Learn With STEEM - How To Manage Your Emotions In Crypto Trading - Check Out Four (4) Tested & Trusted Strategies

How often do you purchase something when the price increases? Or how often do you sell the same thing when the price drops? Although it may seem counterintuitive, many investors experience this frequently. They panic and act rashly out of fear, and they invariably choose the wrong course of action, particularly when it comes to cryptocurrency.

When I first started investing and trading cryptocurrencies, I was doing exactly this. I was a noob and had little experience; in fact, I lost a lot of money. But with time and the right research, I was able to overcome it, and today I'll discuss four strategies that have helped me control my emotions and enable me to make calm, logical decisions whenever I trade. I sincerely hope if you can apply what you'll learn in this article to your trading; it will undoubtedly be beneficial.

_{Important Note: I'm not a financial expert, but I try to provide useful information base on my experience and research}

Let's get started;

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Dollar Cost Average

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Dollar-cost averaging generally entails distributing an investment by making equal investments at regular intervals. Dollar-cost averaging entails dividing the buy or sell over time rather than doing it all at once.

Depending on the investor, different amounts and intervals of investing might be used.

Are you aware that you Can buy or sell assets using dollar cost averaging?

This has been helping me to make successful trade as well as manage my emotion during trading, whenever there's a dump (bear market) I use dollar cost average to buy tokens during a dump, this simple means buying the tokens piece by piece as it dump.

For example, you have $400 and want to buy Bitcoin when it plunges. DCA can be used easily. When the price reaches $50k, you can literally purchase $100 worth of BTC, then when it dipped to $45k, another $100 could be purchased, then when it fell to $40k, another $100 could be invested, and finally when it fell to $35k, another $100 could be purchased. At an average price of $42.5k, you were able to successfully purchase $400 worth of bitcoin.

I also utilize dollar cost average to sell my token during a pump; this simply entails selling the token piece by piece as it pumps.

_{Screenshot From My Trade History On Binance}

If you have 400 STEEM, for example, and the price of STEEM is surging, you want to sell, but you don't want to put yourself in a position where you have sold and the price keeps going up. You can just use dollar cost average. When the price is $1, you can sell 100 STEEM at first. When the price increases to $1.5, you can sell another 100 STEEM. When the price increases to $2, you can sell another 100 STEEM. Finally, when the price increases to $2.5, you can sell the last 100 STEEM. At an average price of $1.75, you were able to sell 400 STEEM.

This has eliminate the form of regret or emotion you'll feel when you sell all the 400 STEEM at $1 and you the price later surge to $2.5.

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Set Up a Demo Account To Help Your Practice

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Anyone who has ever played a shooter game like Call of Duty is aware that some game modes let you practice your techniques. That is the purpose of a demo account: training. Without adequate preparation and practice, no one in their sane mind should engage in trading. As a result, before entering the actual market, you need a place to practice your techniques. Tradingview has a practice range and is a great resource for charts of the markets. I'll give a brief demonstration on how to set up a demo account on Tradingview

You can practice trading using a demo account, which provides you with $100,000 in fictitious money. The best feature of this trading platform is that you may select any token time interval to examine the price or pattern movement of the token, which you can utilize to improve your analysis and research. Once you understand them, you may create buys, sells, and stop losses, alter the time intervals, and test your trading strategy risk-free.

Plus500 is another great demo account for traders especially newbies, it has an easy to navigate layout, and it's user friendly with great and simple UI.

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Create a Trading Strategy and Follow It.

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I'm not going to dive into specific trading strategies, but I will put you in the appropriate frame of mind to start yours.

Each trader has a strategy that works for them. All plans have certain differences, yet they all have some fundamental elements. For instance, the majority of traders, including myself, are aware of the portion of their portfolios they are prepared to use. Additionally, I make sure to stay current on news regarding project launches as well as global financial developments. In fact, I have open different tabs on my browser which display Tradingview and site for latest crypto and finance news or updates.

Another aspect of your trading strategy to think about is risk assessment. I always do this before I trade anything. So, before beginning your day, you must have performed a risk assessment, which entails determining how much you are willing to lose and being okay with it. Regarding it, you must be sincere. If your risk tolerance is, for instance, 1% of your portfolio, let say around $10, then that is all you need to do. If you do this during trading, I can say you will get through being controlled by emotions and this will help you make the best investment decision.

Over the course of the day, you will see different events in the crypto market, but if you've a proper strategy in place, like following the chart, latest crypto news and good risk assessment, and you're willing to follow those strategy you'll be able to manage your emotion and make the best trading decision.

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Diversify Your Portfolio

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When you diversify your portfolio, you spread out your investments among a number of tokens rather than holding them all in one, which lowers your risk of suffering losses from changes in the market and other factors. Never forget that diversifying is always better than "placing all your investment on one token" when it comes to managing your emotions.

Day traders or short-term traders should diversify their portfolios just as much as long-term investors and holders do. Spreading one's trades and investments is one of the many measures that should be taken, even when trading. It should be understood that an asset's value might fall drastically in a matter of minutes, and if it is the only asset you have, your deal may be delayed as you wait for the asset's value to rise and recover your losses. However, you can scrounge by while the other one recovers if you have invested in other assets.

_{Screenshot Of My Portfolio On Binance & Tron Wallet}

I spread out my cryptocurrency investment over as many different projects and blockchains as I can. For instance, I didn't invest all my capital in BTC, I made sure I invested in Tron, Ethereum and other blockchains.

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Conclusion

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In this article, I've discussed four strategies that I personally use in managing my emotions when trading , which is essential for making the best trading decisions. Making a trading plan, practicing your techniques on a demo account, engaging in real trades using DCA, and diverting your portfolio can all help to smooth your trading journey and increase profit making.

Emotions have a survival bias, which is healthy given that we are emotional beings. Emotions, for instance, might impact decisions that prioritize the present above the past or future. Therefore, each of the strategies I've listed has significantly aided me in managing my emotion while trading, and if you employ them correctly, your trading experience will undoubtedly be positive.