An old saying says, “If you fail to plan, you are planning to fail.” You have heard this a couple of times, and it may have lost its grip on you, yet it is the absolute truth. If you want to be a successful cryptocurrency trader, you need to plan and have a strategy to keep winning. If you were to ask any prominent trader how they run their business and stay afloat, their solutions would circle; plan or fail.
A trading strategy is an extensive planned list of activities on how to achieve your trading endeavors. A trading plan helps an investor to navigate risks, have clear decisions, and curb the unexpected. The plan protects you from making hasty decisions and impulsive trading that leads to losses. A comprehensive trading plan includes the following.
Skill Assessment
The crypto trading environment is a battle of losses, profits, and lessons. Assess what is needed to trade, buy and sell crypto; everything that makes this ecosystem. Then evaluate if you have the skills it takes to thrive in the market. Make sure that your available skills will make you profits. Do you have the skill? If yes, we move on to the other part of the trading plan.
Mental preparations
Prepare yourself psychologically for the work ahead of you. This is a new field; you may lose or win, and your assets and long-term savings are on the line. What does your schedule look like? Do you have the time to trade in crypto, being aware that it is very time-consuming and relentless? Make peace with yourself that you are here for the long haul.
Learn the risks involved
You don’t want to walk into the crypto market blindly. Learn and research everything this market entails and weigh your options. Can you handle the risks in the business? Weigh in the number of risks expected. Is it 5% or 20%, and can you do it? If it looks like you may lose all your assets, take a break and live to fight another day.
Set realistic goals
In every business investment, an investor needs to be very honest with him/herself on what they can achieve. Set realistic goals according to the money you have invested and your expected results. Do not expect that you will make millions of money on the very first day. What is your percentage portfolio on losses and profits?
Do research
Cryptocurrency is a relatively new field, and a lot is happening. Do your homework before you officially start trading and continue this habit every day after that. As you do research, cut across all trading grounds in this particular market, and understand all the aspects of trading in the crypto world. Like, DeFi, Day Trading, Trading Bots, and so much more. After you have gathered the information, pick what products and services work best for you.
Trade Preparation
Pick a trading platform, the crypto coin of your choice, and decide whether to trade weekly, daily or monthly. Decide if you will use trading bots or not. Make all these necessary decisions and start your trading journey.
Set exit Rules
Make decisions on when to exit the business if all goes sideways. Being aware of when to call it a day and quit is a great plan as you go into the cryptocurrency business. Decide the mental bandwidth you want to extend to losses and up to what point your profits should not get into your head.
Keep trade records
Account for all trade decisions and transactions you make and keep clear records of everything. This goes a great way in helping you take into account how you have been doing in business. Most experienced traders record their wins and losses; if they win, they want to remember how they won. If they lose, they want to learn and not repeat the mistake. Your trade records are how you know where to go next.
A crypto trading strategy involves the following considerations:
- What assets do you have, and what number of assets you will trade-in
- The platforms to use.
- The needed documents and transactions data
- The dictates of your position sizing.
In cryptocurrency, there are active and passive trading strategies. Active strategies require more time, attention, and constant monitoring; they include Day trading, Swing trading, scalping, and Trend Trading. The passive strategies include buying and holding and index investing.
Final thoughts
Developing a crypto trading plan that fits your financial goals is not an easy task. You ought to create and choose a trading plan that best suits the current times and stick to the plan to the end. You can change the plan developed if it no longer suits you or want to try something new. There are several trusted platforms that would be of help to creating an extended-lasting trading plan. Be flexible throughout.
