Many people get into crypto for various reasons. Every day, we see more and more people taking an interest in the crypto market. This increase in awareness of crypto is a double-edged sword. On the one hand, it builds up a community of people looking to gain financial freedom and enjoy the new-age decentralized economic model in action. On the other hand, it leads to people losing their life savings and hard-earned money, causing confusion and heartbreak.
If you are reading this article, then chances are you are already on a crypto exchange with your first deposit ready to trade. Maybe someone shared a story of overnight success, or maybe you are desperate to make money and exploring the market, hoping to get rich quick. Whatever your motivation, I strongly recommend you apply this checklist before deciding to invest a penny into crypto.
A quick side note before we dive into the details of our essential pre-trade checklist: It is important to mention that the crypto market and crypto trading really can change your life and make you a millionaire, provided you take the time to learn the skills and techniques required to navigate the market in a profitable manner. Shortcuts in crypto can lead to disaster very quickly. So, let’s get into it.
1. Why do you want to become a Crypto Trader?
The first question you must ask yourself is, why do you want to do this? What is the aim in becoming a crypto trader? Well, to tackle this fundamental question, the best idea is to write down all the reasons you can think of that motivate you to enter the crypto space.
Here are a few good reasons for becoming a crypto trader:
I am good with managing finances and am confident that I can make decent financial decisions.
I have an IT or finance background and want to use that to improve my earnings.
I have a business mind or a business background and want to learn this new emerging market to stay ahead and make good profits.
I am adaptable and can learn new skills fast.
I have a decent financial base and want to see how crypto can help me become more financially independent.
I tried a bunch of online skills but have not achieved my goals, so now I want to explore the crypto space.
I have extra money which I can lose; let’s see what crypto is all about.
Here are a few really bad reasons to get into crypto trading:
I saw videos and posts of stories of how crypto can make me rich fast.
I heard people are making money without any hard work from crypto.
I want to double my money.
All you need to do to make money is predict whether the graph will go up or down; there is no skill required.
I will just invest money, and it will automatically increase.
I can just copy someone’s trade and make money.
People around me are claiming to make money, so I want to get rich too.
If you have listed similar reasons to the ones mentioned in the bad category, I would strongly advise you not to enter the market just yet. You need to study the basics and rework your aims. The crypto market is huge, with trillions of dollars in circulation. However, if you enter it as a fad or are just in it for a quick buck, you would end up losing 90% of the time.
2. How much do you know about Crypto as a technology?
Now that we have corrected our aims in the first checkpoint, let’s assess how much we know about the crypto world. This is a critical step since, to use a tool, we must first understand what it does and how it works. We need to know what decentralized computing is and how the crypto market works. Having a basic understanding of the possible uses of digital assets will help you gain confidence and give you a base to build your journey.
Here are some good places to learn about crypto:
Binance Academ
Mr. How (YouTube Channel)
The Inner Circle (YouTube Channel)
Coin Bureau (YouTube Channel)
So, before you invest your first dollar, check these channels out and brush up on the basic terms to become familiar with the crypto industry.
3. How much are you willing to lose?
Right then! Here we are, step three on our checklist. Well… this question is the most crucial of all, as it will decide how serious you are about trading and how much risk you can bear. Let me be the first person to tell you that there is not a single trader out there who has not experienced a loss in their trading career.
The crypto market is a highly volatile market and can crash very badly. So, if you do not understand how to manage that risk and are not learning skills to minimize risk, you could end up losing money. Many people will tell you that this volatile nature makes this market extremely profitable. This is true; however, for new traders with little or no knowledge of market trends and the coins they are investing in, it can lead to negative and even disastrous outcomes.
So, here is the key takeaway: never invest money blindly just because someone says so, and also do not invest more than you can afford to lose, as a total loss can happen—and will happen—if you do not take informed decisions, which leads us to the next item on our checklist.
4. Are You Willing to Learn New Skills?
The rock and foundation of a trader’s success is the extent to which they can predict and understand the market. So, to become a big-shot success, you need to learn the following skills:
Interpretation of charts and graphs
Trend lines and market analysis
Blockchains and protocols
Trading strategies
Use cases and real-world applications of crypto projects
Risk management in the market
Use stop losses and OCO trades
If all of these terms are new to you, don’t worry—if you put in the time, you will master them in no time.
5. Can you handle a total or major loss?
The next key question you need to ask yourself is: are you brave enough and financially strong enough to bear a total loss if it occurs? You need to accept the volatile nature of the market as an opportunity and be ready to bounce back from a total loss. Stay committed, and you will become rich in due time.
6. Do you have a fallback career if things do not work out for you in the market?
As a newbie in trading, make sure you do not make this your lifeline. You need to approach the market carefully, with time and learning. Keep a fallback plan and make sure your basic needs are secure. Keep learning and exploring, but do not quit your job unless you are sure you can generate enough from crypto.
7. Do you have any prior trading experience in any other market?
Although prior market experience is not a must, if you have such experience, it will serve you well in the long run. So, explore other markets as well.
8. Do you know that success takes time, effort, and constant personal growth and learning to achieve?
Like all things and careers in life, crypto requires hard work, consistency, and strong dedication with a spirit to learn every day. If you understand that this is not a get-rich-quick scheme but a real business that requires skill, then you’re well on your way to success.
9. Who is to blame for your wrong and uninformed financial mistakes in the market?
The biggest quality of a winner is that they do not blame others for their mistakes and lack of knowledge. So, you need to develop a winning attitude where your success and your failure are yours to own and learn from.
10. Can you invest your time in the field of Crypto?
The last question is: do you have the time to give to this field? Because if you do not, you will not get far. So, unless you are planning to go all in, I would recommend you rethink becoming a crypto trader.
Key Takeaways:
Crypto is a real market and not a get-rich-quick scheme.
It requires skill and time to succeed here.
Never invest blindly.
Learn about the coins and improve your skills.
Go all in and invest time.
If you can do all that, then nothing can stop you from becoming the best trader ever. Stay dedicated, and I will see you in another article.