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Learn how to make profits instead

By now there are thousands of gurus out there that will promise you ridiculous overnight returns from crypto trading. While great returns are possible a person just starting out on their trading journey can have a tough time trying to distinguish the good from the bad, and potentially make the mistake of following bad advice.

Crypto trading is incredibly risky, and I have personally lost tens of thousands of dollars, which I only recovered once I fixed my bad habits!

Before making any trades I strongly recommend you read our Complete guide on cryptocurrencies for beginners, which contains a massive amount of information you should know before you consider trading Crypto!

This article is based on my real experience and some terrible mistakes I have made along my journey so that hopefully, you don’t have to repeat them! Below you will find 30 practical crypto trading Dos and don’ts that will save you a lot of time, money, and frustration in the long run.

Let’s get straight into:

Trading successfully is not easy, it is an emotional journey where you will continuously have to learn, improve and call yourself out on bad decisions!

But it can be done!

Don’t put all your money into it

The first step seems obvious, yet a lot of people still make this mistake. Cryptocurrencies are highly volatile markets, largely based on speculation and the future adaption on emerging technologies and applications.

Before investing in crypto it’s good to understand what cryptocurrencies and blockchains are. A wise individual will first learn the fundamentals of investing, and understand how to build a diversified portfolio before considering investing their hard-earned wealth in crypto trading.

Never put in more than you can afford to lose!

Do pick the right exchange

The right tool for the right job is a reoccurring lesson that you will find repeating throughout your life! It makes things easier, provides a better end result, and gets the job done a lot faster! When it comes to crypto trading, you will find that there unfortunately really isn’t a “One size fits all solution” and that there are different solutions for different types of trading.

This is why we have an entire post dedicated to the best crypto exchanges, which takes a deeper dive into the difference between them, their risks as well as the best application for each exchange.

When it comes to owning crypto, self-custody is still the best practice however, for practical trading purposes, we do have some favorites that will help you out

For spot trading, our top pick is:

They offer a really secure service that has access to a very wide variety of tokens, a lot of which aren’t listed on other major exchanges yet. They also offer staking and De-Fi solutions and their services will save you a lot of time and hassle along your journey.

For margin trading, our top pick is definitely:

Beginner friendly with a wide variety of tokens, with coverage on the spot and perpetual leverage of up to x100 on major currencies, not that x100 leverage is something you should ever use if you want to trade successfully, consistently! It still remains the easiest-to-use and most user-friendly margin trading solution out there.

Don’t trade on high leverage

As we just discussed with Bybit in our previous section, futures trading on perpetual and inverse perpetual markets is a wonderful tool for traders, however, if you don’t understand how it works and know how to use it, you are definitely going to have a few expensive lessons over the next few months. We will use a little example:

A good way to understand leverage is to look at it like you were taking out a loan to buy a house.

If you wanted to loan $250 000 to buy a house, you would go through the steps, consult a bank or loaning firm and put down an initial deposit as surety, and after completing the loan paperwork, that institute would then finance your home.

Irrespective of if the property market goes up or down over the next few years, you are only responsible to pay back your initial loan amount as well as the interest on it. If the value of your property were to rise and you were to sell your home for $300 000, you would still only have to settle the initial $250 000 and would make a profit of somewhere around $50 000 on the sale.

The same is true if the property market were to crash, and you were forced to sell for $200 000, the bank still expects you to pay back the initial amount of $250 000, meaning that you now need to find the balance for the remaining $50 000 from other places in your life.

Now once the loan is issued, the bank doesn’t really care if you make a loss or a profit, they just want their loan and interest paid. With crypto futures, the exchange takes the role of the bank, and your deposit acts just as a deposit on a home loan. What makes it so dangerous, is the way that the loan is repaid and how the exchanges manage their risk.

A bank would usually only repossess your home if you missed your monthly installments, with crypto trading the process is a lot more active because the exchanges manage and monitor the asset prices, they are able to instantly determine their own levels of unacceptable risk, which keeps increasing the higher your leverage goes.

This means that if you make the wrong decision on margin trading and the value of the asset you’ve purchased drops by 10%, they will liquidate your account, or keeping up with our analogy sell your property before they incur a loss that you cannot pay back. The higher the margin you trading on, the sooner that liquidation will be issued.

As we are dealing with highly volatile assets when crypto trading, this becomes a controversial issue, as the exchange controls their own risk and determines liquidation rate based on their metrics. This means that a $100 account leveraged x100 times to $10 000 can be liquidated from around a 50% loss.

