trend. Pivot points, support and resistance, moving averages, and the relative strength index are all techniques you can use to compute the price.
The following stage is to map the profit margin; thus, you should determine the take profit point when you’ve found the price entry (TP). It would help if you also considered your position, which may be reduced or expanded depending on market conditions and your trading strategy. You must keep up with bitcoin news, as it may affect the value of your trading assets.
3. Control FOMO
The fear of missing out, sometimes known as FOMO, is one of the most important emotions to control in trading to help manage greed. The most typical mistake made by rookie traders is to invest in a currency that has already completed its bull run and feels compelled to participate in the frenzy.
You will often anticipate the growth of approximately five coins, and if one of those currencies experiences a bull run, you will feel bad for not investing at the correct time. Furthermore, you will feel as if you are squandering an opportunity and leaving money on the table. This often leads to poor judgment since the trader is confronted with a market reversal rather than an extended bull run.
The most effective strategy to cope with this situation is to start small and experiment. Even if you feel compelled to follow trends, even if these prove to be poor decisions in the short term, stick to what you decide will benefit you in the long run!
Each trade you make should be based on a strategy and should adhere to basic trading rules. If you haven’t used any trading indicators before, now is the time to understand the fundamentals and apply them to your cryptocurrency trading.
4. Take Advantage Of The Market’s Substantial Gains
It’s time to cash in on your trades if you’ve made large profits in the market. Potential profits can elicit a wide range of emotions, and over time, we may come to believe that staying in the market is always the best option.
This is, nevertheless, a regular blunder made by traders. It’s nearly impossible to target the market in order to lock in earnings. As a result, consider using a percentage-based selling strategy, in which you gradually sell smaller portions of your trading size as the market rises.
5. Maintain a Trading Journal
While investing and trading in cryptocurrencies, you must be accountable to yourself. You should maintain track of your investments and trades at all times. With that system in place, you should be able to evaluate all your investments and determine whether they are in line with your long-term objectives. Keeping a trading log of your assets might assist you in making rational decisions while controlling your emotions. Furthermore, it allows you to rebalance your financial portfolio as needed.
6. Don’t Stop Learning
Nobody knows everything there is to know about the bitcoin market. As an investor, you should always be willing to learn new things. Learn the fundamentals of the market, read about how it works, and understand all technical aspects. More crucially, observe what others are doing; their actions may provide valuable information. When you’re learning, you constantly make analytical decisions rather than emotional ones.
Although greed is widely regarded as the most harmful feeling in the cryptocurrency market, no one has ever achieved success in their trading career by harboring greed in their brains. If you want to succeed in the long run, you must abandon the idea of getting money quickly. You may profitably trade without fear of losing money if you concentrate on your trading abilities and methods.