Create a strategy before starting
Starting with a suitable strategy is a way to play cryptocurrency without losing money, which will greatly help your investment future. Research in the early days will help you develop a solid foundation as well as a clear vision for future investments.
Some tactics, such as day trading, where you invest in something and sell it the same day, can be extremely beneficial. You should have a watchlist of cryptocurrencies, a good portfolio, and make sure that even if you lose money, you will lose as little as possible.
Furthermore, because of the risk issue, some people start by investing a small amount of money and learning about the market. You can invest the minimum amount required and simply observe how the coins perform to determine the current risk.
Setting realistic goals should be a top concern because many people fall prey to greed simply because they do not set reasonable goals. This is why it is so important to prepare in advance and take measures to limit losses. Cryptocurrency investors should plan their trading tactics in advance.
Learn how to trade cryptocurrency with a demo account
First-time cryptocurrency investors are easily tempted to multiply their investments by using the best cryptocurrency platforms. These exchanges allow users to speculate on the price of digital assets in order to buy low and sell high. However, you need to be cautious with this if you do not have market knowledge and careful planning.
A better solution is to trade cryptocurrencies with a demo account before depositing any money, especially if you don't have any previous experience.
One of the best cryptocurrency demo accounts is eToro and Plus500. These two exchanges provide a CFD platform – Contract For Difference.
Creating a demo account with eToro is free and can be used multiple times to backtest a cryptocurrency strategy without losing money. It will provide user-friendly CFDs to learn how to trade and develop cryptocurrency strategies.
As a general rule, if you cannot make a profit in a demo trading account, then it is likely that you will lose money when trading on a real account. So, with a demo account, your investment stays intact on the cryptocurrency hardware wallet while you learn about how to trade cryptocurrency.
Don't Chase Price
People who are new to cryptocurrency tend to buy a coin when they see the price rising on the chart. That is obvious to investors when trading for the first time. This is also one of the reasons why they lose a lot.
You need to know that sometimes cryptocurrency prices can peak at a certain point, then it will decrease again for a long time. The expectation for cryptocurrencies is mainly that the price can still increase many times compared to the entry point. Therefore, the way to play cryptocurrency without losing money is to think carefully before buying cryptocurrency prices.
Reduce Position Size and Leverage
A common trading mistake is using an incorrect position size. This becomes more complicated when traders use high leverage on margin exchanges. They have the experience to take advantage of small price fluctuations in the market by using high leverage on an exchange like FTX.
However, since the cryptocurrency market can be very volatile, a higher leverage amount means the closer the liquidation price is to your position. Trading with leverage – is a high-risk tool and should only be used by professional traders with many years of experience.
For those with little experience or just starting out, the way to play cryptocurrency without losing money is to reduce the amount of leverage. Besides that, you should remember to risk a maximum of 1% of your capital on each trade and always use stop loss orders.
Invest over time periods
While having to wait for the cryptocurrency to drop to its lowest point and then look for it to peak, you should buy a specific amount of cryptocurrency every month. When you use this cryptocurrency trading method, you can get low prices when buying and enjoy high prices when selling.
Many people use this method to stay safe and worry-free while waiting for cryptocurrency prices to increase. Because waiting for the ideal moment in such a volatile market is both dangerous and time-consuming.
Limit the amount placed in single transactions
One of the biggest mistakes novice traders make is putting too much money into one trade. Since every trade always involves risk, it is simply a numbers game of how much of your total capital you can risk.
Having too much capital in single transactions can lead to a significant reduction in total capital in a short period of time. Therefore, play cryptocurrency to avoid losses by not taking more than a few percent of the total trading capital. Thanks to this, the entire capital will increase quickly, even when stopped with small losses.
Be patient and don't force the trade
When you are just starting out and don't know how to play cryptocurrency without losing money, you may make the mistake of jumping into a trading position using market orders. Besides having to pay extra transaction fees to execute a market order, the worst thing is that the price can reverse immediately. From there, it leads to another loss.
If you are tempted to jump into a trade when the price moves quickly, then you are suffering from FOMO. FOMO is a fairly common term that refers to the psychological effect that people who suffer are often afraid of missing out on opportunities.
Cryptocurrency traders need to remember that the markets are open 24/7. So if you miss a trade setup, be patient and wait for the next opportunity. Although this can cause discomfort and price gaps on daily or weekly timeframes. But instead, you always have another chance and at least have preserved your capital.
Diversify your investments
Maintaining a broad portfolio when investing in cryptocurrencies is extremely beneficial. Please follow the very simple example below that can help you understand how to play cryptocurrency without losing money.
Imagine someone puts a huge sum of money, say $100, into a cryptocurrency. If the cryptocurrency loses a percentage of its value, that $100 will be lost or greatly depleted.
However, assuming the same amount of $100, that person splits $20 into five different cryptocurrencies. Even if two of the cryptocurrencies lose value, he will still gain from the remaining three cryptocurrencies.
Transaction scope
In many cases, a cryptocurrency will trade for a long time within a certain range. For example, Bitcoin traded between $8,601.40 and $10,210 over a 30-day period. This ±9.4% range seems unstable until you realize that Bitcoin can realize a change of ±42% in 24 hours.
Cryptocurrency market caps are small enough that they can be manipulated by a single large force. In some cases, those big movers will systematically manipulate the price of a coin up and down for profit. Please note this solution to play cryptocurrency without losing money to trade safely.
Conclude
Cryptocurrency trading is a serious profession that requires a lot of skill and patience. In fact, there is no way to guarantee that you won't lose money in this age of cryptocurrency. However, if you keep these ways to play cryptocurrency in mind, your chances of risking and losing money will be reduced.
Hopefully the above article will be useful and significantly improve your future cryptocurrency trading experience. Because at the end of the day, everything you get is because of the time, effort and knowledge you have invested and gained from this profession.