With over $950 billion invested, the cryptocurrency market can be viewed as either intimidating or enticing. 

If you are one of the people who see it as enticing then it is an opportunity to make millions as a crypto trader. However, anything worth doing is worth doing right, and in this case, you better do it right or you could lose all of your money. 

That is why you need to do your homework before investing and trading in the crypto market. 

Start by reading these pro crypto trader tips to make the smartest moves possible. 

1. Practice Before You Trade

The best way to learn how to trade cryptocurrency is to do it. But, like with any other skill, practice makes perfect. And with crypto, practice can save you from making a detrimental mistake.

Catch most of your mistakes before losing your money by first using paper trading apps and simulators. 

The name paper trading stems from the practice of writing down stock trading numbers to view the outcome before making an investment. Crypto has taken this technique to the next level by allowing you to trade just like the real thing but without putting up actual money. 

Another great feature of paper trading is that you can learn cryptocurrency trader lingo and tools, understand how to trade crypto pairs, and grasp market trends. 

Platforms like Cryptohopper allow you to sign up and paper trade for free. It also includes tutorial videos and documents to help get you started.

2. Look at the Fundamentals

Once you gain some valuable play-trading experience it’s time to start researching the market for the real thing. 

A rookie mistake is to look at the technical aspects of a crypto market analysis: market charts, highs/lows, volumes, etc. But, this is missing the big picture and the long term trend of a coin.

Picking a popular coin, i.e. one with a large price increase, may get you into huge trouble as well. The coin could easily crash if it’s using a pump and dump scam. 

Avoid these two issues by making a fundamental analysis. This includes:

  • Reviewing the coin or token’s white paper
  • Understanding its goal and practical purpose
  • Knowing the team behind the project
  • Researching its economical system of distribution and maintenance

Knowing a coin’s ins and outs is a reassuring way to make smart investments and predict its future profitability. 

3. Make a Plan, Including a Budget

After deciding where to put your money, you need to know how much you can afford to lose (because this is always a possibility) and how much you want to earn (this is your stopping point where you sell for a profit).

Crypto trading is similar to gambling as you need to know when to take a loss in order to not lose even more. So, you need to set these limits beforehand and stick to them. 

Limits will directly relate to your overall budget. If you exceed your budget then do not give up. This is a lesson to re-assess your plan, make a new strategy, and start with another budget, once available. 

4. Track Profit/Loss Percentage

You are interested in crypto trading to make money so you should know if you’re actually making some. However, this can get confusing especially if you have several trades and trading pairs. 

It is very difficult to calculate your absolute profit with a fluctuating crypto market using various currencies. Instead, use a percentage profit/loss method for each trade.

The easiest way to do this is to use a trading terminal that connects to your exchange via API and shows you the percentage of loss or profit for each trade in real-time. 

5. Use Stop Loss Feature

One of the best tools for any cryptocurrency trader is the stop loss function. All exchanges have this option for short and long trades. So, what makes it so useful? 

You can set an automatic sell price if the market price dips suddenly, lessening your losses as much as possible. It can also be useful to make a profit by automatically selling when the price rises. This is perfect for when the price jumps up momentarily then goes down again. 

There is also a trailing stop loss option to set the sale at a percentage of the market price rather than the dollar amount. 

If you don’t use stop loss then you are missing a major opportunity to save money. Plus, you won’t have to worry if you need to step away from the computer for a moment. 

6. Keep a Cryptocurrency Trading Journal 

Writing down your strategies and keeping a log of which trades work and which ones don’t is an excellent resource to have. 

For beginner crypto traders, this is the most helpful learning tool. And even for the experts, a crypto trading journal is a reference and guide to always reassure yourself as memory can fail us a lot. 

Use an Excel spreadsheet or simply jot down your trades in an actual notebook. Do whatever feels right for your trading style and that your future self will understand. 

7. Understand the Fear and Greed Index

The crypto market is generally run by the herd’s mentally. This is otherwise known as the fear and greed index. 

Basically, the index is a calculated measure of market fluctuation based on the emotional responses of buyers and sellers. 

For example, if some bad crypto news comes out then fear could affect the market. Investors will sell in a panic if they think prices will drop. However, knowing that this is part of the fear and greed index gives you a chance to buy cheaper coins.

On the other hand, people have extreme greed if they believe the market is pumping. This might be a sign that a correction is about to happen. Selling when the greed index is high can get you a profit before the burst. 

Remember that the fear and greed index is not always 100% accurate, so use it with caution and only in conjunction with other intuitive factors. 

Pro Crypto Traders Still Make Mistakes

Knowing these pro crypto trader tips will set you up to make informative decisions, but they aren’t error-proof. Even the pros make mistakes, but it’s what you do with your mistakes that matter. Not giving up and learning how to improve is the only way to make a profit.

Check out more of our Tips and Tricks to capitalize on the crypto market. 

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