How to Avoid Pitfalls of Crypto Trading

The following post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga.
A retail trading market is a specific phenomenon. It is also one of the rare places where everyone comes with the same goal – to make money.

This market doesn't care about your age, gender or nationality. It doesn't discriminate by the color of your skin ... It is equal to everyone and yet this creates a sense of accountability that can be hard to accept.

If you try to reason with this you might come up with a whole line of excuses, ranging from misinformation to straight-up conspiracy theories. Fortunately, the market is not out there to get you – it simply gives what you have earned, ironically offering the highest freedom in the environment with the highest responsibility as well.

Few authors have researched this better than Mark Douglas. In his bestseller “Trading in the Zone”, he discusses the main problems that traders face, including failure to take responsibility and addiction to random rewards.

Although the market might seem random at moments, your responsibility, as a trader, is to stick with the plan. No matter how dull it might seem at times, following statistically significant recurring patterns is a way to beat the market. Yet, boredom might get the better of you, or you might hear a rumor on Discord, read a Tweet, listen to an analyst from CNBC and act upon that. While this might turn out to be profitable – the idea is not yours, and this is how you become susceptible to random trading. It becomes a way to avoid responsibility.

On the other hand, addiction to random rewards is a well-studied phenomenon. Positive surprises are hard to dislike and the brain gets easily trained to love them. This is one of the reasons why gambling is so potent. Gambling addicts end up in a never-ending loop because they are not after the profits, they are after the chemicals that the brain releases when it experiences a random reward. If you have this urge to constantly look for a trade, to be in the market even when there are no objective reasons for it – look out! You might be succumbing to addiction to random rewards.

Facing this ain't easy and professionals know it. This is why hedge funds employ armies of performance psychologists to keep their traders up to the challenge.

While psychologists might be out of the price range of a retail trader, there are still solutions for succeeding with extremely volatile assets like cryptocurrencies. Automating your trading is one of them.

Platforms like Coinrule make this available and affordable to everyone. Through the application program interface (API), Coinrule makes automated trading easy – connecting to the largest exchanges like Binance, Coinbase, Kraken, Bitpanda and many others. Although setting automated trading usually requires coding knowledge, Coinrule offers an intuitive no-code interface based on “if-this-then-that“ principles. You are also able to easily test the rules and strategies with paper trades before moving forward to live trading.

While the Hobbyist account costs $29.99 /month and Trader and Pro packages cover those with more demanding needs, the basic Starter account is free! It includes 2 live rules, 2 demo rules and 7 template strategies. It provides a convenient way to test the functionality of the platform.

While human emotions swing between fear and greed, an algorithm operates with pure indifference. It doesn't care whether you had a good day or a bad one, whether you are sleepy or hungry. It continues to chug along, 24 hours a day, 7 days per week.

As much as manual trading has its appeal, when it comes to avoiding the pitfalls of extreme volatility, automated trading is hard to beat.

The preceding post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga. Although the piece is not and should not be construed as editorial content, the sponsored content team works to ensure that any and all information contained within is true and accurate to the best of their knowledge and research. This content is for informational purposes only and not intended to be investing advice.