Few months into trading and it already feels like multi-year experience. Initial days were dominated by losses, from a minute share of portfolio lost to back-breaking losses. This was followed by a few days of consistent profits followed by more losses, the resolve to not repeat silly mistakes that spiral into heavy losses, but still repeating it anyway.
Here I am sharing 7 lessons learnt from my experiences till now:
Knowledge comes first
Knowledge of cryptocurrency is must. The projects associated with the currency, past trends, the range of oscillation at a given BTC value, the current resistance and support, past peaks for similar value, past dips, any current news or information,etc. The more the information you possess, the bettwer you are positioned to take correct decisions when the time arrivees.
Know the candlestick shapes and patterns, observe the past behaviour of currency’s candlestick, see how it reacted to speculations in the market, reaction to previous BTC dips and crashes. Patterns reveal the future turn a currency’s value might take, the steepness varies from one coin to other. The more eye your have for such nuances of patterns, more it’s going to push up your profit margin or reduce loss margin.
Divide your portfolio
Divide the total value of your portfolio into different brackets. My division – only 30% of my overall portfolio I invest to purchase coins in the business as usual scenario. Next 30% is to buy the dips. Part of remaining 40% I use only when I am dead sure that the market can not go down any further, mostly post crash. 100% portfolio is never put into play. Business as usual give decent returns, but the real big push to portfolio is when you buy the dips and crash.
Divide your invested bracket
Whatever percentage of your portfolio you involve in a trade, divide it judiciously between high returning high volatile coins and coins that are stable but return low. Try to buy when they are near the support. Don’t put all the money in a high risk high volatile asset. If it drops heavily, you will be left with no option but to wait till it recovers , that might block your investment for multiple days. Which assets are more risky and which are not? Let your experience and knowledge obtained by following crypto-NEWS decide.
Do not buy the rise, wait for the dip
Do not buy the the coin that has already exhausted a fraction of upward trend. Do not follow the coin, the coin might be close to the resistance. It would result is losses or the gains might not be worth risking the money. Wait for the coin to dip.
Daily Targets based on Total Portfolio
Keep conservative targets. More important is to grow. Do not end up losing all past gains with an over ambitious investment. Go slow, grow your portfolio, and wait for the opportunity. Work on gaining the skills to minimize risks and maximize returns.
Do not rely only on Long selling
Long Selling is easy to understand and start with. Also learn short sell, options trade, margins trade, futures trade and other variations. Develop a strategy to fit in any market-Bearish or Bullish.