How would you describe your trading style? Are you a day trader or swing trader? Or maybe you prefer to trade using options. Whatever your approach, there are some things to consider before entering the markets, including the pros and cons of each.
Day traders focus on short-term trends and price movements to take advantage of volatility spikes and sell off their positions once they see a dip. Swing traders, on the other hand, try to identify long-term trends and wait until prices reach certain levels before taking action.
You can begin investing through a company like Zerocap. However, if you wish to trade large stock amounts or trade without using a registered stock exchange, try OTC trading. OTC trading refers to buying and selling stocks without going through an exchange. Here are six tips to help your OTC trading.
1. Use Stop Losses
Every investment requires you to know when to exit and whether you are making profits. So, the first tip to help your OTC trading is establishing a precise stop loss level to help you reduce or avoid losses, a rare skill every trader can benefit from. Setting a stop loss should not be random or controlled by emotions. The best point to set your stop loss in OTC trading should be the cost of your coin. This allows you to walk away with what you invested, even in the worst cases.
2. Set Reasonable Profits
The crypto market is quite volatile and has many uncertainties. So, as a savvy investor, set a reasonable target profit at the beginning of your OTC trading journey. Then, when you hit this target, stick to that and exit the market. Greed can have you lose more than you invested. So, be content with your set profit.
3. Avoid Peer Pressure
The fear of missing out can drive you into making unplanned investments that you don’t even know the first thing about. You might see your peers prosper in the trade and feel you would also like to enjoy the massive returns. So, be wary of that moment when your body tells you to jump into OTC trading. In most cases, many people buy the coins at lower prices, meaning there will be an oversupply in no time and the profits you were hoping for becoming elusive.
4. Manage Risks
Wise OTC traders do not run towards profits. They stay alert as they watch the market to know when to make a killer move while still enjoying small gains from regular trade. So, in OTC trading, investing less of your portfolio in less liquid stocks is advisable.
5. Understand how Bitcoin Works
Most altcoins prices rise and fall as the price of bitcoin rises and falls. So, when the bitcoin is volatile, the market becomes unclear as traders try to understand the state of the market. In such cases, you can opt not to trade or have close targets.
6. Don’t Buy because of the Price
OTC trading beginners make the mistake of buying a coin because it is cheap or affordable. Ideally, buying coins should be guided by the market cap, not the price. The higher the market cap, the more suitable the coin is for investment.
It is wise never to invest until you are sure you can choose to stay or exit the market when that moment comes. Emotional trades always end in losses, so remain calm and be ready for the next opportunity.