Trading strategies for cryptocurrency investors | Coins2Learn

Intermediate level cryptocurrency guide — turning knowledge into profit

Bitcoin, Litecoin, and Ethereum coins hovering above an open book.
Coins2Learn helps beginners to learn how to invest in cryptocurrency and experts to profit more from trading strategies.

Once you understand the fundamentals of how cryptocurrency works, you’re ready to start developing your crypto trading strategies. Whether you want to learn how to start day trading or your goal is to improve at Bitcoin investment in general, this guide will help you move in the right direction.

The golden rules of cryptocurrency investment and trading

There’s some debate about the exact percentage, but the reality is that the vast majority of traders (80-95%) lose money. Investing and day trading for beginners is all about surviving the initial learning phase to become one of the minority who can actually make money with Bitcoin and altcoins without just HODLing and hoping for the best.

With that being said, here are a few golden rules to follow if you want to become profitable in the crypto market:

Rule 1: Security first

The worst thing that can happen to you isn’t losing money trading: it’s losing money in a theft or hack. Cryptocurrency exchanges are constantly being tested by hackers who want to exploit security holes and take funds, so storing your money on an exchange is risky. There are also countless cryptocurrency phishing scams out there that thieves use to try to access your cryptocurrency wallet.

Two things we recommend doing are thoroughly researching the reputation of the exchange(s) that you use and taking proper measures to secure your accounts on those exchanges. For example, you can set up 2FA (2-Factor Authentication) to give an extra line of defense in case your password is cracked. 

Note that text message (SMS) based 2FA isn’t truly secure because hackers can hijack your phone number relatively easily. The best practice is to use an app for 2FA, such as Google Authenticator.

Rule 2: Only invest or trade with amounts you are willing to lose

Even the best and most experienced traders lose money sometimes. As a beginner to cryptocurrency trading, it’s likely that many of your trades won’t work out as well as you’d hope.

When you’re deciding how much to invest, you should never exceed an amount that you can’t afford to lose. Taking out debt or investing every cent you have into trading is a really bad idea. 

You can experiment with trading large sums of money on our crypto exchange simulator before doing it in real life.

Rule 3: Master your emotions

Financial markets are designed to punish you for acting impulsively or emotionally. To consistently make good decisions, you must become a master of clearing your mind of any distractions so that you can analyze the crypto market as rationally as possible.

Otherwise, two things are likely to occur:

  1. FUD (Fear, Uncertainty, and Doubt) will cause you to sell low
  2. FOMO (Fear of Missing Out) will cause you to buy high

Make no mistake about it, FUD and FOMO will cause you to lose money if you aren’t managing your emotions well. The antidote to those things cultivating your self-awareness so that you can think about your trading strategies clearly and calmly.

This also builds on Rule 2, considering that one of the keys to trading with a clear head is not being overly invested in a trade to the point where you can’t afford to lose it.

Picking the coins in your cryptocurrency portfolio

Learning how to pick a coin to trade is easy, but actually doing the research to make good decisions is more challenging. That’s why it’s so important to understand the fundamentals first, so that at least you have the ability to analyze cryptocurrencies on their merits without falling for marketing tricks and gimmicks. 

Things to look for when researching include the strength and transparency of the project team, their token economics and business model, the engagement they foster in their community, and so on.

Once you’re capable of finding projects you like and verifying their legitimacy, try them out in our cryptocurrency trading platform. That way you can test your skills with the particular coin’s market before you put any real money on the line.

Of course, there’s no rule saying that your portfolio can’t change over time either. You’ll undoubtedly learn about new projects if you’re following the market closely, so you can always experiment with them and optimize your portfolio as you go.

Deciding how much to invest in a trade

When the time comes that you’ve found a coin to trade and you have a strategy in place, that still leaves an important question: what amount should you put into each trade?

The answer depends on a few factors:

  • The size of your portfolio
  • How much risk you can tolerate
  • Your experience level with trading

The size of your portfolio matters because you need to balance growth vs. risk. For instance, it will be hard to grow a very small portfolio (e.g less than $500) quickly even if you trade well. At the same time, it wouldn’t be so difficult to lose all your money on just a couple of trades. Ideally, you’ll find a sweet spot that enables you to grow your portfolio with good trading strategies while making sure you don’t get whipped out by one or two bad decisions.

