Cryptocurrency is a hot topic these days. In fact, it’s been the subject of many mainstream media outlets lately. It seems that every day, there are new stories about Bitcoin millionaires and how to get rich from trading crypto.
However, you should be aware that cryptocurrencies are highly volatile and risky investments with high potential returns but also large chances of total loss if you don’t know what you’re doing.
With this in mind, we will take a look at some steps for how to become a responsible cryptocurrency trader so your success story can read more like those in the headlines!
Why is planning important?
Now that we know responsible trading is the key to long-term success let’s understand why planning is essential.
Simply put, if you want your investments and trades in cryptocurrencies (and stocks) to work out well for years on end then no matter what strategy or method of investing they are it’s important not only to start off with good habits but maintain them as well!
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As discussed last time around emotions can be our downfall when making decisions quickly without thinking things through properly first so keeping this under control will provide benefits such as a better grasp over finances which would lead us toward becoming reliable traders by preventing any unplanned financial losses from happening alongside increased profit margins because now everything comes together nicely.
Responsible crypto trading tips
#1 Notch-up the security
One of the most important things to do as a crypto trader is to make sure that you’re constantly staying safe.
There are some ways for doing so: using two-factor authentication (2FA) and keeping your account information secure with strong passwords, or even creating an offline wallet if possible in order not have anything on removable media like USB sticks which can potentially leak personal data; additionally, never share any private keys online!
For best protection against cryptocurrency scams, there are always hardware wallets available too – but be wary before trusting them since they only store digital assets instead of physical coins/notes.
#2 Create a trading plan
Having a trading plan is crucial if you want to be an effective crypto trader. The main idea of having one, as opposed to not doing so or creating one only after the fact and following its suggestions blindly without any consideration for your own preferences in investment decisions like sudden losses vs gains that will happen over time while keeping emotions under control when they arise because it’s easy said than done.”
You’re probably wondering, what goes into creating a crypto trading plan? Well, let us make things easy for you.
Do not worry about the nitty-gritty of technical analysis or how much profit one should withdraw from their account at any given time; we’ll take care that all those details are taken care of by our experts who know these matters best!
First and foremost in establishing your strategy with regards to investing/trading must be deciding on which trades YOU want to participate in–if anything at all (?).
It is important because then there won’t remain an option but rather fate decides if they will yield success…but wait there’s more: next comes determining conditions like entry prices, exit strategies, etc.; diversifying portfolios.
#3 Stop-limit orders
It can be hard to keep up with the markets, and this is where stop-limit orders come into play. These types of orders allow you to protect your investment by putting a cap on how much money could potentially go down if something unexpected happens during trading hours.
They also give traders more control over their investments because instead of dance Forced Liquidity who constantly changing prices based on emotions or news events such as geopolitical tensions from China banning cryptocurrency exchanges there will always exist some sorta form of volatility in any given market which means that no matter what direction it goes stops are here for us!
For example, stop-limit orders can be used to prevent market loss. When the price reaches a preset value called “stop” in this case (e.g., $100), then it will trigger your trading platform’s limit order which you have set up beforehand at an equal distance from that same amount as well ($101-$200).
If prices go back up but not too much before hitting again on either side of their original range (below/above) they would get sold off by these automated computer systems because there aren’t enough traders left watching over them who knows what might happen next!
#4 Diversify your crypto portfolio
One of the significant benefits of having a balanced crypto portfolio is diversity. For example.
If you keep holding onto Bitcoin it will be highly prone to extreme ups and downs in its value because cryptocurrency isn’t regulated by any central bank or government so whenever there’s news about new regulations coming out people panic selling all their coins – this causes volatility which leads many investors with less experience dealing on exchanges to end up losing money.
By diversifying into other altcoins though (especially ones without large holders), traders can reduce market ‘mood’ swings triggered from one coin becoming popular overnight thanks.
#5 Keep FOMO at bay
One of the qualities of a responsible trader is dealing with Fear Of Missing Out (FOMO), that anxious feeling among many crypto traders.
They may be missing out on some exciting trading or investment opportunities happening elsewhere due to the lack of information available at their disposal, which induces fear and manipulation in this emotional state!
This problem has become even more prevalent as we have so much technology these days – it’s hard not being caught off-guard when things change rapidly around us.