Your major focus should be trading responsibly, whether you’re buying or selling cryptocurrencies. The secret to responsible trading is preparation. Making a trading plan before you start trading can make you accountable for your actions.
By making decisions when your mind is clear, you can stop emotions from affecting your trading. Along with those things, you should consider doing your own research, diversifying your investment holdings, using stop-limit orders, and avoiding FOMO if possible.
Following these simple suggestions and strategies will help you avoid unnecessary risks and invest only money you can afford to lose, no matter how much you trade.
Let’s look at some important points that can help you trade responsibly
Secure your wallet
The best thing you can do before you start trading is secure your wallet & trading account. No matter how carefully you plan your transactions, if your money, account, or password are lost, you can lose all your assets. There are several ways to do this, including using two-factor authentication (2FA), creating a secure password, and whitelisting withdrawal addresses.
If you additionally use an external crypto wallet, the same rules still apply to your private key. Your private key or seed phrase should never be shared with a third party, just like your bank account information shouldn’t be.
Create a trading plan
Making and sticking to a plan is the best way to prevent your emotions from influencing your trading. This will stop unforeseen profits, losses, rumors, or FUD from swaying your decisions. So, what makes up a trading plan?
Your trading goals, circumstances under which you’ll trade, and desired transaction kinds should all be outlined in your strategy. Your restrictions will be determined by your trading strategy and risk profile. When creating your trading strategy, you should be rational and prepared to stick with your choices going forward. As part of your trading plan, you should know how much leverage, if any, you want to use; prices for entering and leaving certain deals; how to maximizes investment in a particulate project; when to stop a deal (time, volume, etc.), consider the potential losses to the resources or items you are trading in.
Always put stop-limit orders in place
Stop-limit orders are an easy approach to increase your trading control on Klever Exchange. Since cryptocurrency is so unpredictable, if you can’t spend all of your time in front of a screen you can suffer unprecedented losses. It’s not a responsible trading strategy to expose significant amounts of cryptocurrencies to volatility. Using stop-limit orders to stick to your trading strategy is easy after you’ve created one.
Suppose you paid US $10,000 for 1 Bitcoin (BTC), and that it is now worth $40,000. Make sure that if the price drops, you won’t sell for less than $38,000. As a result, you will make a profit of $28,000. To automate this, you can establish a sell stop-limit order.
If there is a difference in price between the stop price and limit price, your stop-limit order has the best chance of being filled.
A stop-limit order is not always guaranteed to be filled, but when it is, you will always get the price you requested or even more.
Do your own research (DYOR)
Despite the fact that Klever Exchange provides basic information about crypto trading and its assets listed on the exchange, it is better to do your own research (DYOR) before making any trade.
Any information you discover can be confirmed and verified by engaging in your own research.
Diversify your holdings
If you decide to diversify your portfolio to reduce risk, your trading plan should include that information. Owning just one or two investments in your portfolio can be hazardous. You should invest in numerous assets from various asset classes to diversify your holdings.
Choosing your cryptocurrency asset allocation could be a good place to start. DeFi liquidity pools, staking, derivatives, stablecoins, and other currencies may all receive a portion of your funds. By restricting your exposure to a single crypto class, you lower your risk of experiencing substantial losses.
For instance, you might experience a brief loss from an investment in a liquidity pool but be able to make up for it by increasing your position.
The fear of missing out (FOMO) is a common sentiment for many crypto traders. However, you must be aware of how it affects your behavior. You can give up on your restrictions and trading methods in favor of making rash selections out of concern that you won’t capitalize on a great investment opportunity.
We are all exposed as such information is easily available through social media, and other channels of communication.
There are good investing possibilities and online resources for research, but you should constantly watch out for shilling.
Users that have ulterior financial motivations will promote their currencies or efforts regardless of their actual value. Shillers will employ FOMO to sway traders’ emotions.
Spend some time carefully researching the crypto venture before putting your money at risk if you feel like you’re missing out on an opportunity you haven’t heard of.