Cryptocurrency is a hot-topic and so is cryptocurrency trading. With such volatility associated with it, there are potential for massive profit. However, if you are not doing it correctly, you might lose more than you gain.
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That’s why it is always a good idea to be lenient and follow some rules of cryptocurrency trading. It is common to see traders making same mistakes over and over again. To help you not make them, we will go through the rules of cryptocurrency trading. By sticking to these rules, you are less likely to cause loss. So, without any delay, let’s get started.
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6 Rules of Cryptocurrency Trading

1 . Only invest the money that you are ready to lose

It is common to see many investors taking loans to invest in cryptocurrency. This might work out for few, but not for everyone. And, you don’t want to go into debt. Not only that, even if you don’t take a loan for investing, always keep in mind that the money you put in is lost forever. Yup, you read it right. Cryptocurrency is highly volatile, and your investment can anytime become zero.
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In short, only invest the money that you afford to lose. Cryptocurrency is a decentralized idea which is susceptible to many factors including government regulations, hacks, bugs and so on. Just evaluate your current position, and invest only that you can afford to lose.
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2 . Diversification is the key to success

You have seen multiple coins do 100x or even 1000x in the past year. One such example is Verge(XVG), a privacy coin, that increase 13000x times! All these numbers are too good for true, and can easily tempt a newbie investor to put all his eggs in one basket.

The cryptocurrency market currently has 1500+ coins. If you plan your investment, you can gain the most out of the big market out there. By investing in one coin, you are taking unnecessary risk. To get started, you first need a slight percentage of your investment in BTC so that you can rise the BTC rally and minimize loss when Altcoin value goes down. According to us, it is always a good idea to have an investment in 4–5 coins so that you minimize risk as much as you can.
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3 . Take profits at regular intervals

Crypto is crazy land. You can easily find a coin doing 20–30% increase in a span of 2 or 3 hours. When this happens, it is common to see investors getting greedy and hoping that it goes more. By not taking out profits at regular intervals, you are doing the mistake of missing out on apparent profit. It doesn’t matter what your goal is; you need to take profits at regular interval. This habit can save you a lot of pain, later on, when the coin sees a correction, and you see yourself losing a lot of profit.
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4 . Do proper research before investing

It is common to see novice investors invest in coins based on hype. That’s one of the biggest mistakes! Never do it! It is common for new investors to put their money in things that are hyped and then later repent. Also, there are many ICO’s and Ponzi schemes out there that only need your money. By doing some basic research and understanding the crypto-coin you are investing, you are just making sure that you are doing your best and also taking responsibility for your investment.
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5 . Use stop-loss

If you are into day trading, it is necessary for you to set stop-loss. Stop-loss can help you cut losses. Many coins are not good for long-term and hence should be traded with caution. Stop-loss gives you to the ability to automate a trigger when the coin is sold. This is a good strategy considering you cut your losses and want to move out of that coin to Bitcoin or USD.
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6 . Never FOMO

Fear of missing out is a popular term in trading. It is a human response when they see prices going up and don’t want to miss out on the chance to profit. This means they buy coins at high prices, only to find out that they bought at all-time high or near it, reducing their opportunities to gain profit for a long period. Bitcoin, for example, reached $20,000 in Dec 2017. Now, it is hovering around $10,000. Just consider the condition of that investor as he now needs to either sell for a loss or HODL(another popular term which means to hold) for a long time.
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Cryptocurrency trading is not a simple task. You need to understand the market, TA, technical understanding of the coin you are investing in, volume traded for that particular coin and so on. However, these simple six rules will keep your float for the long term. If you can follow these rules, you will do good for the most part.
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Note: This document with all the information in it is shared here to boost our knowledge of cryptocurrency , the original document can be found in Document Source

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