A good rule for a new trader is to not go far over the x15 to x20 leverage mark, this will keep your risk manageable, while still allowing you to reap good profits by using leverage as a tool.

Do manage your Risk!

Now that we have an understanding of how leverage works, we get to one of the most important tips of crypto trading – Managing your risk!

• Never trade money you don’t have.
• Keep your leverage low
• Don’t trade your entire account in one trade
• Don’t be greedy
• Pick the right time frame to trade on
• Start your trades small, you can always add more to your position later
• Learn the difference between isolated & cross margin accounts

The best advice I have for a new trader is to start small and slow, it’s a lot better to make a $10 profit than a $200 loss, and you will be experiencing both on this journey. The right risk management strategies will keep your losses small and your profits plentiful.

Don’t listen to youtubers & influencers

This means learning the difference between educational and speculative information!

There are thousands of people out there that do not have your best interests at heart. A quick visit to Investopedia will teach you the dangers of external manipulation with a good introduction to the old pump & dump scheme, which keeps repeating over and over again in today’s social networks.

You need to be able to distinguish between that educational and informational content that improves your knowledge and insights into the markets and the type that is put out there to manipulate you into buying into losing trade at the highest point.

By the time information hits youtube and Instagram, it is usually outdated and a good trader knows that good fundemental & technical analysis will always be the key to success.

Do use reliable resources

This doesn’t mean that there is not great informative content out there that will make you a better trader! Finding good teachers is also a crucial part on the journey to becoming a successful crypto trader.

Besides checking out our content on investing, crypto & growing your wealth, there are also some amazing resources out there that will provide you with the education you need to start consistently growing your profits and turn you into a successful trader!

Here are some fantastic Free resources on learning how to succesfully master crypto trading:

• Investopedia
• Crypto.com – University
• Coinbase
• Coindesk

These are great for education and accurate news. They will benefit you a lot more than following whatever is trending on Twitter or Youtube!

Don’t give in to your emotions

When it comes to your wealth, this is easier said than done!

There are few things that will get you as excited as a winning trade, or as anxious as a losing one. The process of learning how to trade is just as much a process of learning how to regulate your actions as it is about making money.

Making emotional decisions leads to reckless trading that will usually end up costing you a lot more than the loss you were trying to make up for. Consider practices such as mindfulness and meditation to help regulate how you react to your emotions and to help take the pressure off you, be sure to:

Use a trading plan

Creating a trading plan with set rules that you follow allows you to detach the emotional side from things while creating a series of checks for you to confirm your bias!

A successful trader is not determined by a single winning or losing trade, but by repeatable successful trades that grow their account over time, and to do that we create a checklist of conditions for ourselves.

Investopedia has a great article on this, that lists a lot of common parameters successful traders incorporate into their plans, which you can use to create your own!

A good start is to just create a set of rules to regulate your actions by, some examples are:

• Limiting leverage
• Determining your trading timeframe
• Limiting risk
• Determining profit-taking points
• Indicator checks
• Position size

All 30 Dos and Don’ts covered in this article are examples of things you could incorporate into your personal one. It really is about finding something that works for you

Don’t ignore your trading plan

Which is harder than it sounds! Especially while you are just starting off. The temptation is always there to break away from your strategy. This could be because it’s working well, or because it’s failing.

Learning the discipline to follow a trading plan is what will allow you to repeat your results again and again. This is not to say that your trading plan cannot evolve however, the changes you make should be conscious and recorded in order to make them repeatable!

Do know your entries and exit points

Every trade you take should have an entry and exit point. This may sound simple however it’s harder to do than you may think.

It means that you need to know which direction the market is heading into and that you need to have a clear understanding of technical support and resistance levels. We can once again make use of the amazing resources from Investopedia, they thoroughly cover the topic of technical analysis which can be used to set your own targets for trades

If you don’t know your entry and exit points, there is no way to manage your risk or know when to take profits, which leaves you floating and turns your trading into gambling!

Don’t try to break even

Losing trades will happen, sometimes you’ll lose a little, sometimes more than you planned. Especially if you were up on a trade, only to have the market reverse on you, without having moved your stops. Keeping up with the theme of managing your emotions:

There are very few things that will blow up your account as quickly as trying to make up for a losing trade, by continuing to trade in the wrong direction.

This is where you start taking larger risks, increasing your margin, and generally just making bad decisions because of the perceived loss.

Always remember the following three lessons:

• There will always be another trade.
• Doubling down bankrupts you twice as fast.
• One small loss is better than three big ones!

Do record your trades

There is an old anecdote :

What gets measured, gets managed!

