Traders that cannot make it rich on trading platforms make blunders that the ultra-wealthy do not. Unlike high net worth investors, they do not make their money work for them.
The trader that is always trying but never getting rich from cryptocurrency trading might have fancy dreams of big cars, businesses, and personal investments but they never learn how to make their money work for them. They also never learn how to invest wisely by taking well thought out risks.
Trading platforms like PrimeXBT offer individuals a chance to concentrate their investment portfolios with diverse opportunities. The ultra-wealthy will ensure that they have a mixed assortment of assets, focusing on emerging markets. In cryptocurrency markets, they will study the sentimental and technical aspects of a currency to ensure that their investment risk does not lead them to a scam.
As an illustration, one of Bitcoin’s most influential millionaires, Charlie Shrem made his clever move back in the digital currency’s infancy days. He quickly realized the opportunities within Bitcoin and bought large quantities before its legendary 2017 bull run. This move made Shrem a fortune worth over $450 million.
Besides mining, the one other easy method of minting wealth from cryptocurrency is via trading. Fortunately, cryptocurrencies have the advantage of extreme price volatility, offering massive profit opportunities. You can either go long or short on the digital currency of your choice. Crypto derivatives platforms like this offer cryptocurrency margin trading. Through margin trading, a trader can borrow funds to enhance their trading positions.
All that they need to do is to deposit the fraction of a position’s total value. For that reason, a trader can start large trade positions, worth much more than the capital that they have at hand. It is however good to be very careful and once more study the risk of margin trading.
The leverage given by a CFD broker like this can make massive profits but also lead to massive losses.
Secrets That the Wealthy Use To Make It Big On Trading Platforms
1. They Focus On Their Trading Goals And Objectives
New crypto traders often base their trading decisions on FOMO or emotions driven by fear, uncertainty, doubt, or FUD. High net worth individuals devise robust trading strategies that allow them to take manageable trading positions, while the new trader makes unmanageable emotionally driven big trades that can cause massive losses.
Their strategy lies more on action and discipline. By having a clear plan, that is thoroughly tested and at times automated, chances of making errors is minimized. This way they can avert making big losses that can be consequential to their portfolio.
The most successful of cryptocurrency traders today are making their fortunes via a long series of trades that bring in consecutive profits each year. Rarely do wealthy crypto traders make a fortune in a single trade. Numerous new traders however lose all their trading capital on one large but bad trade. Trading cryptocurrencies is much like trading stocks, bonds, or currencies. Traders need a trading education, discipline, and strategy.
2. They Employ Strict Risk Management Strategies
The successful traders have an approach to trade that protects their capital and earnings. Statistically, up-to 90 percent of first time traders lose money within the first few months of their venture. Heavily affected, they gave up at that point. However, the rich know better and they deep down know that if they lose money out of recklessness, it takes double the effort to break even. Their trading strategy has a margin for loss since they are aware that regardless of their initial margin and the diversity of their portfolio, using a well-calculated risk management strategy is key. This feature keeps them cautious and rightly so. Cryptocurrencies are known for their wide price fluctuations, their movements being some sort of a roller coaster ride that can adversely impact profitability if care isn’t taken. Some of them use the one percent risk rule of trading. They will only risk a minute fraction for loss putting stop-loss orders in their positions to protect their capital.
3. They Diversify Their Portfolios To Hedge Risk
Wealthy traders in stocks, currency, or cryptocurrency markets often look for new opportunities in overlooked markets. They will use these options to diversify their portfolio or rebalance them for the right mix. Usually, a well diversified plan–cutting across different crypto asset classes, helps taper volatility which in turn reduce price movement within the portfolio. While the cost of balancing a crypto portfolio may be tedious, even expensive to manage and putting a dent to the bottom line, the end result is a well-balanced investment asset that mitigates against losses and unprecedented risks. Savvy crypto-assets traders will try their fortune at multiple cryptocurrencies to stay profitable and cut down on losses as different asset values fluctuate and increase over time.
4. They Study New Products before Investing In Them
In the cryptocurrency circles, traders that jump headfirst into an asset without investigating it, often get “rekt.” In legal circles, there is no excuse for ignorance. This aptly applies in cryptocurrency and the broader investment field. Ideally, it is good to have latitude before jumping head first in an asset class that’s relatively new and largely unexplored. There are no fitting laws and regulations are being formulated to protect retail investors.
As policy makers take their time, space is plagued by scams. The ICO-hysteria of late 2017 and early 2018 illustrates how gullible investors can be. Millions were lost in rosy projects without MVPs.
Perceptive traders will perform in-depth research into a new token and learn about its fundamentals first. They will ask why and go through the project’s whitepaper. How does it work? How is it governed? What is its use case and does it have a strong and committed development team? All these questions must be sufficiently answered before parting with hard-earned cash.
They also stay on top of the changes happening in existing assets since most tokens are in a continued state of development. A well-informed crypto assets trader will avoid pump and dump schemes and other scam coins.