A Few Tips And Things To Remember For Those Who Are New To Cryptocurrencies And Cryptocurrency Trading

There is definitely a greater level of  interaction and engagement on Steemit lately, and much of that is due to the influx of new uses Steemit has recently gained. 

Although Bitcoin, cryptocurrency, and blockchain can seem very confusing and complicated at first, if you keep an open mind and try to learn as much as you can you will be shocked by the amount you can learn. Cryptocurrency trading and investing can often seem very easy and appealing to individuals who are just discovering the markets, but in reality it is very seldom as simple as it looks. I want to discuss numerous 'big picture' things to keep in mind and consider when investing in cryptocurrency, and I guarantee that these tips can be applied to many different forms and aspects of investing. 

We have all heard it before but....Rule 1- Never Invest money that you can not afford to loose. 

This is the first thing that anyone should consider when entering into an investment, but especially when that investment is in something such as cryptocurrency. Before any investment is made, think long and hard what it would look like if you never saw this money again. I like to actually run through the scenerio in my head in detail, both to prove that I could afford to loose the investment, and because I believe that it helps me to continue to think of my cryptocurrency investments in terms of 'real' currency. Often times the cryptocurrency market can be simply unpredictable or move suddenly in an unexpected direction, and anyone who has been trading for awhile has experienced taking losses from investments. Losses are going to happen and there is no way around that, but we will focus a bit more on that later.

Rule 2- Always Start Small

Whether its the first time you are trying cryptocurrency trading in general or if you are trying a different and new strategy, start with small investments for a few days to see if the strategy is worth trying in practice. When I signed up for a Poloniex account for the first 10 days I only traded with 10 dollars worth of Bitcoin, and boy am I glad that I did. Whenever you are just watching the prices and the market from the outside it is very easy to imagine yourself taking profits, but the reality is that cryptocurrency trading is often not as easy as individuals imagine it to be. Try a variety of different trading styles, strategies, and techniques to determine which one you will likely experience the greatest amount of success with, and then begin to test that strategy with a bit more capital. As you get more comfortable and knowledgeable about cryptocurrency trading, then you can incrementally increase the amount of capital you invest into those strategies. I know it may seem like you need to start right away, but I promise you that the market will still be there in a month and you will likely be much better prepared and more successful.

Rule 3- Realize a bad position early and exit it accordingly

I know for me personally, this was one of the hardest things for me do do properly when I was new to trading. Instead of taking a small loss, I would try to increase my position at a better price to get my base price to a more reasonable level. Although this did work for me sometimes, it also led to numerous large losses when I was new to trading. While adjusting a position by increasing stake can be an effective way to exit a position, it is not something I would recommend for new traders. You must realize and be okay with the fact that you are never going to win every position, and making losses as small as possible is a huge factor in increasing the profitability of trading strategies. 

One of the most successful strategies that I use is taking short term positions on coins and exiting once I reach 3% profit. I also have a level at which I will exit the position if my losses hit a certain percentage, but that varies from position to position and from coin to coin. The point at which I will chalk up a short position as a loss is when I am down between 2-4%, but again this varies greatly based on numerous factors.  I have the most success when the goal of my trading is many smaller positions searching for 'small' profit margins. The whole reason that this strategy works is by assuming you win more often than you loose, and take more profit than you loose. 

Rule 4- Avoid being overexposed to a single position

This is another rule that is very important, and another rule that I personally had a very hard time grasping when I was new to trading. Although it may seem like using 50% of your capital on a single position is a good idea in some cases, it is very risky and has a greater potential to be a major issue in the long term. When I am taking short term positions, I generally try to take about 10-20% of my total trading capital, and this way even if I do experience a large unexpected loss, I will be able to recover relatively easily. Although you may miss out on some profit from the positions you get correct, the peace of mind and safety that one receives from  diverse and well rounded positions is very important to the success of a trading strategy in the long run. I know that it is very easy to get overconfident and take risky positions, especially when 'hot' the past few days, but all it takes is one major loss to wreak havoc on all of the profits you have made. 

While this will depend on what type of investment and trading strategies you are trying to run, it is also helpful to vary your positions, as in taking both short and long positions on different coins. While I do implement a 'day trading' strategy, I also have numerous buy and hold strategies on a variety of coins. While this type of investing isn't as exciting and its often months before they really pay off, they are a very good option for new traders and experienced traders alike.

More important tips coming soon..

While all of these rules and tips are helpful and important, there are still so many other things that go into making a successful and profitable trading strategy. I intend to write a follow up to this post today or tomorrow and explore some of those other tips, but I think it individuals will be more receptive to shorter articles. Remember that if the cryptocurrency market is not and never will be 'free money'. While you may think that you are correct about a position, it is very likely that you have a very small amount of knowledge compared to the high level and high volume traders. This is not a bad thing as they have more information than generally everyone, but you always must remember that these high level traders often profit greatly off of new and beginner users. There are people out there who have superior hardware, information, and automated trading algorithms who will always be a step ahead. This doesn't mean that you can't profit as well, but just that the market is still relatively consolidated among the big players.

I really hope that you enjoyed this post and potentially even found it helpful! Like I said, I intend to writ a follow up to this post later today with some other important tips and tactics so please stay tuned! As always I urge you to leave any comments, discussions, or input below, thanks for reading!

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