How to become a successful crypto trader?

A crypto trader is someone that leverages price movements to make profits. 

A successful crypto trader is someone who can protect his capital, minimize losses and maximize profit. 

Making a profit, however, is not the first aim of a successful trader but protecting his capital. 

Not all digital currencies are cryptocurrencies…

Hilary, Founder of CryptoHills. 

What is Cryptocurrency? 

Cryptocurrencies are digital currencies that are encrypted on a cryptographic network that runs on a blockchain. 

Types Of Trading

  • Spot trading

This type of trading is otherwise known as “Buy low, Sell High”. 

It is the form of trading where you buy a particular cryptocurrency when the price is low and sell at a higher price above your buy price. 

One of the bottlenecks of spot trading is that it is one-way trading. 

You only make money when the price is moving up. 

A retracement or reduction in price means you are losing money already nevertheless, it is the easiest form of trading. 

  • Future trading 

This refers to the trading of derivatives that are buying a contract. 

When trading futures, you are allowed to buy more than your capital through a system called leverage. 

For instance, if you want to buy 1 bnb at the current price, you will need about $400.

If you have $100, you can buy 1 bnb @ $400 with 4x leverage. 

The initial amount that you have, which is $100, is called margin while the 4x is the leverage. 

Unlike spot trading, you make money in both directions in future trading. 

Whether the price is going up or the price is coming down, you can earn in futures trading if you are trading in the direction of the market. 

  • Arbitrage 

This type of trading is not common like spot and futures trading and has low volume. 

It is the act of leveraging the difference in price in two different markets. 

NB: Market in cryptocurrency refers to exchanges. 

Parameters To Be Considered In Becoming A Successful Crypto Trader.

  • Ability to spot opportunities

Spotting opportunities is a skill that can be developed but it can only be developed with consistency.

Being a successful trader starts from your ability to spot opportunities before others see them as you cannot leverage on what you do not know. 

How Can I Spot Opportunities In Crypto? 

Read our previous session by clicking here.

  • Learning

If you ever have a chance to become a successful trader, you must be ready to learn. 

You can’t earn above what you know. 

You are a student of the market. You can’t influence the market but the market can influence you. 

Hope you remember this saying:

Don’t invest in what you do not know. 

  • Build connections

The role of the community cannot be overemphasized in crypto trading. 

There are some opportunities that you might not get unless you build enabling connections and collaboration. 

  • Have a mentor

Learning from your own experience or using a trial and error approach is another pitfall on your way to becoming a successful trader. 

You do not have to learn from your own experience if you are ready to learn from other people’s experiences by being a mentee under them. 

  • Analysis

Analysis in crypto trading is of two types: Technical Analysis and Fundamental Analysis. 

Technical Analysis is the use of charts and charts patterns to determine a trade while fundamental analysis is the use of personal sentiment about a project by digging deep into circumstances surrounding the project like the team, the market cap, the kind of blockchain, and news. 

Fundamental analysis will tell you which coin to buy, technical analysis will tell you at which price.  Hilary

  • Develop a trading plan

If you have to be successful as a crypto trader, take trading as a business, and have a plan. 

Don’t just trade because you feel like trading but develop a trading plan which will guide you while trading. 

  • Risk management and trading psychology 

Trading psychology refers to a trader’s emotion which can either be when stop-loss is hit or when profit is hit. 

NB: Trading psychology is not only when you are losing money but also applies when you are earning money

Risk management on the other hand relates to the protection of capital, minimizing losses while maximizing the profit. 

How To Manage Risk

  • Set a stop loss

Stop loss is the level at which a trader exits a trade if it continues to be in loss. It is a level to avoid liquidation.

Liquidation means losing all your capital in a trade. 

  • Don’t trade what you cannot afford to lose. 

The entire market is very volatile and there is no successful trader without losses. 

To manage your risk very well and enhance positive trading psychology, you should trade with the amount you can afford to lose. 

This is an excerpt from our let’s talk session with Hilary Azubuike, Founder of CryptoHills. 

 

  • Are you an entrepreneur? 
  • Do you have the intention of upscaling your business on the blockchain? 
  • Are you aware that you can be a blockchain business developer? 

This week Friday, 18th of February, 2022, Crypto Smart and Qlip founder, Karla Obakpolor will be talking about business development in the blockchain. 

  • What are the basic things to note while building on the blockchain? 
  • How does building on the blockchain differ from building other digital businesses or offline businesses? 
  • What does it take to be a blockchain business developer? 

All these questions and more will be discussed during the let’s talk session. So don’t miss it!!! 

Join our Telegram community where the session will take place. 

 

Previous sessions

How to spot Crypto Gems? 

Understanding the Algorand blockchain

How to start with Cryptocurrency? 

Understanding the Algorand blockchain nodes

 

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