How to Maximise Your Crypto Trading Potential

For traders, maximising trading potential entails getting the most out of their initial cryptocurrency investment while minimising the chance of loss. They want to get the highest possible gain from a minimum stake. Traders recognise that when they start investing, there is a chance that they will not get it back. That is why they want to make sure they enter and exit the market at the right time. As a new investor joining the crypto market, you should also learn to get the most out of your crypto assets. Here are some tips for you.

Know when to enter a trade.

You can reduce the risk of losing money when you enter the market at the right time. This step is crucial because starting to invest at the wrong time might lead you to a potential loss. As an analogy, we can compare it to a plane taking off. If the pilot makes a mistake in launching the aircraft or some mechanisms malfunction, the plane may lose control and crash eventually. Similar to trading, you have to start smoothly. Or else you might be leading yourself to a potential loss. So the next question is, when is the best time to enter a trade? To answer that, you have to understand the different phases of trading.

First Phase - Accumulation Phase

A price movement that goes sideways or bounces up and down is called the accumulation phase. The crypto asset is not yet on the traders' radar. It means that almost no one knows about it.

Second Phase - Mark Up Phase

In this phase, we can see higher highs and lower lows. The trend in this phase continues to go up because people begin to talk about the crypto asset. More buys the crypto due to the hype on social media about it. This phase is also called price discovery.

Third Phase - Distribution Phase

This stage comes into the picture when the price does not achieve higher highs anymore. The trend moves sideways again and gradually declines, which means the number of those who want to buy crypto decreases.

Fourth Phase - MarkDown Phase

At this point, many traders start to fear losing because they see the price continuously drop. It is the counterpart of the second phase.

So, when is the best time to enter a trade? It is during the accumulation phase. Entering this phase allows us to maximise our profit. The price movement in this phase is not yet volatile, so you can rest assured that the price will not drop all of a sudden. In this case, you do not have to check the price movement from time to time. Another trait of the accumulation phase is that it moves sideways, which indicates that prices do not pump and dump significantly.

Others who decide based on their emotions enter the market often in the third phase or when the price is at its peak. That is why most traders get stuck in this unlikely situation. They do not want to sell at this point because they will lose their crypto without profit. Other traders, especially beginners, do not want to experience such a nightmare. So they connect with reliable crypto brokers to assist them in trading, like Bitcoin Era. The team of experts at Dart Europe has provided a comprehensive review of the Bitcoin Era. You can check it to see for yourself how legit their platform is. Understand that when you start roughly, the chances are you end up roughly as well. To increase the chances of succeeding in trading, make sure you have the necessary knowledge to start and the right people to help you achieve your trading goals.

Know how to ride the waves.

We know that crypto trading is volatile, which means it goes up and down, or the stability is not guaranteed. Knowing this, you have to make sure you can ride along the waves. It means that you have strategies in place in case the price of your crypto plummets. We call this risk management. One of the risk management strategies traders use is the stop-loss strategy. This strategy allows traders to set a specific point where they close their crypto position to avoid further loss. They calculate and decide about the profit they want and the amount of money they can risk to know that point. There are several stop-loss strategies you can study. The list includes support and resistance stop, moving average stop, time stop, volatility stop, and trailing stop.

Having a discipline in trading is essential. You have to know when to stop investing your hard-earned money. As others say, only invest what you can afford to lose. Do not go all-in because doing so may risk all of your fortunes and end up with nothing. Also, a trader must understand that investing more does not necessarily mean gaining more. Trading is risky, so it is possible that you also lose more. Diversifying your investment is also a strategy you can implement to reduce the impact of loss. Do not put all your investments in one crypto asset only. If that asset where you are over-exposed to plummets, you will be left with nothing. Unlike when it is diversified, you can use the profit from different assets to reinvest and recover from the loss you suffered.

Know when to exit a trade.

Once you establish a smooth entrance and consistent trading, the next question you should ask is when to exit a trade. You can gain most of it when you understand when to pull out from the market. The optimal time to move out is when you're in the second phase, just before it's about to transition to the third. In other words, try to predict when the price peak will happen. If you know when it comes, you can sell your crypto at the highest price possible; thus, maximising your potential profit.

To Sum It up

The first thing is to invest at the phase where most investors invest to maximise your trading potential. At this point, the price is not yet high. So, if the price soars, you are one of those who may gain a lot since you buy at a low price and sell at a high price. Alongside this strategy, traders must also incorporate risk management strategies. Finally, one must study when to exit the market because entering at the right time will be put in vain if you do not pull out at the right time.

This article does not necessarily reflect the opinions of the editors or management of EconoTimes