When building a portfolio in trading, investors have a lot of factors they must consider before starting to trade.
Before we get started, a few basic rules should be in place:
The first rule of thumb is never to invest or trade any capital that you cannot afford to lose (don't borrow, this market 90% of newbies will lose before they learn the lesson.
Second, only about 2-5% of your total investment should be spent on cryptocurrencies because this market is very harsh. The rest of you should invest in safer areas that you can grasp.
Third, divide the capital into 10 times, each time you invest in coins you only use 1/10 only. Absolutely not see it increasing strongly, but put it all in and you will swing.
And finally, if you are new to cryptocurrency trading, you will want to start small ($ 50- $ 100 per transaction is more than enough) to get a feel for the market, the interface of buying and selling. moving.
Investors should have a certain understanding of the returns and risks, the rate of return and risk, the margin per trade, the time frame of each individual trade, the current market conditions. and the phase of the market cycle they are trading with.
I believe this site can give you more knowledge: bitcoin exchange
Profits and risks
Profit - Risk basically measures how much your potential return is for every dollar you are willing to risk. Investors should carefully choose the best profit - potential risk transactions.
Rate of return and risk
The risk / return ratio measures the difference between an entry point and a stop loss (stop loss) and a sell or take profit. Comparing these two offers ratio of return to loss, or reward for risk.
The ideal traders should have the most favorable rate of return to risk when choosing a trade because we ideally want to be paid more for taking great risks in the market.
For example, traders should make twice the amount they want to risk. This gives them 2: 1 return-risk.
A 2: 1 risky return is considered normal, while a 4: 1 risk return is considered good. For example, a trader could risk $ 10 on a trade hoping to make $ 40 back with a 4: 1 risk-on rate.
Investors can use different timeframes to achieve the best investment results. These timeframes are categorized by short, medium and long term.
Short term trades usually take anywhere from a few hours to a few days. Therefore, investors can take advantage of short-term movements in the market.
The returns and risks for short term trades are usually lower than medium or long term trades.
Short-term trading is considered more risky than medium or long term trading because individuals are more exposed to market volatility with smaller margins of error.
This type of trading suits traders because of its higher risk tolerance.
Medium term framework
Medium-term trading is less risky than short-term trading, and is based on transactions that take weeks to months to work. This type of trading is perfect for traders with moderate risk exposure and less time on their hands.
The risk reward for medium-term trading is usually lower than long-term trading, but higher than short-term trading.
Long term framework
Long-term trading is less risky than short- and medium-term trading, and helps traders align themselves with the current market trends to get the best results.
Usually long term transactions take 4 to 6 months. Long-term trading is suitable for transactions with a low level of risk tolerance and for investors with less time on hand.
The risk return for long term trade is usually higher than short term or medium term trade.
Margin trading (MARGIN), also known as leverage trading, is a form of transaction that uses borrowed capital to trade a larger amount of a particular asset. For example, if you have 1 Bitcoin on Binance, you can borrow up to 2 more Bitcoins and transact as if you have 3 Bitcoins.
However, if the profit is 3 times, the loss is 3 times. And not for the inexperienced in the crypto market.
If margin trading goes in the wrong direction, a trader will be required to add funds to their account in order to avoid order liquidation. This is called a margin calls. If a trader is unable to provide additional funds to secure an order, it will be automatically closed, you lose all your money.
Using too high trading leverage is both profitable and risky. It can increase profits, but can also cause you to suffer from margin calls or liquidation during relatively high price movements.
Traders should have a complete understanding of the current market conditions before they start trading.
For example, the overall crypto market is bullish (bullish or bullish) or bearish at a time (bearish or bearish).