Checklist Before Entering a Crypto Trade

Cryptocurrency trading has one of the lowest entry barriers, and because it is easy for new traders to enter, they often fail to learn the high-level profession.

As people say, there is no shortcut to success. To become a successful trader, one should deeply study the complicated ways of trading.

Another important aspect a trader should focus on is developing risk management skills.

Risk management skills are a strategy for the layout of a well-executed trading plan.

According to the plan, a trader will analyze the key features of trading, such as entry points, position size, and where to place ‘take profit’ and ‘stop-loss’ orders.

The trading plan aims to identify the best probable setups that match your strategy.

The following is the checklist to help you determine the potential profit and the risk you will have to take in the investing sector.

Choose the Right Crypto Trading Platform

 According to one trading preference and limits, an assessment should be done in advance.

And before jumping into the trade, it is safe to understand the condition required for the desired outcome.

For any trade to begin, a trader must choose the trading exchange platform.

Many crypto trading platforms have opened in recent decades, but selecting a trading platform that matches your skill and potential isn’t always easy.

At the beginning of your trading journey, it is wise to go with a reputable one.

Each of the platforms offers different options for cryptocurrencies.

Therefore, a trader has to ensure that the trading platform offers the coins you want to trade.

Moreover, make sure that the platform provides a cashout cryptocurrency service. This feature allows traders to turn coins into cash.

1. Start to Diversify

Now a trader has learned to select the most suitable platform. Then, the next step is to choose the right coin for the trading to begin.

And to maintain a good portfolio, at least have knowledge and trading experience of three cryptocurrencies.

One of the wise decisions followed by many traders is to trade with at least one stablecoin.

The stablecoins are the coins supported by established currencies such as the USD, Binance USD, Tether, Ampleforth, and many others.

Stablecoins help to balance your portfolio and keep you steady in the trading market.

Once the preferred stablecoin meets all the trader criteria, it is time to select the other popular crypto coins.

These coins are sensitive to the highs and lows of the market, but a good trader can make money in both situations. 

2. Allocating Trade Triggers

 After properly structuring a trade, the trader has to learn about triggers. The triggers act as an indicator that informs the trader about the activation and position of the trading.

The primary function of the trigger is to notify the trader about the right time to open either a short or long position on a selected cryptocurrency.

Some traders prefer to enter a trade when the resistance is broken. But, many traders wait for a pullback. These are the situations that can be regarded as triggers.

These triggers separate the high-probability trading offers from the general price fluctuations in the market.

When a trader analyzes the triggers, they have the advantage of detecting the entry point.

And, their judgment becomes precise with experience to a level unaffected by the volatilities.

It also offers enough time for traders to determine the position size.

3. Determine Position Size

Traders who understand their account size can determine the number of capital to allocate to a specific trade.

In other words, a trader should be prepared to make a risky decision, like how much of the available capital a trader will risk losing on a single one.

And be prepared for the inevitable losses that are an essential part of investing. Always remember that even experienced traders suffer losses and make wrong choices.

Despite that, a well-executed risk management strategy strengthens the trader to focus on profit and achieve their goal. 

It’s time to put your trading skills to the test. Hopefully, now you have a better understanding of the fundamentals of designing a strategic trading plan.

This is just part one of our checklists. Follow our space for the next part. Also, a trading checklist does not guarantee that all trades will result in profits.

However, it will assist traders in sticking to their trading strategy, performing more steadily, and avoiding impulsive decisions.