7 Things I Wish I Knew Before I Started Crypto Trading

In a previous article, I wrote about my experience trading crypto and how I lost a big chunk of my capital.

Looking back, there are a few decisions I wish I took. Maybe, things could have turned out differently and I wouldn't have lost so much.

The thing with trading financial markets is that you get too emotional and begin to make decisions that you wouldn't have taken if your money wasn't at stake.

Well, now I know better, and there are a few things I'd like to share with people who are looking to start trading crypto or any other financial market.

Here are 7 things I wish I knew before I started trading crypto.

Small Accounts are a waste of time

To be honest, trading crypto with a small account is a waste of time. Not only do your profit come in small tranches, you will most likely be tempted to take bigger risks in pursuit of bigger profits.

In my opinion, trading crypto professionally with a capital of less than $1000 is not worth the time and effort.

With that, you'll likely make less than minimum wage in profit, so why the hassle? Better go get a real job then.

The biggest negative for me was the frustration of wondering if I'll ever make a living out of this thing.

Imagine making less than $1 per day in profit. Even the guys hawking goods on the street make more than that.

So, in my opinion, when it comes to financial trading, you better go big or go home!

Find your Edge before Going Big

Your trading confidence must be backed by something more than your guts, and that's your edge.

Before trading on a particular strategy, you have to backtest it more than a couple of times to ascertain its win ratio, before putting your money on it.

It is recommended to backtest a trading strategy at least 30 times in order to have a more insightful sample size.

Stop banking on your gut feeling, and you'll start seeing the need to trade with only the data that the market gives to you.

Only then can you improve your chances of making a winning trade.

Losses are Normal, don't fret

Nobody likes to lose, especially when it comes to money matters like trading.

One of the biggest factors that affect traders is how they react when they lose. Do they shrug it off or do they get emotional and let one loss scuttle their trading psychology?

In my case, I was always reacting to losses in a negative way. Most of the time, I exit a trade too quickly or I let a loss run for too long until I get liquidated.

In hindsight, I now know that losses are normal and should be dealt with systematically.

If you have a consistent go-to plan that you implement any time you take a loss, it'd be very difficult for you to lose in the long-term.

Stop Losses aren't set in stone

While a stop Loss is a very important tool in limiting losses and protecting trading accounts, there's no one way to implement it.

My first experience with using a stop loss was not too pleasant. Every time I put a stop loss, I end up being taken out of the trade.

Well, that was mostly because I was implementing my stop loss in a generic way, mostly in liquidity zones where most newbies naively place their stop losses.

Obviously, we all get taken out, like sheeps in a slaughterhouse. And most newbie traders never learn, they keep repeating the same mistakes over and over again.

Now, I'm a bit wiser, and I know that you must have your own personal stop loss plan if you want to stay profitable.

You alone must decide how much you're willing to lose per trade, and then implement that risk tolerance into your stop loss.

Your stop loss margin can be as wide or as tight as you want it to be, but never conform to the public narrative of putting stop losses in specific trading zones.

Trade Matured Assets Only

What many newbies don't know is that there are a lot of scam projects in the crypto space.

A lot of the listed assets in crypto trading markets are actually organized scams. They want to rope you in, and then pull the rug off of your feet.

So, you must apply discretion in picking the crypto assets that you trade on.

If you notice, on the popular crypto trading platforms, a few crypto pairs get delisted periodically for some weird reasons.

What many people don't know is that many of these delisted crypto assets have already cashed out from scamming undiscerning traders who throw money at trades without any due diligence.

Now, I believe it makes more sense to trade only matured assets with a strong community and huge capitalization.

This might not really save you from getting rug pulled, but it reduces the chances to a bare minimum.

Don't Over-leverage

Leverage is the trickiest tool you have in the box when it comes to trading crypto.

With more leverage comes higher potential for profit as well as similar potential for losses.

The reason why I got liquidated several times was because of over-leveraging my trades.

Due to trading with a small account, I had to utilize leverage in order to improve my chances of making a reasonable profit

But that's a trap.

Leveraging is a two-edged sword that newbie traders often get slayed by. If you can make a big profit with it, you can also make big losses with it.

In hindsight, I should have been more cautious when leveraging my crypto trades, but then, what can a small holder crypto trader do?

Consider Funded Accounts

I'm of the opinion that the underlying reason why I had so much losses in my crypto trades was because I was trading with a small account.

Majority of the problems I encountered — over leveraging, poor stop losses, over exposure to risk — wouldn't have happened if I traded with a funded account of at least $5,000.

With a funded account, you don't need to expose the bulk of your capital to risk before you can make a reasonable profit, and you most likely do not need any leverage at all.

This helps you trade at a moderate pace where you're able to react reasonably to any market event without getting too emotional.

Even though I don't plan on trading crypto in the nearest future, if I ever decide to trade again, I would trade only with a funded account of nothing less than $5,000.

Only then do I believe that I stand a chance to trade crypto both professionally and profitably.

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