The 1000’s of percent returns of cryptocurrencies have drawn tens of thousands of new investors into the cryptocurrency space in the past few months. Exchanges have been overwhelmed with account requests and many have been forced to stop people from opening accounts for periods of time. However, people are starting to realize that cryptocurrency trading is a stressful ordeal. The 24/7 markets make it one of the most time-consuming markets out there. It is important to understand how you can trade cryptocurrencies and still maintain a healthy personal life. Here are 5 tips that all crypto traders should adhere to in order to keep cryptocurrency trading from taking over your life.
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Focus On Bigger Time Frames
Because of the 24/7 markets, cryptocurrencies take longer to make their moves. This means in order to capture these moves, you need to focus on bigger time frames. We recommend that the smallest time frame you should focus on for cryptocurrency trading is the 15 minute time frame. Many stock traders that come into cryptocurrency trading focus on the 1 minute and 5 minute time frames in cryptos, and get completely chopped up. You will either get stopped out too early, or take your profits too soon by focusing on micro time frames in cryptocurrencies.
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Set Hard Stops
Trading without hard stops is very dangerous in a 24/7 market, especially in this kind of market environment where there is a lot of uncertainty around the regulation of cryptocurrencies. You never know when a catalyst will cause a big move against your position. It will also make it easier to focus on other things during your day besides your cryptocurrency investments. Knowing that you have a worse case scenario planned out for your trade will take a ton of the stress out of trading cryptocurrencies.
Note that many cryptocurrency exchanges have platforms that have terrible executions. A lot of exchanges may not execute your stop order at your desired price. It’s important to use recommended one to avoid any issues when trading.
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Size Appropriately
If you are the type of person who feels the need to check on your trades every 5 minutes, you are probably trading with too much size. Sizing down will help you get a better nights sleep and make your life way less stressful. You should not be risking more than 1% of your net worth on a given trade. If you lost money in a given trade, it should not have any affect on your quality life.
Sizing down will also improve your trading decisions as well. When you trade with too much size, you will often trade your P&L versus listening to what the market is telling you. Over sizing will cause you to panic every time your position goes a few ticks against you, and also take profits too soon.
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Don’t Hold Full-Size Positions Overnight
This is a good general rule of thumb if you are more of a short-term trader. I rarely hold my day trades overnight, but if I do I will rarely hold full size. This will eliminate a lot of the stress of holding the position and make it easier for you to sleep. Cryptocurrency markets are very volatile in the early morning hours, usually around 5am-7am EST. If you are holding something overnight, you will usually have to get up around that time to manage the position.
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Automate Your Exits
A great way of making cryptocurrency trading less time consuming is to automate your exits. Setting sell limit orders (or buy limit orders if you are shorting) at your profit targets will allow you to exit your positions as soon as the price gets to your target. There is nothing worse than checking your crypto position and seeing that it spiked big an hour or so ago to your profit target, but you didn’t sell and now it is going against your position. Putting limit orders to exit your position at profit targets will prevent this type of occurrence from happening to you.
Check Out Crypto Street
We have a 24/7 cryptocurrency trading room with almost 300 people in it. There are so many cryptocurrencies moving every day, it is hard to keep track of all of them and catch every big move. Luckily our community has hundreds of active members calling out the biggest movers every day, so you never have to worry about missing a big move. If you’re looking for a community to discuss trade ideas and get alerts to the biggest movers every day, there is no better place than Cryptostreet. Learn more about Cryptostreet here.
Kunal Desai is an American day trader (stocks and cryptos) and founder of Bulls on Wall Street and Bulls on Crypto Street, two online trading academies and informational publications. He has been featured in many high profile publications like Inc, Forbes, Buzzfeed, and Fortune. He has spoke at trading and business events all across the World.