Tips for successful trading

Let’s take a look at the five most common mistakes new traders make and how to avoid them:

1. Do not invest more than you can afford to loss

Any financial investment can produce losses, rather than returns. With a highly speculative investment, such as Bitcoin, there is a high chance that you can see very large gains or losses. By trading Bitcoin, there is also further scope to lose money from poor decision-making.
One should invest such an amount that they feel comfortable with losing completely — be prepared for the worst eventuality. This tends to lead to losing more money when the market recovers and the trader buys back at a higher price.

1. Set goals for each trade

Setting goals helps traders remain level-headed during periods of extreme volatility. This is highly important for Bitcoin trading. When placing a trade, determine what price to take profits or cut losses in advance.
The benefit of this is that it is easier to prevent trading decisions based purely on emotions. For example, a trader with no target price may make a profitable trade, become greedy, and then fail to realize their profits while the market is still on their side.

1. Learn how to read charts and indicators

Although technical analysis is a difficult skill to develop, new traders at a minimum should know the basics of chart reading to identify market trends.

1. Do not set stop losses too low

A stop loss is an automatic trigger to liquidate your position if your losses reach a certain value — essentially stopping you from losing any more. They are a good tool to take advantage of.

1. Close unprofitable & leveraged positions within 24 hours
   Leverage is borrowing or lending an asset in hope that it appreciates or depreciates, respectively.

If a trader shorted 1 Bitcoin at 5:1 leverage, for example, the total investment is 6 Bitcoin. To make a profit the price must fall, allowing the owner to reclaim ownership at a lower price.
However, the price of a Bitcoin must fall sufficiently to cover the trading fee and the interest fee charged on borrowing the 5 Bitcoin. Do not fear if this sounds complicated!
Put simply, we recommend that inexperienced traders close unprofitable positions within 24 hours to avoid paying re-occurring interest.

Summary
The key takeaways from this post are:

1. Do not invest more than you can afford to lose
2. Set goals and target prices for each trade
3. Learn how to read charts
4. Do not set stop losses under $20
5. Do not keep unprofitable positions open for longer than 24 hours