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How to Be Successful in Cryptocurrency Trading in 2020

Man in front of his laptop investing in cryptocurrency

The world of cryptocurrency trading is getting more exciting with each passing day. Last year, we entered the second decade of crypto. This year, we witnessed the 3rd Bitcoin halving.

If you have just discovered the realm of magical internet money, don’t worry, it’s not late to invest in cryptocurrencies or start trading crypto. And, if you already know a thing or two about crypto trading, now is the right time to review your strategy.

Be you a rookie who wants to learn the craft or an experienced trader who wants to stay in shape, here’s what you need to know to reach success in 2020.

The Number One Rule of Cryptocurrency Trading: The Market Is Always Right

If you think that something is going wrong, have no doubt that you’re the mistake. The market is right, always. It’s true that the market is more predictable on some days than on others.

But, whenever it does not behave like you thought it would, you can rest assured that you are the one who is in the wrong. It will be like this always and forever. Amen.

Reasons People Lose At Cryptocurrency Trading

Trading strategies may change over time, but some things will always stay the same. If a trader loses money at cryptocurrency trading, it is because they:

  • Make mediocre trades and trade too often;
  • Never cash out their winnings;
  • Gamble with other people’s money;
  • Trade with cheap, worthless, and sketchy altcoins;
  • Invest too much money;
  • Hold positions for too long;
  • Play the lottery because they’re trading without knowledge.

Less Technical Analysis Is More

If you want to succeed at cryptocurrency trading, you should learn about: wedges, breakouts, bull flags, upwards and downwards channels, trend lines, stochastic RSI, moving averages, and the basics of the Candle Sticks.

If there is something you know you can’t discover in hours, don’t try to search it in minutes. You can form your TA from minutely, hourly, or daily, values, but the pattern is always more error-prone in shorter timeframes.

HODLing

If you are a beginner, all of this may be too much to soak in. No one can blame you. If you think cryptocurrency trading is too much to deal with, you always have the option of long-term investing, also colloquially known as HODLing (a misspelling of “hold” that caught on).

Many cryptocurrency aficionados and experts believe that the previous price actions of coins like Bitcoin, Ripple, or ETH are proof that the price of these coins will rise again.

So far, being in it for the long term has shown to be the best way to go for many investors. Even with all the ups and downs the market has seen, those who bought popular coins in the early 2010s and decided to “HODL” are quite well off.

For instance, the price of ripple was around $0.005 in the last quarter of 2014. Today, ripple is valued at around $,02. Like all the other popular coins, it has had a few very rough patches but it has still significantly gained in value since its inception. So, for example, you can learn how to buy ripple at the right time, hold on to it, and forget all about trading strategies.

The obvious disadvantage of this strategy is the long waiting period. But for those who want to dabble in crypto without risking much, it may be best. Mind you, there is still risk, so you should never invest more than you are willing to lose.

80/20 Rule

A good trader is considered to be someone who makes a profit with 20% of their trades. All of their other trades are either a loss or a tie.

This is closely related to the 80/20 rule. For instance, if you earn a profit of 32% on a good trade, then a lousy one can bring an average loss of 8%.

A stop-loss is one of the best ways to reach this relationship. This also allows traders to calculate whether they’ve made a net profit.

This will help you see clearly. For instance, it can help you realize that a trade with 2% profit is not really a win.

50 plus 1

A course can either rise or fall—there are just two relevant states, no more. It is a matter of 50:50. If a pigeon were to take up trading, the probability of it being right would be 50%.

Whether we are talking about trading or anything else, no person is right all the time. No matter what strategies you use, how long you have studied the market, or how good you are, you won’t be able to always predict an irrational market correctly.

To be successful at cryptocurrency trading, you don’t need to be right almost all the time. Just strive to be right 51% of the time. You will lose money, no doubt. But if you can handle losing it in 49 out of 100 trades without letting frustration get the best of you, you are good to go.

Takeaway Tip

Ever since blockchain and cryptocurrencies became a thing, people have been arguing about the future of Bitcoin and other major coins. Even though we cannot say for sure what the future holds, we can see the potentials of cryptocurrency.

So, it’s safe to say cryptocurrency trading is a strategic game and not a gamble. If you want to succeed at this game in 2020, make a trading plan and stick to these golden rules of crypto- trading.

Marco Lopo is a Sydney-based business consultant and a marketing analyst. He writes about business and lifestyle. He thinks that's the perfect opportunity to present himself to a wider audience and receive recognition. In his free time, Marco enjoys music, travelling and also is a big reading enthusiast.

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