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Trading101: How to Trade Crypto Responsibly

Trading101: How to Trade Crypto Responsibly

In this next chapter of the series Cryptocurrency Trading 101, we will talk about trading psychology mainly.

Psychology in trading is probably one of the most important aspects to succeed. Many people who neglect this aspect fail to have good results, simply because they did not have the mindset. In his first book entitled "Psychology of Great Traders", Thami Khabbaj explains, from his experience in the trading rooms, the madness of people who trade. He has counseled polytechnicians, people who graduated from top schools, and the most surprising fact that he remembers is that these people are sometimes capable of the best as well as the worst and can therefore "blow a fuse". Everyone, you will say, has strengths and weaknesses, and you are right.

If you really want to succeed, you have to take the psychological dimension seriously. It is also advisable to have a trading journal. This in order to rigorously follow our positions and emotions. And of course, follow a plan. The vast majority of losers are losers because they don't have a plan.

Training in trading is the equivalent of training for an athlete.

In trading, you have buyers trying to get sellers to capitulate and vice versa. Depending on the number of buyers or sellers, you will have a rising or falling market. It's not complicated but it's always important to know. However, trading is a complex business when you don't know it.

How a trader reacts in unpredictable situations will reveal his winning/responsible character.

Getting Started in Trading

The first characteristic of a trader is to be a psychologist. A novice trader is first and foremost a budding financial analyst who, unlike bank traders, is self-employed and therefore does not necessarily have a financial education. A trader is also a speculator, so it is up to him to buy and sell at the right time. Third, a trader is also a risk manager.

Many people have said to themselves when starting out: "I am going to be extremely rational"; "I will be extremely disciplined"; "I know what I am doing"; "I understand the markets"; etc.

And in fact, for the majority of them, they ended up doing just the opposite and mistaking trading for a casino.

What are some classic errors of crypto traders?

Failing to cut losing positions. It is important to know when to open a position and it is also important to know when to close it to avoid big losses.

Listening too much to the noise.

Reading without applying. Reading is good but applying is better. Training in trading is the equivalent of training for an athlete. You will not succeed overnight.

Don't believe the dream sellers. Don't listen to all the people who are going to pretend that they have the best signals on the market and that they are going to make you rich. Don't be too naive. Good signals exist but they are rare and do not run on social networks. Don't follow too many signals from others.

Some tips to trade crypto responsibly

The first tip is to read a lot of books about trading. A top book we recommend is "Reminiscences of a Stock Operator" by Edwin Lefevre which tells the stories of Jesse Livermore's memoirs. This is one of the best books on trading that has nothing technical in it but totally represents the psychology within the trading floor. Some people fall into the trap of habits and "sheep-like" behaviors that lead to certain mistakes.

Working seriously on the psychological aspect will allow a good start. Working seriously means taking inspiration from top athletes, business leaders, and all people who have a winning mindset. The biggest part of the work for trading is mental.

Try to anticipate all possible scenarios as much as possible. By anticipating, you will leave much less room for emotiona l trading. Take a position only after all your criteria for entering the position are met. Don't let yourself go and take thoughtful trades as much as possible. Many times, the best trades are the ones you didn't take.

Learn that the market has no reason. You may be losing money when all the conditions were right for you to be successful. Learn to lose and be humble. What is important is to make the right decisions for the long term, the short term does not matter.

You don't necessarily lose because you are bad, but sometimes because the market is simply irrational. In the financial markets and especially the crypto markets, if you're not solid, you're going to get screwed. You can disappear quickly if you are not mentally strong. The markets are easy to understand if we respect the rules but hard if we don't.

Trading, if you want to do it seriously, like everything else, can become a professional activity to be considered as such. Work means effort, commitment and sacrifice. As with all income-generating activities, it is important to do your homework. Good organization will make your life easier and optimize your results. We also encourage you to review your trades and comment on them. This will allow you to step back and analyze your performance on a regular basis. It also allows you to learn from your mistakes as well as your successes. Self-learning should therefore not be underestimated.

Take risks that you can handle. 1% of your capital per trade seems like a good base to start with. Increase a little at a time if you wish but keep this 1% rule as a basic one. To begin with, do not exceed 3%.

Before acting, take the time to analyze the market. It should also allow you to choose the assets you will trade.

Always place stop-loss and take-profit.


Consider giving some analysis time to behavioral finance. Psychology is everywhere in life and in trading. With the right psychology, the results can only be better. Sometimes learning this is not easy and requires making mistakes. There are plenty of times when you'll feel like giving up, but don't give in, hang in there.

Don't be too greedy. It is normal to want to succeed quickly but be patient.

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