Crypto trading is both exciting and engaging — the thrill of catching a big market move is a never-ending quest for many. Each day spent analyzing the charts for signs of a new trend and a chance to benefit from the market is compelling for both newbies and experienced traders. Interestingly, the ease of operation and relatively low entry barrier makes crypto trading appealing to everyone.
However, a lot of people need proper planning to trade the crypto market. Beyond the basics of buying and selling, you should always practice responsible trading. This means you should consider doing your own research, avoiding FOMO and ultimately taking full control of your trading strategies rather than trading based on emotions. This short guide will highlight some responsible trading tips and how you can take advantage of them.
Understanding Responsible Crypto Trading
Usually, crypto traders expect to enter a good trade. Once they enter, they lose control by riding an emotional roller coaster, eventually losing out on the essential aspects of winning. Most traders are influenced by their expectation of gaining high profit while simultaneously losing their awareness of the market reality.
The responsible trader keeps their focus on reality and identifies the changes and trades based on them, not wasting time and energy on regrets and wishful thinking. Ironically, the main goal is not to make money but to trade well. Trying to hone their trading skills and improving their strategies so that money no longer influences their emotion.
Ultimately, responsible crypto trading is the process of accessing and analyzing the market based on deep research and market indicators rather than emotions. Also, a responsible crypto trader starts with a small capital while learning to handle the market, as the market can never be controlled, but you can learn to control yourself. Here are some tips for trading the crypto market responsibly.
4 Tips to Help You Trade Crypto Responsibly
Trading cryptocurrencies responsibly goes beyond buying and selling cryptocurrencies. It involves managing different aspects of strategies, including identifying trends and reversals and much more.
Secure your trading account and wallet
One of the most important aspects of responsible crypto trading is security. There are several ways you can safeguard your trading wallet. Some of these include:
- Using a special email address and password for your account
- Using two-factor authentication (2FA) or a strong password.
- Avoiding unsolicited links or opening unknown attachments in emails
All these are effective ways to secure your trading account.
Effective Trading Plan
Just like any other financial market, crypto trading requires a plan that highlights your present status, future goals, and the strategies you want to employ to achieve those goals.
A good trading plan is the rules governing your trading activities in the crypto market. In simple terms, it clearly sets out the conditions that must be met before entering or exiting trades. A good plan combines all the whys, whens, and hows of trading in the crypto market. It reflects your strategies, personal expectations, risk management, and other market trading strategies.
By learning to plan your trade, you can trade professionally and not emotionally. You won’t be afraid of a loss too big to bear or a profit too small to gain. Your trading will become systematic and seamless.
Everyone knows that risk management is one of the keys to successful crypto trading, so you need a risk management strategy to minimize risks and maximize rewards.
One of the most common risk management tools is the 2 percent rule. It essentially keeps you out of risky trades that can do harm to your portfolio.
For example, if you have $1000 in your portfolio, you may only risk up to $20 per trade. If your plan triggers an attractive trade with a $15 risk, then you may only trade one crypto asset. If the risk is only $5, then you can afford to trade two crypto assets at any given trading instance. This rule must be followed to avoid any major loss.
Do Your Own Research
Oftentimes, a lot of crypto traders only follow the herd mentality. Nowadays, so much information is available at our disposal, which often manipulates the actions of crypto traders towards the market.
As a responsible trader, you need to ensure you have done extensive research before risking your funds on a particular cryptocurrency.
Overall, Responsible trading is the ultimate method to achieve long-term success in crypto trading. If you keep trading less emotionally and stick to your risk management rule, your trading will be stress-free, and you can focus on analyzing the market.
To sharpen your trading skills, LBank essentially educates and guides users on the best methods to navigate through the crypto market.