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To study the laws of the cryptocurrency market and master the skills necessary for a successful trader, a beginner will have to spend several months, make efforts, plunging into the field. In order to effectively make money on the crypt, making as few mistakes as possible, it is worth learning from the very beginning.
Why does a trader need money managementOne of the effective tools used by successful market players is money management. Having thought over the plan for using the deposit and having calculated the risks, you will not go out of your way after the first few transactions, you will get a profit and gain valuable experience.
Beginners, having listened to the advice of experienced traders, are trying by any means to make money on the crypt as quickly as possible in order to make it the main source of income. They are ready to immediately invest a fairly large amount of personal funds in a digital asset and choose risky transactions that promise high profits. Such an aggressive tactic threatens to lose capital and requires high activity from a novice trader. Not every beginner is able to hold out at this pace for a long time. Money management helps to rationally approach the opening of a deposit and act gradually, without risking large sums.
The second task of money management is to increase profits. If you managed not to lose the initial deposit on the first transactions, the chances of making a profit are already increasing.
Money management rules for beginners:
- The maximum transaction amount should not exceed 5% of the deposit.
- You can only invest in cryptocurrencies the amount that you are ready to lose irrevocably if the rate falls.
- Do not “overclock” the deposit. Overclocking refers to the constant violation of previous money management rules in order to quickly profit on risky trades.
- Diversification. A successful trader invests in various digital assets; the diversity of the investment portfolio protects his deposit from being drained in case of failure.
- Risk limitation. Determine in advance what risks you are willing to take. Calculate the maximum possible losses for yourself for one transaction, one trading day, week and month.
How not to lose a deposit to a novice trader?
Draining the deposit on the first few trades is a common case among inexperienced traders who enter the exchange without knowledge and preparation. A few rules will help protect your capital from draining:
- Put your feet. Until you have learned to control risks and losses on your own, use the platform’s tools to close positions when the rate goes down.
- Do not blindly trust analysts. Professionals can give accurate predictions, but they are sometimes wrong. Learn to analyze the market yourself and follow the mood in the crypto sphere.
- Don’t get carried away with diversification. Diversity of the investment portfolio is good, but do not rush to buy a lot of different crypts at once, focus on a couple of promising coins first.
- Stop promptly. Do not try to recoup if the trade is not profitable. After several unsuccessful attempts, pause and work on the mistakes.
- Let yourself rest. Your life should not revolve only around trading, give it a few hours a day and start your trading day rested.
Newbie Mistakes That Profitable Traders Don’t Make
The main mistake of a beginner is trying to make money on a crypt without knowledge. Quick success is not excluded, but much more often luck comes to those who take the matter seriously. Learn, immerse yourself in the crypto industry, track trends.
Another mistake is buying an asset at the peak of its value. A seemingly profitable deal can turn out to be a failure and lead to the loss of most of the funds. Don’t get emotional, study the analysis and weigh the decisions.
A common mistake is to leave positions unattended for a long time. Approach trading like a job and be careful.
Crypto Crew team will help you reduce the number of errors and start earning even with a small initial deposit. We teach beginners to act boldly on the exchange, but make informed decisions without succumbing to emotions, help build an effective strategy and protect the deposit from draining, without falling for psychological tricks.