As crypto is being adopted twice as fast as the internet as back in the 90s, combined with the easy way for any person to start trading cryptocurrencies, the losses for beginner traders have become a problematic subject. Following best practices for trading cryptocurrencies is an absolute must in 2022

Here are best practices for trading cryptocurrencies in 2022:

  1. Investing in innovation
  2. Having “Investment” and “Trading” baskets
  3. Applying Fundamental and Technical Analysis
  4. Using analytics fine-tuned for the crypto market
  5. Using tools and websites to track the crypto market
  6. Having an investment plan that takes profits and reduces risk
  7. Diversify your holdings: Portfolio Management
  8. Performing your own research
  9. Keeping funds on the side to “buy the dips”
  10. Using common sense: “your gut”

And now let’s take it one by one to learn more:

Investing in Innovation

This is perhaps the whole point of cryptocurrencies, innovation. Think of Solana, Polygon Matic, Terra Luna, and the list can go on. All of these share one common element, innovation. Alonside a multitude of other companies, they all innovate with technology that it’s actually being used and even more, it’s revolutionary, and that is what makes them such a great investment.

Having “Investment” and “Trading” baskets

There’s an unwritten rule for trading, you need to have two baskets of funds: what you invest and what you trade. Don’t trade investments and definitely don’t trade your long term investments. And, remember to take out some of those profits to invest some more.

Applying Fundamental and Technical Analysis

This is a simple yet fundamental aspect for trading, especially if you are rather new in trading of any kind, not just crypto. There are underlying fundamentals that cannot be ignored of how market trends function. These fundamentals are easier to understand with technical analysis. Technical analysis can be done with the minimum basic trading concepts, and further by using indicators to help read data in a more user friendly manner.

Using analytics fine-tuned for the crypto market

Many indicators are specially built and in tune with the stock market, forex, metals or other tradable markets. Those indicators will not function well with cryptocurrencies, particularly because they are designed to work with less volatile assets with price movements of 0.5 – 2%

You can take a look at our TradingView indicators such as: Momentum Oscillator, Automatic Trend Channel or the Elliot Wave Oscillator. Our indicators are built for any market and specially designed for beginner and advanced traders alike.

Using tools and websites to track the crypto market

This is a topic part of Applying Fundamental and Technical Analysis. The same as if you would be using Finviz for the traditional markets, you should make use of Coin Market Cap or Coin Gecko for cryptocurrencies. There are several other important tools and websites you should use for tracking the crypto market and you can learn more about it in our article Secret Tools and Websites to Track the Crypto Market.

Having an investment plan that takes profits and reduces risk

This is a must do and we can’t imagine how anyone is able to trade without having a Risk Management Plan and an Investment Plan. For example, in the early beginnings traders don’t keep a good track of their trades, they take unnecessary risks, and greed is still a part of each and every trade, specially during those first few lucky trades.

  • It is advisable to set multiple Take Profit marks ( TP ) to help offset some of that risk.
  • You should also use a 2 to 1 risk ratio. Put your Stop Loss ( SL ) at 1% below your entry point, set your Take Profit at 2% above your entry point.
  • Always, always, always use a Stop Loss. It’s your greatest ally.

Diversify your holdings: Portfolio Management

It’s an old saying but a very true one in a lot of aspects: don’t put all your eggs in one basket. Instead, built several baskets to store your eggs. DCA Bitcoin, but buy more of Solana, Matic and Luna, for example. Never stop diversifying, just like Stop Loss, diversification is your ally.

Performing your own research

Watch tutorials, YouTube videos, read articles but don’t blindly follow any of them. Do your own research, and you will come across this acronym often in the crypto space, DYOR!

Keeping funds on the side to “buy the dips”

Cryptocurrencies are volatile. It’s what makes them special. Don’t spend all your money, depending on your budget, keep a decent percentage on the side to buy dips… because cryptocurrencies will always dip when you least expect them, and that’s where the serious dollars are.

Using common sense: “your gut”

Somehow our entire lives are dictated by gut feeling. Trust it, and don’t regret following it, no matter what. If your gut says you should get out of a trade, and the trade then goes in your favour as you previously expected it, this is a possibility, but your gut will save you when you need it the most. You will never loose following your gut instinct.