Having rules is essential to becoming profitable as a trader. Rules keep you grounded and, if followed, can avoid making risky and unprofitable decisions. The following are some of my own personal rules that I follow – a list of Do’s and Don’ts.

 

10 Simple Rules Cryptocurrency Trading

  1. Trade Your Plan. “Plan your trade, trade your plan.”
    1. Create a questionnaire for your trading. Ask questions to yourself on how you are going to approach your trade: What is your time horizon? What are you trading? When are you trading? What is your bias and probability? How are you allocating? What are your entry signals? Do you know when to exit for profit, when to exit for loss?
  1. Follow the lead of the major pairs.
    1. What pairs are considered major pairs in in cryptocurrency trading is debatable, but following Bitcoin’s move is often a safe decision – it does represent anywhere from 50 to 70% of the market at a given time.
    2. Use those pairs as a basis to form your trading bias for your particular time frame. Pay special attention to longer time frames.
  1. Don’t let emotions control your trading.
    1. it’s not personal
    2. losses = learning. learning = more success
    3. beware of fear. beware of greed.
    4. BE SPOCK. Not yourself.
  2. Diversify!
  3. Set you risk level. (Set levels at support or resistance).
  4. Set a profit target or technical exit.
  5. Use limit orders.
  6. Use stop loss orders.
  7. Keep a trading journal.
    1. Note your feelings before and after a trade.
    2. Be honest with your performance and results – you will often find that losses are due to an emotional response, not your logical analysis.
    3. Journal
    4. Journal
    5. And journal
  8. Have fun!

 

10 Deadly Things to Avoid for Cryptocurrency Trading

  1. Don’t start with too little capital.
    1. For whatever reason, there are many traders who approach trading with not enough money to sustain their early entry into trading. Opening an account with the minimum required is rarely enough to try your hand at making money. It is essential to have a cushion and ‘air’ for your trades to run their course. A great many trader has put on a trade, watched it go against him then have his trade closed out by his broker and then witness price reverse and go in the intended direction.
    2. Avoid committing all of your capital all at once – keep some powder dry for opportunities to hit the market.
  2. Don’t gamble on news, fluff, and unquantifiable rumors.
  3. Avoid speculating with crypto pairs that are not a major exchange.
  4. Don’t chang your trading Direction mid-trade.
    1. follow my your plan.
  5. Doubling Down. Don’t double investment when it goes against the trend.
    1. Doubling Down is gambling
    2. There is a massive difference between doubling down and cost averaging. One is an investment/trading plan, the other is a gamble.
  6. Avoid trading on unregulated derivatives exchanges with questionable reputations and practices (BitMex, Bitfinex).
  7. Be very careful when you’ve had a big win or a series of wins.
    1. Humility is good.
    2. Beware of many successes, check emotion.
  8. Don’t concentrate on a single type of cryptocurrency.
    1. Privacy coins
    2. Utility coins
    3. Network coins
  9. Avoid Overtrading
    1. the more you trade, the more work you need to do
    2. entails costs
    3. extra time = extra money
  10. Violating your trade plan.