The Crypto Trader Survival Kit: 6 Indispensable Tips and Tools

Crypto trading can be lucrative, though not without risk as 90% of traders lose money.

Because of the inherent volatility in the cryptocurrency market, the potential for handsome trading profits is considerable.

And it’s not just sudden price movements that offer gilded opportunities: the proliferation of decentralized finance (defi) products and services, from yield farming to liquidity pools, produces even greater possibilities. 

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No wonder crypto trading is booming, with the latest data from Coingecko showing that the combined trading volumes of exchanges surged by $155 billion between July and September, rising from $176 billion to a whopping $331 billion.

Crypto trading can be lucrative, that much we know. However, we must also acknowledge that around 90% of traders lose money.

Whether guided by greed, slaves to unrealistic expectations. or simply suffering from poor planning and portfolio mismanagement, crypto traders crash and burn just as hard as regular day traders. If it was easy, everyone would be doing it. 

So, what’s the secret? Avoiding common mistakes for a start – and doing as the pros do. Here are six habits that should be in your Trading Survival Kit.

Use a Demo Account before Risking Real Money

Many major trading platforms, from eToro to Binance, allow users to open a demo account to simulate trading activity without risking real money.

In this way, they can gradually build up their confidence and enact trading strategies to see how they fare (or adapt one from scratch based on demo trading), all the while accessing live buy and sell prices at any hour of the day.

Demo trading is a terrific way of getting to grips with a particular exchange’s interface: it’s like reconnoitring a city by taking a virtual tour, then alighting in the central plaza and exploring on foot.

If you’re intent on surviving the dog-eat-dog world of crypto trading, demo mode is an option you shouldn’t pass up. It’s a good idea to keep it going even after you graduate to the real thing.

Copy the Pros

The advent of copy trading has enabled users to replicate the activity of experts and reap the rewards. In some instances, the copying trader can also halt trades before they have concluded, taking the reins as they see fit. 

In essence, copy trading gives users an opportunity to follow the lead of more experienced traders, glean insights and create winning strategies based on behavior patterns.

And it’s not just for novices keen to walk in lockstep with rockstar traders: old hands dabble in copy trading to research markets and save themselves time.

As for the heroic traders who set the standard, they get to earn a profit share of the daily net profit from their followers’ copy trading. Everyone’s a winner. 

Bingbon’s copy trading feature is one of the best, as it enables users to set a daily maximum limit to their copy trading margin and also set a stop-loss ratio, meaning trades automatically close out at a predefined threshold.

What’s more, trading fees are extremely low – just 0.045% for crypto and 0.03% for non-crypto.

Manage Volatility

Market volatility can enrich crypto traders; it can also wipe them out. As such, it’s a wise idea to have a port in the storm, a stable cryptocurrency that holds its value.

There are many USD-pegged stablecoins such as USDT and USDC for this purpose, although that’s not gonna help if the dollar itself is dropping in relative terms.

Your best bet might be to jump into a highly stable, basket-backed token when volatility is too hot to handle. 

One option is Sögur (SGR), a digital asset fully backed by a reserve configured to match the IMF’s Special Drawing Rights (SDR).

An international reserve asset created by the IMF to supplement its member countries’ official reserves, the SDR is based on a basket of five currencies: the U.S. dollar, the euro, the Chinese renminbi, the Japanese yen, and the British pound sterling.

Sögur’s SGR is about as stable as it gets, helping traders protect the value of their assets and maybe even turn a profit as Sögur’s economy expands.

The startup has some true financial heavyweights on its board, including Dr. Jacob A. Frenkel, former Governor of the Bank of Israel.

Set Stops

Deciding when to cut your losses is a true art form: if you simply ‘chase it’ every time, you’re a gambler rather than a trader. Of course, this decision is best made before you even open a position.

Setting stop-losses is an absolute must, a way to determine a floor for your position and close it at a certain price/percentage. In addition to mitigating risk, stop-losses help traders secure profits at a specific limit price.

Have an Exit Plan

How much profit is enough? The fact is, whatever you earn, you’ll always want more. Contentment in trading is nothing more than fiction.

With this in mind, determine a price target you want to exit at, then get out while the going’s good. Don’t let emotion or avarice compromise your trading strategy.

Use a Trading Diary 

Some traders get by on instinct, but they are few and far between. Most wake up early, obsessively study charts and hone their strategy over a period of years.

The best thing to do is take the guesswork out of the equation and maintain a trading diary wherein you record your big wins and harrowing losses.

Note down important lessons and refer back to the diary whenever you need a touch of inspiration. Who knows you better than yourself?

There’s never been a better time to trade cryptocurrency. Provided you take a measured approach and use the many tools at your disposal, you’ll do what many eager traders fail to do: turn a profit and have a blast.

Good luck and may the trading gods smile kindly upon you.

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