The year 2019 marked a new recovery for most of the popular cryptocurrencies, mainly due to the appearance of new derivative instruments. People who want to get involved have more options available and most of them tend to go away from the traditional exchanges, as the lack of regulation and security issues continues to linger.
Whether you want to choose Atecs Capital online trading, futures contracts, or other derivatives, you’ve got a lot of options available, but the education part of the process should not be skipped. That’s why we want to talk briefly about some of the things you must consider in order to start with your right foot.
Education
As with trading shares, commodities, or forex, cryptocurrency prices are not random and are set based on supply and demand principles, which fluctuate due to cause-effect relationships. If you want to trade cryptocurrencies successfully you must first understand the industry. Blockchain knowledge, particularities of each token you want to trade, and similar details are things you must know. Start with educating yourself and allocate a few months, if necessary, to learn as much as you need.
Technical Analysis
Trading involves taking generally short-term positions and one of the most popular ways to do that is by using technical analysis. Some “experts” claim that this is not possible in the cryptocurrency world and they are only partially true. Technical analysis (support and resistance, Fibonacci levels, Oscillators, etc.) already proved to work on liquid cryptocurrencies. Especially if you are at the beginning, you should stick with trading Bitcoin, Ether, XRP, and other popular fiat or cross cryptocurrency pairs.
Fundamental Analysis
When dealing with cryptocurrencies, you would need to pay attention to some particular fundamental factors that have an influence on price. Blockchain forks, halving procedures, cryptocurrency adoption news, security improvements, etc. are just a few of them. You must also bear in mind that regulatory developments have proved to be an important factor in cryptocurrency valuations, which means you’ll need to be constantly updated with the latest news.
Risk management
Since most of the beginners like to use leverage when trading cryptocurrencies, it should be treated with diligence. You’re dealing with one of the most volatile markets and that’s why you’ll need a plan. Set up a fixed percentage of your equity which you’ll risk on a single trade. Always use stop losses and have a target that’s at least twice as big as the stop loss, in order to have a minimum 2:1 reward to risk ratio. Lastly, filter the trading opportunities which you’ll encounter, in order to have an accuracy that’s higher than 50%.
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