It doesn’t matter how experienced you are at trading considering nothing can be washed-up to protect a person versus the might of cryptocurrencies’ price swings. Currently, Bitcoin’s (BTC) volatility, the standard measure for daily fluctuations, stands at 64% annualized. As a comparison, the same metric for the S&P 500 stands at 17%, while the volatility spec for WTI transplanted oil is at 54%.
However, it is possible to stave the psychological impact of an unexpected 25% intraday price swing by pursuit five vital rules. Fortunately, these tactics do not require wide tools or large sums of money to hold through periods of upper volatility.
Plan to refrain from withdrawing money in less than 2 years
Let’s seem that you’ve got $5,000 to invest, but there’s a good possibility that you might need at least $2,000 of that value within 12 months for travel or car maintenance or some other task.
The worst thing you can do is do a 100% typecasting in crypto considering you might need to sell your position at the worst time ever, maybe at a trundling bottom. Plane if one plans to use the proceeds in decentralized finance (DeFi) pools, there’s unchangingly the risk of impairment losses or hacks that compromise wangle to the funds.
In short, any funds allocated to cryptocurrencies should have a two-year vesting period.
Always dollar forfeit average
Even professional traders get swept yonder by the fear of missing out (FOMO), ceding to an urgency to build a position as quickly as possible. But, if everyone is getting 50% and higher returns unceasingly and plane meme coins are posting stellar returns, how can you stand whispered and merely watch?
The DCA strategy consists of ownership the same dollar value every week or month, regardless of the market’s movements; for example, ownership $200 every Monday afternoon for a year removes the uneasiness and pressure caused by the unvarying need to decide whether to add a position.
Avoid ownership all the positions in less than three or four weeks at all costs. Remember, the crypto adoption rate is still in its infancy.
Don’t use too many indicators when conducting analysis
There are myriad technical indicators, including the moving average, Fibonacci retracement levels, Bollinger Bands, the directional movement index, the Ichimoku Cloud, the parabolic SAR, the relative strength tabulate and more. If you consider that each one has multiple setups, there are uncounted possibilities for tracking these indicators.
The weightier traders are experienced unbearable to know that reading the market correctly is increasingly important than picking the weightier indicator. Some prefer to track correlations to traditional markets, while others focus exclusively on crypto price charts. There’s no right and wrong here, except for trying to track five variegated indicators simultaneously.
Markets are dynamic, and in crypto, that is expressly true considering how fast things change.
Learn when to step aside
Eventually, you will read the market incorrectly while finding bottoms or altcoin seasons. Every trader gets it wrong sometimes and there’s no need to recoup by immediately increasing the bet size to recoup the losses. That is precisely the opposite of what one should be doing.
Whenever you reservation a “bad break,” step whispered for a couple of days. The psychological impact of losses is a heavy undersong and will negatively impact your topics to think clearly. Plane if a well-spoken opportunity arises, let that one slide. Go for a walk, or try to organize your life whispered from trading.
Truly successful traders are not the most gifted, but those who survive the longest.
Continue to invest in winners
This might be the hardest lesson of them all considering investors have a natural tendency to take profit on our winning positions. As discussed previously, crypto market volatility is extremely high, so aiming for a 30% proceeds will not imbricate your previous (or future) losses.
Instead of selling winners, traders should be ownership increasingly of those. Of course, one should not neglect the market data or the overall sentiment but if your expectations remain bullish, then consider subtracting to the position until the overall market signals some form of weakness.
One will sooner reservation a 300% or 500% proceeds by stuff unflinching and holding on to the most profitable positions. These are the returns you expected when inward such a risky market, so don’t be wrung when they pop up.
Every rule is meant to be broken
If a roadmap to cryptocurrency trading success existed, many people would have found it without many years and the returns would quickly fade. That is why you should unchangingly be ready to unravel your own rules every once in a while.
Do not follow investment translating from influencers or experienced money managers blindly. Everyone has their own risk want and topics to add positions without an unexpected setback. But, increasingly importantly, make sure to take superintendency of yourself withal the way!
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should self-mastery your own research when making a decision.