What Skills a Crypto Trader Should Develop

Novice crypto traders often wonder whether it is possible to profitably trade cryptocurrencies without having special training. They think that this requires a special set of qualities or even financial education.

The experience of most of the Polyx users shows that crypto trading doesn’t require special training. To make a profit on a cryptocurrency exchange, you need to learn how to conduct a technical analysis, manage capital, and control your emotions. We’ll speak about these key skills that you can easily develop on your own.

Conducting technical analysis

Technical analysis skill

Almost every business requires analytical skills. In trading, they are the most important ones above all. Here, technical analysis is a capability of drawing parallels between fluctuations in cryptocurrency prices, trading volumes, and other indicators. A crypto trader should notice where they can profit from, make the right decision, and get in and out of a trade just on time.

When scrutinising the exchange, technical analysis allows making sense of charts with dynamics to find out a trend direction and predict price changes. It allows working out your strategy that will lead to an upcoming profit.

Crypto traders use many methods of technical analysis. Among them are the following:

  • Support and resistance levels;
  • Particularly shaped patterns on long time frames;
  • Japanese candlesticks and their shapes on short time frames;
  • Technical indicators, such as oscillators, Bollinger Bands, etc.;
  • Trading statistics: vertical and horizontal volumes, depth of market, etc.

We’ll look into them in the next article about trading. For now, just remember that you can combine any of these methods for mutual confirmation.

Money management, or risk management

Capital management skill

A crypto trader should learn to manage their assets wisely to multiply them. This skill is also called risk management because it helps exit losing trades on time or simply avoid them.

Here, as well, there is a common method that has long been known to professionals — the fixed risk method. Its principle is that in the cryptocurrency market it is better not to risk over 1% of funds, while in other markets the usual amount allocated for each transaction doesn’t exceed 2%. Such management allows trading with minimal losses.

The fixed risk method has proven its efficiency for 3 reasons:

  1. Several losing trades limit the total losses. This way, the account isn’t blown up completely.
  2. Several profitable trades allow for increasing the trading volume. This is how the reinvestment of profits is done.
  3. Risk management works constantly, even when a crypto trader isn’t involved in it directly.

Remember: every loss is a certain percentage of your account balance, the same goes for every profit. Therefore, in the future, the uncontrolled risk may lead to a blown-up account. Improve your capital management skills to save yourself from a losing streak.

Self-control and psychology in trading

Self-control skill

Crypto traders have to control not only risks but also emotions. Generally, psychology is at the core of successful trading. It helps not to give up and not to back down from working strategies. So it is necessary to develop psychological resilience, calmness, and stability along with previously mentioned skills.

The ability to make informed decisions without haste and influence positively affects trading. A crypto trader who can control themselves is more likely to be successful, regardless of the feeling of fear or the desire to make a profit quickly. Developed psychological skills allow following the plan without being distracted by steep turns.

The reverse example of loss of self-control is the so-called tilt. This is a condition when a trader loses patience, ability to analyse, and even common sense. They become less reasonable and more emotional to critically evaluate a situation and adhere to a strategy.

Tilt is a widespread ‘disease’ not only for highly volatile markets but also for any other. And initially, the phenomenon came to trading from poker. There are no poker players or traders who have never fallen into a tilt. It harms the most active crypto traders who make a lot of trades during the day. It is they who have the opportunity to enter the market at any moment, and at the same time, they don’t have time to restrain their emotions. And it is necessary to control not only negative emotions due to losses, but also positive ones when the joy of super-profitable trades boosts excitement.

You can develop these 3 skills both before trading on a cryptocurrency exchange and during your first transactions. In the future, you will be able to improve them, gaining experience on-the-go. The main thing is to stick to your plan and trading strategy, not allowing possible failures to lead you astray. Even if you encounter difficulties, proper technical analysis, capital management, and self-control will make you a disciplined crypto trader who will succeed.