It has never been truer than with crypto trading! Keep a trading journal and record not only your entries, exits, profits & losses but also your emotions, feelings, and logic behind the trade.

This practice will help you test out new strategies, fix holes in your methods and make you rapidly grow as a successful trader. Taking a step back from your emotions and honestly analyzing what your thoughts were during an error leads to an interesting experience, which is :

Awareness is auto-correcting

Meaning that the more you observe and reflect, the faster your mind will fix that behavior!

Don’t trade against the markets

All financial markets are interlinked in some way. When you consider that markets are basically just distribution platforms for wealth and value you start to see that when one part goes up, others go down.

By doing your research on correlated markets you will be better equipped to understand the impact they have on cryptocurrencies.

Do trade the trend

Trading the trend while trading crypto or any other stocks links directly to not trading against the market. By establishing what the conditions of the market are, ie Bearish or Bullish, you are able to establish a general direction over a timeframe.

While trading crypto, it is essential to consider what period you are planning. For a day trader looking for short-term opportunities, it is essential to follow the trend in the correct timeframe. A currency could be moving up on the 15min or 1h charts, but be on a serious downtrend on the 4h, daily, or weekly.

This awareness comes with practice and time, but the faster you learn it, the faster you’ll stop turning good entries into bad trades!

Don’t move your stoploss

This comes back to knowing your entries and exit and managing your Risk!

Once you have set your stop loss, you have decided how much you are willing to risk! It is a different story when you are moving it to lock in your profits, however, even then you need to be careful to not take yourself out of a winning trade early.

The market is a ruthless mistress and she will take she can bring both incredible pleasure and terrible pain. Making your trade and sticking to its parameters will help you keep your losses small, and prevent you from messing up your winners!

Do understand fear and greed

Understanding fear and greed means that you understand where the money you make comes from!

Markets are made up of various players, from individual retail investors like us to institutional traders and hedge funds, each with their own unique targets and methods to achieve them.

Because of the ever-changing ephemeral value of cryptocurrencies and other assets, we are continuously caught in a cycle of over-bought and oversold assets, which is where fear and greed come from.

You may have heard the old anecdote :

Be fearful when others are greedy, and greedy when others are fearful

This means that you should be aware of the general sentiment of the perceived value of the asset you are trading. A good way to do this is to make use of an index, such as the Fear & greed index for crypto trading, which will allow you to understand what the rest of the market is thinking based on their collective trades.

This is a powerful tool that can make a real difference in your results and should always be taken into account before taking a trade.

Don’t Invest in shitcoins

There is a difference between taking a reasonable, controlled risk, short-term margin trade based on the price action of Dogecoin, and investing 90% of your capital into it and expecting it to be worth something by the time you retire.

Short-term trades on the “hottest token of the week” have the potential to bring good returns, in the near future, but can lead to disaster if you pick the wrong technology or token and end up with something that has no intrinsic value.

The recent collapses of exchanges and tokens like FTX, Celius & Luna only fo to prove this point and are likely to have even further ramifications in the form of upcoming regulation, which is very likely to impact almost every crypto trading pair around.

In the long term, many of these technologies may fail because of these factors, and understanding what you are investing is the difference between sinking and swimming!

Do your own research

Following the theme of the previous point, we come to the only tried and proven method of succeeding in life:

Doing your own damn research!

Simply put, most people do not have your best interest at heart, and at the crux of it all, you are the only person responsible for the decisions you make! Taking the effort needed to understand the technologies you are dealing with and doing your due diligence on their respective risks and rewards is what truly sets apart the successful from the unsuccessful crypto trader.

Nobody is going to wipe your ass for you!

Don’t gamble

If you are not following your rules, creating repeatable results, and earning consistent profits, then you’re basically a gambler and gambling is a serious and dangerous addiction that has the potential to ruin your life!

This is the reason we have trading plans, trading rules, and why we manage our risk. While trading has a negative connotation to many people, successful traders know how to juggle these challenges and how to zone in on the trades that yield a profitable result

Nobody forces you to take a trade, and for the most part, if your risk is managed, all you need to do is get the direction right! Work on repeatable results and get rid of randomness in your decision-making!

Follow your intuition

This does not mean disregarding the previous section on gambling!

Successful trading is a 50/50 split, between educated risk and intuitional decision-making. Our trading plan and the other rules we create for ourselves are the training wheels we create for our intuition, and actually only serve to help us disqualify bad trades, based on logical observations.