How much risk you can tolerate mostly depends on the size of your portfolio and where those funds are coming from in the first place. If you have a well-paying job and you decide to try out trading with some leftover spending money, you can naturally afford a few more losses than somebody who has less than $1k to their name and puts it all into the crypto market hoping to strike it rich.

Additionally, a 20-something who is still decades away from retirement will typically have a much higher risk tolerance than a 50-something who is nearing the end of their career and will need to start spending those retirement funds soon.

Finally, experience is likely the most important factor of all. For anybody who has been trading for a living and knows the market like the back of their hand, the odds of making a mistake are lower and the consequences of their mistakes are lesser as well. In the case of a new trader, however, mistakes will likely be frequent and their consequences can be devastating.

Generally speaking, the main goal of day trading for beginners should be to survive until you become better at cryptocurrency trading and then to use your experience and the process you’ve developed to get more aggressive about growth. 

For example, you could begin with by limiting the amount you allow yourself to invest in a single trade to less than 2-3% of your total portfolio. That way, even in the likely event that most of your trades lose money, you’ll still be able to continue gaining experience. Eventually, when you achieve positive ROI more consistently, you can start investing 5% or more into trades you are highly confident in.

One excellent way to benefit from our Bitcoin game is to experiment until you find the right balance between growth and risk. Hypothetically, you could spend one week investing 10% of your total portfolio per trade, then another week investing just 2%, and so on until you figure out what works best for you. 

Developing strategies to manage your portfolio

Knowing the right amount to invest and which coins to invest in are great stepping stones to achieving a positive ROI in the crypto market. To reach your full potential, however, you’ll have to develop successful trading strategies that help you determine when to buy, when to sell, and how to maintain a optimal portfolio.

Unfortunately, we can’t do this part for you — no magical formula for profitable trading exists. However, we can tell you the not-so-magical formula for developing your own profitable trading process.

It all comes down to one thing: experience. You need to spend time looking at price charts, evaluating possible price action, and observing what happens. 

When you first start trading, you might see a pattern on a price chart and be 50-50 about whether it will go up or down. Then, after you observe the price action on 100 different charts, your confidence grows to 55%. Another 10 000 trading situations after that, you’re at 70% confidence. The rate each person improves may vary, but experience and practice are irreplaceable parts of Bitcoin investing no matter who you are.

In this way, trading is a lot like learning a new language. At first, you barely understand anything and you’re lucky to piece together one coherent sentence. Gradually you build your vocabulary while practicing speaking and listening, soyou become conversational. Once you’re conversational, things become really fun because you can learn just by meeting people who speak your target language and chatting with them. Eventually this leads you to become fluent, and then you’re just filling in minor details like slang and uncommon words.

This is why we say that day trading for beginners is all about survival. If you lose all your money while you’re just getting started, it’s like paying for a language course and then never using the language or getting any benefit from it. Every price chart you analyze and every trade you execute should make you better prepared for future trading opportunities. As long as you manage to maintain some money in your portfolio during the learning process, you’ll improve your ability to achieve a high ROI and reap the rewards in the future.

The best part of our day trading simulator is that it lets you get all of that experience without having to fight for survival and risking the loss of your funds with each trade. On top of that, we are fully-featured online trading academy that’s designed to make learning social, fun, and profitable. It’s a whole new way to master the crypto market and build your rocket to the moon.

This opportunity won’t last forever

Today, cryptocurrencies are seen by the general public as extremely risky and wildly unpredictable. If they were already safe and stable, the opportunity to profit from them would be much smaller. But the day when cryptocurrency goes mainstream may very well come sooner rather than later. 

There are no guarantees of success when it comes to trading crypto, but failure is always better than the regret of not trying. Plus, with us by your side, success is perfectly within reach. 😉

Coins2Learn is more than a cryptocurrency trading simulator

We are a place for both beginners and advanced traders to learn how to invest in Bitcoin or how to day trade cryptocurrency, as well as start trading altcoins, practice skills, test strategies, or even become Bitcoin traders for a living. 

Every user starts with $10k in play money to buy and sell Bitcoin and 90+ other altcoins in a currency exchange simulator that imports data from the market in real time. On top of that, among all the other Bitcoin trading sites, we are the only one who allows you to make passive income by sharing your trades and portfolio, or automatically copying the moves of successful traders in real exchanges to make the same profits. You can also earn real money in our Bitcoin simulator by inviting friends and championing leagues that offer prizes. 

All of this is wrapped in a fun gamification system with rankings, levels, achievements, and XP, making Coins2Learn the most engaging virtual coin market game in the world.