Effective crypto trading habits to adopt in 2023
The year is 2023, and cryptocurrencies are no longer a niche product but a popular financial instrument used worldwide for trading and investment purposes. The crypto industry has been alive and well for over a decade, and the number of crypto projects continues to increase yearly. In this timespan, crypto users have grown wiser and more skilled at managing cryptocurrencies which are slowly carving a path to mainstream adoption. The blockchain technology at the core of digital currencies is now driving change across all major industries due to its numerous applications.
This is not a sci-fi scenario or a possible development of the events but the reality of the moment. With the emergence of the crypto industry, our financial system has been enriched with a new asset class whose transformative power cannot be denied. However, the novelty of virtual money and its inherent volatility have made it difficult for people to embrace them from the get-go. It took a while for the average individual to get accustomed to this new type of asset, its features, and its use cases.
There is still some confusion and uncertainty surrounding the topic as the industry is still in its young years and continues to experience the commonly occurring growing pains. But we can’t deny that we’re a lot more knowledgeable on all things crypto than we were a short while ago, from researching a project or reading and interpreting an Ethereum price chart to building a trading strategy or managing risks. We have all the information we need at our fingertips and plenty of tools and support to master cryptocurrency trading.
So, let’s make this the year you finally let go of common crypto myths and misconceptions and adopt healthy crypto trading habits that can help you succeed in the field. Here are a few aspects that you should focus on.
When approached properly, crypto trading gives users the possibility to earn profits that go well beyond what they could gain by trading traditional financial instruments. However, we know now that not all cryptos are created equal, and not all of them can yield the same results. The cryptocurrency industry is currently populated with over 10.000 crypto projects, many of them with no real utility or prospects for the future.
So, how do you separate wheat from the chaff and choose the best cryptocurrency to trade in 2023? The answer is research. This is especially important for new cryptos entering the market that have no track record to prove their legitimacy and potential as trading vehicles. Doing due diligence implies learning about the people behind the project, their background and previous achievements, as well as reading the whitepaper, understanding how the crypto works and what it’s supposed to do, and checking developers’ activity and the project’s online presence.
You can also take the safe route and opt for established cryptocurrencies like Bitcoin and Ethereum, whose longevity and resilience ensure higher stability and safety. But this doesn’t mean you should skip the research phase, which is crucial no matter what type of crypto you want to trade.
Setting clear objectives
Establishing clear goals is one of the golden rules of trading crypto. You should never set on a trading journey without having a well-defined plan and outlining the objectives you want to attain. You need to get clear on what you want to achieve and how you want to do it in order to make sound trading decisions. Without these basic principles to guide your every action, you can be easily swayed in one direction or another by the inevitable price swings that characterize the cryptocurrency market.
When decisions are made randomly without prior preparation, crypto trading turns into gambling, and that’s not the wisest nor the safest way to increase your wealth. In order to minimize risks as much as possible, you have to determine your goals and limits and adopt strategies that can help you stay safe. Setting loss and profit limits is the best approach in this regard.
The cryptocurrency industry has made huge strides toward maturity and evolved rapidly in the short period since its emergence. This demonstrates that more growth will be expected in future years, as cryptocurrencies are still a work in progress. What we know today about crypto trading and digital currencies, in general, might not be relevant or applicable tomorrow.
Things continue to change and move forward in the crypto space, so no matter how much you think you know about digital assets, it’s impossible to cover all available information. It’s, therefore, necessary to stay informed and continue to expand your knowledge of the cryptocurrency industry to keep up with the transformations in the market and make intelligent trading decisions.
Keeping emotions in check
Whether we’re talking crypto or another financial instrument, there is no room for emotions in trading. It’s challenging to keep your emotions in check when the stakes are high, especially in a volatile market. With values changing from one day to another and many factors influencing market trends, traders often experience feelings of anxiety, panic, sadness or even depression.
However, making decisions under the influence of strong emotions such as greed or fear can never lead to positive outcomes. FOMO is not a good advisor and can cause even versed traders to make rookie mistakes. Acknowledging the risks associated with crypto trading and addressing them by developing a risk management strategy can help you emotionally detach yourself from crypto trading and allow reason to guide your decisions.
These habits can set a solid foundation if you want to start trading crypto in 2023 and significantly increase your chances of success. However, experience also plays an important role in the equation, so you need to take things one step at a time and give yourself enough time to learn and grow as a crypto trader.