What is Rect? Considerations When Trading Bitcoin and Cryptocurrency
Rekt is a term derived from the English word "wrecked" which means to be ruined. Exactly in this sense, users who have their Bitcoin or cryptocurrencies upside-down with a faulty trading strategy express the situation by saying "I am rect". There are some points that need to be considered when buying and selling cryptocurrencies in order not to be a rakt. We will talk about them in this article.
It is important to set a trading strategy when trading cryptocurrencies. A trading strategy can be defined as a comprehensive plan for all your trading movements. This strategy is a general framework that will guide you in all your attempts at trading. A trading plan also helps to avoid financial risks as it eliminates many unnecessary decisions. Having a trading strategy is not essential for trading, but it can be a life saver at times.
Two approaches to consider when creating a trading strategy are technical analysis (TA) and fundamental analysis (FA). Technical analysis involves analyzing price movements and market trends with the help of charts and indicators. Fundamental analysis, on the other hand, involves examining the economic, political and social factors that can affect the value of an asset. We'll talk about which approach is applicable to which strategy, but before we move forward, please make sure you understand the differences between these two concepts.
Another thing to consider when choosing a trading strategy is your trading style. Your trading style determines how long you stay in the market and how often you trade. Your trading style also affects your risk tolerance, capital management and psychology. Traders are generally classified into these four main categories:
- Scalping: Scalping is a trading style that tries to profit from small price movements by making very short trades. Scalpers usually follow charts on a minute or second basis and can use high leverage. When scalping, it is necessary to focus on technical analysis.
- Intraday traders: Intraday traders are people who aim to close their positions at the end of the day. Intraday traders usually use hourly or 15-minute charts and follow market news. Both technical and fundamental analysis are important in intraday trading.
- Swing trading: Swing traders trade days, weeks or months, following price trends and swing points. Swing traders often use daily or weekly charts and analyze market sentiment. Both technical and fundamental analysis are important in swing trading.
– Long-term trading: Long-term traders expect an asset to appreciate in value by trading over years. Long-term traders often use monthly or annual charts and evaluate the underlying value of the asset. Fundamental analysis is important in long-term trading.
Another point that you need to pay attention to when buying and selling cryptocurrencies is risk management. Risk management is a set of techniques applied to minimize losses and maximize profits. Risk management prevents you from protecting your capital and making emotional decisions. One of the most important elements of risk management is to use stop loss. A stop loss is a price level set to cut a loss. The stop loss automatically closes your position when the market moves against you. When setting a stop loss, you should consider support and resistance levels, volatility, and risk-to-reward ratio.
The last point you need to pay attention to when buying and selling cryptocurrencies is psychology. Trading psychology refers to the emotions and behaviors of the trader. Trading psychology greatly influences the trader's performance and decisions. To be successful in trading, you need to keep your emotions in check and be disciplined. Otherwise, emotions such as fear, greed, hope and regret may turn you on.
In conclusion, here are some points that you should pay attention to when buying and selling cryptocurrencies in order not to be a rakt:
- Set a trading strategy and stick to it.
- Perform technical and fundamental analysis to suit your trading style.
- Apply risk management techniques and use stop loss.
- Develop your trading psychology and do not make emotional decisions.
By paying attention to these points, you can be more successful and safe in your crypto currency trading. Remember, being rect is a choice!