I heard about cryptocurrencies for the first time in 2015, but I didn’t know they could be traded.
In 2017, I was looking for ways to make money online when crypto trading came to mind, but I didn’t have any trading experience and didn’t know how to start.
It took a lot of effort and learning to navigate the crypto world on my own.
I made many mistakes because I was a beginner and lost three trading accounts between 2017 and 2020.
Now, I have over six years of crypto trading experience, and I want to share all of my secrets with you.
In this article, I will share what you must do to become a crypto trader and the mistakes you can avoid as a beginner.
If I were to start crypto trading again, I would follow the blueprint below.
If you’re ready, let’s dive in.
How To Become A Crypto Trader: The Ultimate Step By Step Guide
1. Get Education
If you want to become a crypto trader in the long term and not just for fun, I recommend you get some education, especially if you have no trading experience.
You must know technical analysis, fundamental analysis, and tokenomics.
What Is Technical Analysis?
Technical analysis is a method used to predict future price movements based on historical data.
You use chart patterns and volume data to predict the price of a crypto token.
The concept of technical analysis is based on the generally accepted mindset that the market repeats itself.
Before you start your crypto journey, I recommend you read any of the technical analysis books listed below:
Technical Analysis of the Financial Markets by John J. Murphy
Technical Analysis and Stock Market Profits by Richard Schabacker
What Is Fundamental Analysis?
Fundamental analysis refers to the inherent value of a financial investment.
In the crypto world, the fundamental analysis of a crypto is mainly dependent on the following factors;
News about the crypto asset
The unique problem the crypto asset solves
The strength of the team
Supply and demand of the token.
If you want the latest news about a crypto asset, you can follow their official page on X (formally Twitter) Or use coinmarketcal.com, a crypto news aggregator.
2. Understand Trading Psychology
One of the most common mistakes of new crypto traders is that they don’t understand trading psychology.
It’s important to be good at technical and fundamental analysis, but if you don’t understand trading psychology, you will lose money and even blow up your trading account.
That was my situation when I started trading six years ago.
I didn’t understand patience and discipline, the core components of trading psychology. It’s why it took me years to become profitable.
What Is Trading Psychology?
Trading psychology refers to the mental and emotional factors that influence a trader’s decision-making process.
Key Areas Of Trading Psychology
Risk Management
I have always told new traders that the most important thing in trading is not making profits but protecting your capital.
If you can’t protect your trading capital, you won’t have funds to trade when an opportunity presents itself.
Try to protect your capital. It’s the only reason why you can trade.
Ensure you implement stop losses and diversify your trading portfolio to reduce your risk.
Discipline
Without discipline, you won’t go far in crypto trading.
Discipline involves sticking to your trading plan and following rules for your trades.
Lack of discipline can make you trade when you ought not to or stay longer in a trade when you ought to exit.
Patience
I noticed a pattern in my trading in 2018 (a year after I started trading).
I was correct in my trading analysis most of the time but was never patient enough to wait for the trade to play out according to my forecast.
I was always in a hurry because I needed money quickly. It made me take trades that cost me money.
If you don’t know, trading is a test of patience.
3. Sign Up On A Crypto Exchange
For a beginner, I highly recommend you start with Binance. It’s currently the largest crypto exchange with many trading pairs that you can start trading with.
You can sign up for Binance after 2-3 months of education and watching YouTube trading videos.
4. Start With Little Capital
I recommend you trade with little capital when starting your trading journey.
Ensure your capital is what you can afford to lose because the cryptocurrency market is very volatile, and all your funds can be wiped out in the twinkle of an eye.
Please don’t put all your funds in crypto trading as a beginner because you might lose everything.
5. Document Your Experience
Keeping a trading journal would help you identify mistakes in your previous trades and prevent a repeat in the future.
In your trading journal, write about your trades, why you took them, the entry and exit price, the stop loss price, and what you learned from the trade.
I still have my trading journal of 2017; it’s full of valuable insights. I could sell it to a newbie trader.
6. Get A Trading Mentor
Get a trading mentor if you want to succeed as a crypto trader.
You won’t make many mistakes if you have a mentor.
Most beginners think they can learn crypto trading on their own, although it’s true it comes with a hefty price.
A mentor would shorten your learning period and help you become profitable faster than learning on your own.
If I were to start crypto trading again, I would get a mentor before I even take my first trade.
It’s that important.
7. Focus On Continuous Learning
As the crypto market keeps evolving, staying informed about the latest market trends is important.
Successful traders commit to continuous learning and devising new trading strategies to profit from the markets.
Read more trading books, take crypto trading courses online, and follow other professional crypto traders.
Crypto Trading Mistakes To Avoid As A Beginner
There are a lot of mistakes new crypto traders make that ruin their trading accounts.
Below are the five most important mistakes you must avoid to succeed:
8. They Don’t Have A Job Apart From Trading
At the beginning of your trading journey I don’t recommend you make crypto trading your only source of income.
It will make you desperate to make a profit, and in the process, you will take the wrong trade and lose money.
Try to get a job so you don’t depend on crypto trading for your daily expenses.
A time will come when you’re good at trading and making consistent profit; then, you can focus on it full-time.
That was my first mistake when I started trading. I had no job and needed to trade to make a living. It was a bad idea.
9. They Don’t Protect Their Trading Capital
If you don’t learn how to protect your capital, you won’t be a crypto trader for long.
The crypto market doesn’t care about you or your funds.
It’s your responsibility to protect your capital and ensure you don’t lose everything.
One of my trading rules is I never take a loss greater than 5% of the amount I put into a trade.
10. They Don’t Read Charts Daily
It was the missing piece of why I was not profitable for a long time.
Many traders occasionally analyze the markets and make forecasts; they even open trades based on that analysis.
Their analysis is usually right, but the crypto market is a 24-hour market, and your analysis can change if you don’t monitor your trades.
That’s why you have to read the charts daily and be able to get fresh insight into the direction of the markets.
11. They Engage In Revenge Trading
Revenge trading, or emotional trading, is when you make decisions based on your feelings.
Such emotions include getting angry with the markets after losing money and trying to recover it immediately, even if it deviates from your trading plan.
As a beginner, you would likely be a victim of revenge trading until you become an experienced trader.
12. They Don’t Have A Trading System
The major difference between a hobbyist trader and a professional is having a trading plan and sticking to it.
As a beginner, developing a trading plan is difficult, but with time, you must create a unique strategy for your trades.
It will help you become more intentional with your trading.
Frequently Asked Questions
What Qualifications Do You Need To Become A Crypto Trader?
Although you don’t need any official degree or qualification to be a crypto trader, there are still important skills you need to succeed, and they are listed below:
Discipline
Patience
Sharp instincts and analytical skills
Zeal for continuous learning
Trading Education
How Much Do I Need To Start Crypto Trading?
You can start crypto trading with any amount.
If you’re a beginner you should start with small amounts between $10-$100.
As you become more experienced as a trader, you can increase your capital.
Can Anyone Become A Crypto Trader?
With the right knowledge, anyone can be a crypto trader, although it will take some time before you make consistent profits.
