It's been a wild week in the world of cryptos with the failed SegWit2x effort taking Bitcoin up to 7950 and then down to 5900 at the time of this writing.
All of this volatility and media exposure has attracted a lot of new traders and investors in search of easy money.
If you're new to the Cryptocurrency space here are 3 important considerations before dipping your toes into the volatile waters.
Everyone has heard of Bitcoin, however, there are a plethora of independent and competing cryptocurrencies that are worth keeping an eye on.
The key is to know the instrument(s) you are trading. Just as in Forex and equities trading, understating the macro picture and more importantly, the sentiment of other traders is paramount in setting the proper trading context.
One site that you should bookmark is CoinMarketCap.
This site is a must reference to track the ongoing fluctuations in market cap and capital inflows.
I personally pay attention to the top 10 Cryptos by market cap.
One of the biggest mistakes that a trader can make is to let a losing trade turn into an investment.
A lot of this is due to not having firm enough rules around when the trade is broken and then having the emotional discipline to take the loss.
So before you start counting all the potential dollars you can make off your next trade, define your stop.
What price would invalid the premise of your setup and how much are you willing to lose?
Last but not least is the need to fight the urge to chase a seemingly runaway market.
Many traders only see the potential upside and often will jump into a trade and get stuck with poor trade location.
Location isn't just important in real estate. A lot of traders could save a lot of money if they just remember these 3 words: location, location, and location.
Good trade identification begins with the recognition of where a stop would be placed prior to executing a new position; this will alert you to asymmetric trade opportunities and position you to capitalize on good trade location.
Have a good and safe trading week!
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