Those who are familiar with the investment business must know about the Forex market. The Forex market is the largest financial market in the world and more than $5 trillion is traded per day.
So, what is traded in the Forex market?
To make things easier, consider this market as a place where you can trade currency pairs. Though cryptocurrencies are not regulated in many countries, many reputed brokers offer crypto trading services. You can trade the major cryptocurrencies and use the market volatilities to make some decent profit.
Trading is a very complicated business. It’s like an art where precision is the key to success. So, how do we become the best crypto traders in the global market?
Selecting Your Trading Asset
When you speak about trading crypto, everyone thinks about the bitcoins. But the highly skilled traders think about all the possibilities. More than 2900 cryptocurrencies are traded publicly in the global market.
If you stick to the bitcoin only, you are putting an end to your investment career. For instance, the price of bitcoin dropped from more than 15,000 points after securing a record high of $20,000 back in 2017. So, those who were trading bitcoin didn’t have much to do.
But if you trade ethereum, ripple, dash, and other popular cryptocurrencies, chances are high that you will find a decent profit-taking opportunity. Instead of sticking to one major asset, you need to diversify the risk factors by trading multiple assets.
Developing Your Trading Strategy
To trade cryptocurrency, you must have a valid trading strategy. Unless you have to ability to look for profitable trade setups in the crypto trading platform, you are not going to make any profit. Think about the long term goals and create a simple strategy so that you can find the best possible trades without taking too much risk.
So, how do we create a simple trading method? Well, you need to learn technical analysis first.
After learning to analyze the technical data, open a demo account and start trading the cryptocurrencies and try to come up with a unique idea to trade the major asset. If you can demo trade the market successfully for 3 consecutive months, start trading with real money.
Focus On the Risk Factors
Those who are involved in the trading business know the high risk involved in this profession. To become the best crypto trader you can be, you need to learn advanced risk management policy. Instead of taking high risk in each trade risk a small percentage of your account balance.
For instance, you can risk 3-5% in each trade. Some of you might think taking a 3-5% risk is very high and can result in heavy loss. But there is a small twist to this technique. When you trade the major pairs like EURUSD, GBPUSD, etc. you get access to a high leverage trading account.
But if you trade cryptocurrencies, you are not going to get more than 1:5 leverage. The leverage factors will vary depending on the type of crypto you are trading.
The Risk to Reward Ratio
After learning to trade cryptocurrencies, never think you won’t have losing trades. Losing trades are very common in the trading business. To recover the loss, you must learn to trade this market with proper discipline.
If you lose $100 in a trade, make sure you make $300 from the winners. You need to trade the market with at least 1:3 risk to reward ratio. To get a higher risk-reward ratio trade setup, analyze the higher time frame data.
Learn about multiple time frame analysis since it will filter out many false trade setups. Regardless of your trading result, stick to your strategy and trade with discipline.