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Important Tips and Strategies Every Crypto Trader Should Follow

by Trailing Crypto cryptocurrency experts

The volatility in the crypto trading market is creating endless opportunities for buying, selling, and taking profits at the right time. While there is no magic formula for when to take profits or when to exit a trade, there are several tips and strategies which traders can employ to maximize their gains.

 

Trading cryptocurrencies involve taking some risks while necessitating traders to use different tools to control their risks and secure profits. Stop loss and take profit orders are generally used for risk control in crypto trading, and therefore, it is important for the traders to understand how such orders work. Let’s understand about these orders:

 

Stop loss and take profit

 

A lot of strategies for Take Profit and Stop Loss functionalities in crypto trading have been propounded and examined by traders over the years. When trading on any asset, the traders are exposed to high risks if the price of the asset moves in a particular direction opposite to the one they had anticipated. This could further lead to considerable losses unless immediate action is taken to exit the trade. On the other side, if the price moves in a direction that makes the current position of the trader profitable, an investor may want to take profit and close the position as there are chances that winning trades could turn into losses due to the volatility of the market.

 

Different strategies for securing profits and averting losses have been proposed usually involving the prices at which a position was opened, and are used by the traders as well as the automated trading systems frequently. Some of the strategies used by traders to stop losses and take profit include:

 

  • End-of-day trading strategies
  • Swing trading strategies
  • News trading strategies 
  • Day trading strategies 
  • Trend trading strategies
  • Scalping trading strategies 

 

Using trailing stops

 

A standard stop order is an order which directs a trader to buy or sell the asset once the set price is triggered. This order is quite different from a standard stop loss order. Traders can set trailing stops either as an amount or percentage.

 

Here is an example of a trailing stop order. The crypto asset, say XYZ is trading at $30 and you place a buy trade. As time goes on, the asset price jumps to $33.

 

To protect your profits, you initiate a sell trailing stop order with a stop price of $2 below the current price. Within a while, the asset reaches $35 and then starts to drop, which is not in your favor. In this case, the trader can get benefit from the trailing stops.

Let’s understand this with another example:

 

Suppose a trade for an asset ABC has made a down gap and is trading at $204. If you think that the asset price will rise to $250, you can have your stop at $170. In this case, it means that the asset can move lower by about 34 points before being stopped. In this case, you may set the next stop to move as the asset price increases by 10 points, which means that your stop price will move to $180 when the price increases to $260.

 

If the price of an asset advances, the trailing stop loss order will follow the direction of the asset automatically. But, if the price changes its trend, the position will be closed while ensuring the profit percentage of the trader. Trailing limit sell and trailing stop sell orders are the best trailing stop orders to be used for selling an asset with profits. These are the best risk management tools to ensure a solid trading strategy. Developing the right trading strategy with dynamic stop loss levels allows traders to maximize their returns without any risks.

 

Important tips that every trader should know to improve their trading knowledge

 

In the crypto trading world, success means earning significant profits as mistakes could be extremely costly. That’s why you should consider a strategy in place before you start trading.

 

Here are some important tips that a trader should consider:

 

  1. Establish a trading plan

Firstly, the trader should plan their trades carefully before establishing any position. This means, one should not only set a profit gal rather they should also set an exit plan in case the trade goes against them. For this, they can set trailing stops or trailing limit sell/buy orders.

 

2.    Protecting the positions

Setting stop orders is not a guarantee against losses as markets can quickly move through them. But in the majority of cases, a stop will help to keep your losses at a manageable level. One such example of protecting the positions is setting an OTO order where you will place a primary order and a protective stop order at the same time. Whenever the primary order executes, the stop order will be triggered automatically. This frees traders from having to watch the market constantly. 

 

3.    Narrowing down your focus

Trading futures is hard work and requires substantial time as well as energy. Studying charts, watching current market trends, and staying on top of the news is important. If you follow and trade too many markets, there are chances that you won’t earn profits from any of them. And, the opposite is also true for the same. So, it’s better to narrow down your research, which means trading more than one market, rather than following and trading a single market or too many markets. 

 

4.    Think long and short

Trading opportunities present themselves in both falling and rising markets. Look for opportunities to buy or go long. But if you are not open to going short, you might limit your trading opportunities. With futures trading, you can sell or buy the market. For this, you can buy first, and then sell an asset to close the position. 

 

In volatile crypto trading markets, advanced trading orders are very useful in limiting potential losses. And, considering these orders like Take profit, stop loss, trailing limits, and trailing stops is beneficial. The best crypto trading terminals like TrailingCrypto help crypto traders to use these orders smartly.


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About Trailing Crypto Advanced   cryptocurrency experts

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Joined APSense since, July 8th, 2019, From Gurgaon, India.

Created on Jan 23rd 2023 11:01. Viewed 100 times.

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