This Diwali season, let’s brush up our lessons on the crucial crypto trading rules together!

Cryptocurrency trading has now become a common aspect in the investor’s community. The decentralized nature attracts several traders around the world to invest in digital currencies as per their needs and demands, without any restrictions. But trading in unregulated circumstances might prove dangerous and cause major financial losses, thefts, and scams. Any type of financial investment is inherently complex, especially in an unregulated landscape. Cryptocurrencies are a new investment class, with very little data on their fundamental aspect. So, keeping in view the upcoming Diwali season and stepping into November, the crypto literacy month, let us jog through the 10 most crucial crypto trading rules that everyone should keep in mind.

• Never invest money that you cannot afford to lose: Expert and old crypto investors know how important this rule is. In crypto trading, investors not only incur losses while the market is declining, but they can lose their entire investment by mistyping one letter or a number while withdrawing money from the wallets or exchanges.

• Money management: Money management is crucial for crypto It makes a huge difference between success and failure in trading. Investors definitely want to buy low and sell high, but it is not that easy. Therefore, it is always advisable to start small and not more than 5% of the trading funds into one fund. Also, experts do not recommend placing multiple orders to buy several cryptos at once.

• Buy and sell at extremes: Whenever the investors trade in volatile investment options like crypto, they must routinely take profits. If the gains are extreme, sell half or all, but always take something off the table as well. Also, it is advisable to resist the urge of FOMO while trading in crypto, or the traders might lose risking it all.

• Always be aware of the volatility: Investing in cryptocurrencies is also the best way to learn about them. It is like a high-risk reward game that comes with high volatility. An overnight fall of 70-80 % is also a possibility. Before entering the market, investors should be prepared for their investments to go wrong in several ways.

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• Avoid buying on margin: If the investors reach the margin, they will have to borrow from the brokerage to increase the buying amount limit. It is leverage, but it is also dangerous. Wise traders manage risks, which means not borrowing to buy cryptos.

• Always have mental stop losses: It is clever to have mental stop losses. It is a type of trading tool that is designed to limit the maximum number of losses incurred on trade by liquidating assets once it reaches a specific value. But the crypto market is highly unpredictable, so instead, it is advisable to have mental stop losses and develop the discipline to obey them.

• Avoid random tips: The crypto space suffers from a severe lack of credible information. Some investors rely heavily on updates and information found on social media. Self-proclaimed crypto analysts create WhatsApp groups and social media profiles to trap gullible investors by charging fees and taking sensitive information from them.

• Never ignore the taxes: It is crucial to never ignore the taxes that are payable on the income from crypto Even though crypto is not subjected to taxes or treated as capital assets in several countries, but it is mandatory to treat the crypto as directed by the central governments.

• Use technical analysis: Using technical analysis will provide the investors when clues regarding when to exit and enter the market. For beginners, the best two indicators will be moving averages and RSI (Relative Strength Indicator). They are easy to grasp and provide good signals.

• Keep updated with developments: Even though investors are trading in local currencies, any international development will impact the market at large. The crypto investor should always be aware of the recent tech and economic developments to understand and analyze the next course of action.