This may sound contradictory, however, there is a large part of your subconscious mind that processes information much faster than you can calculate actively. It’s this part of the mind that creates our gut feeling on a trade and successful crypto trading is based on eliminating bad options and trusting yourself on the good ones!

The more you practice, the luckier you get!

Don’t chase the dragon

The same principles apply here as to our section on trying not to break even.

Chasing the dragon is an addictive cycle traders get caught in where they make one bad decision after another while trying to recover their losses. The difference here is that it can also apply to trading directly after a winning trade, before locking in your profits.

Trading has no place for compulsive, emotional behaviors

Hold yourself accountable

Only you are responsible for your profits or losses.

The market does not care about your feelings or excuses! Holding yourself accountable for your mistakes and figuring out what you did wrong is one of the most important parts of improving in life, crypto trading works exactly the same!

By keeping track of your progress and making use of a trading plan and journal you will be able to revisit and revise your strategies.

Practice makes perfect, so make sure you practice effectively

Put all your eggs in one basket

Never put your whole account into one trade!

Especially when dealing with volatile assets. Keeping some of your trading funds available to either add more surety for a leveraged trade or to enter in on another opportunity is an essential part of trading.

Many a trader has been stuck in the wrong trade, only to have the right one appear, without having the capital available to take it.

The same rings true for spot trading and building your portfolio. Creating a diverse portfolio will allow you to achieve the much sought-after antifragility that Nassim Nicholas Taleb loves talking about

Make peace with losses

God, grant me the serenity to accept the things I cannot change, the courage to change the things I can, and the wisdom to know the difference.

Sometimes you make the wrong decisions. Nobody is perfect and trading will teach you this lesson faster than almost any other activity in life. This does not mean giving up and accepting your fate every time you take a bad trade. It instead helps you accept your errors in judgment and allows you to reflect and make better decisions in the future.

Don’t be too hard on yourself!

Don’t take more than one active trade

This one is specific to active day traders!

It is so easy to get tempted into taking multiple entries and various pairings, and generally not a bad thing while trading crypto, provided that you are trading in a longer timeframe. If however, you are focused on a specific short-term trade, resisting the urge to trade multiple currencies will double the results you get.

Currently, the entire market is correlated to its biggest asset class, Bitcoin. When bitcoin goes up or down, there is a ripple effect as the rest of the currencies follow suit. Unfortunately, this ripple effect is usually just enough to misalign the rhythms of your trades, and if your stops are not set within reasonable margins, you could find yourself taking multiple losses for every winning trade you end up getting.

When day trading, put your focus on one trade at a time and do it right!

Do lock in your profits

Possibly the most important part of trading!

There is an old anecdote among traders:

Nobody ever went broke from taking profits

Locking in profits is the only time you should be moving your stop-loss, but also a period where you should be very careful not to knock yourself out of a winning trade early. By moving your stop on a profitable trade, you prevent yourself from taking a loss.

Every successful crypto trader has a slightly different approach to this. Always consider the timeframe and trend direction before adjusting your stop and locking in your profit, and don’t forget this step, or you will be crying crocodile tears when your previously winning trade turns into a losing one.

Good traders are ruthless when cutting their losses, but very patient with their winning trades.

Don’t forget about timezones

Unlike Forex or stocks, the crypto markets operate 24/7

While this is quite convenient for the trading junkie planning to spend 3 days straight on crypto trading, it does create some unique market conditions when it comes to market movements.

You can expect very active moves on the open and close of the American markets from 08:00 GMT to 16:30 GMT, this could be fake outs or trend continuation spikes, however, they happen almost every day like clockwork.

To a lesser extent, the Chinese and European markets also create their own waves, however much less impactful than their American counterparts.

A good trader is conscious of what is happening in the world around them, as well as when!

Be patient with yourself

Becoming a successful crypto trader is not easy!

95% of people that try crypto trading end up losing most of their money. You are not going to become a successful trader overnight, it is a long road filled with emotions and challenges, however, If you follow these tips and apply the habits recommended, you will get there.

So keep trying and

Don’t lose hope

If you actively work on yourself, record your results and work with a plan, eventually you will grow your understanding to the point where you are able to reach a profitable ratio on your trades.

until then:

Keep learning and revising

It is completely in your hands!

As with most skills in life, the dedicated practice that you put into this will determine the results you get! The more you learn and apply, the better your strategies will become.

You’ve got this!

Trading is one of the best things you can do to secure your financial security for the future!

You now know how to avoid a lot of the major pitfalls and how to improve yourself along the way!

Good luck and happy trading!

Be sure to check out our other great content on growing wealth and building your business to help you along your journey!

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