It doesn’t matter what kind of trader you are; a swing trader, intraday trader or daily trader, and no matter what you trade, from Forex stocks to cryptocurrencies, there are certain rules you must always apply to become effective.
The goal of any trader is to minimize their losses, while expanding their profits, and to do so you need to manage your capital well. Here are my basic rules for being a solid trader, who earns more than he loses.
1. Stick to a plan
We are intricate creatures, with emotions that can change quickly. When negotiating, the main emotions we face are fear, emotion, adrenaline and greed. It is often these emotions that block our true potential.
Therefore, it is essential to have a business plan and comply with it. A trading plan is effectively the rules you will follow: how long you will hold an open position, when you will record your profits, what kind of analysis you will use to determine your entry and exit points.
If you abide by your rules, no matter what happens in the market, it will effectively nullify your human inclinations to act out of fear or excitement. It’s also worth keeping track of your operations and analyzing them, to learn how to improve and the areas you fall short of. Excel can work great for a business journal or you can find some for free online.
2. Risk management
All forms of trading have a level of risk, the way you manage that risk can be the key to your success as a trader. The first rule here is to never negotiate with more than you can afford to lose.
From here, it’s important to allocate a defined percentage of your global fund bank per transaction. This way, you will stay in the game longer and allow yourself to withstand any turmoil in the market.
The next risk management rule is to set the Stop Loss and Take Profit commands on the platform you use. A Stop Loss order is defined to be activated when the value of the asset you are trading sinks to a certain point, either 10% below your entry or above.
A Take Profit order removes profits from the table when your asset rises to a certain point. It is often very tempting, especially with cryptocurrencies in HODL and HODL, but if you are an everyday trader, do not be tempted to go against your trading plan. Book your benefit, cover your business entry and open another position if you wish.
A really important rule, observed by all successful investors, is to diversify your portfolio so that it can withstand storms. Diversification means exposing your portfolio to various regions (Europe, UK, US and emerging markets), various sectors (green, technical, value and growth) and various asset classes (DeFi tokens, currencies, stocks, ETFs) and so on. ).
Another rule here is to learn how much of each asset needs to be allocated to your portfolio. An example might be 1% Crypto, 1% DeFi Utility Tokens, 30% stocks, 10% commodities, 30% indices, 28% currencies, and so on.
4. Understand what you are negotiating
This philosophy has been praised by many of the most successful investors, including Warren Buffet i Benjamin Graham, the father of value investment. No matter what you want to negotiate, you have to understand it.
A strong example of this is Peter Lynch. He had a different way of finding stocks to invest with huge potential. He found Dunkin Donuts, not reading them, but being a customer in the store, seeing the occupation he had and then checking that the other branches were so busy too. This turned out to be one of his best performing actions.
You can’t be an expert on everything, so if you want to invest in DeFi, learn about the protocols behind the tokens, what the project does, the potential and current user base. This is how you will find the next big winner. The key here is to read, read and read more.
5. Education is powerful
In the era of stimulus-driven retailers, everyone is jumping on the streets of memes. Some of them are lucky, but many are erased. Do you know why?
They literally have no idea how to operate. You can see it in the forums. The only way to become a trader who earns more than he loses (and by the way, you only need to earn about 60% of the time to make the trade viable) is to live and breathe the trade.
Learn the difference between fundamental trading and technical trading, learn how markets move, learn charts, and use the free trading tools that many brokers and exchanges offer you.
TradingView it’s great for graphics and some runners offer you tools like TradingCentral to give you business ideas and explore how the market moved after past economic events. In terms of reading, I personally love it SearchingAlpha, which updates you on the moving market news and what’s to come that day.
6. Signal trading
Signs are simple instructions or alerts about when to enter or exit the market. There are many good signal providers out there, just find the genuine ones.
You need your signal provider to earn 60% of your trades or more ideally. Some signals are generated by humans and others are generated by algorithms, both of which have their advantages.
For information about which package to subscribe to, see your business history and history. You can also try their signals again or test them instead of demos to get an idea of how they actually work.
7. Don’t waste time making tax calculations
For anyone who does their own self-assessments, we feel your pain. With DeFi and cryptocurrency trading, as with all forms of trading, you need to report your earnings and assets.
We can save you a lot of time in this area with ours Cryptographic tax calculator and that’s why we founded the company. Accountants love us thanks to our detailed and accurate reports.
Our platform performs tax calculations with a high degree of accuracy and calculates complex tax scenarios, including DeFi loans, DEX transactions, gas commissions, leveraged trading, and participation rewards. Get a complete breakdown of each calculation so you can understand exactly how your taxes have been calculated and what rules have been applied.
We cover all DeFi products, including DEX, such as Uniswap, Pancakeswap, o Fast exchange, as well as the most popular game and LP protocols. To get started, just add your public wallet address.
Shane Brunette – CEO
A software engineer by profession, Shane created CryptoTaxCalculator after experiencing the pain of making his taxes during the ICO 2017 boom. He has a master’s degree in Artificial Intelligence as well as a double degree in Psychology and Economics.
Sometimes we include links to online retail stores. If you click on one and make a purchase we may receive a small commission.