How to Trade the Crypto Market Like a Pro for Beginners

This is the best cryptocurrency trading guide for beginners (PDF) to master technical analysis like a Pro trader.

Do you want to trade the cryptocurrency market like a Pro? Then read this article. Every day, new traders enter the cryptocurrency market hoping to make profits and achieve financial freedom. Some may have seen flashy ads on social media promising to turn them into profitable traders in a short amount of time.

In some cases, the advertiser may ask you to join their premium signal groups so they can send “BUY and “SELL” signals to your email. However, more often than not, these ventures end in failure, and some people even get scammed, losing their hard-earned money.

If you’ve found yourself in such a situation, it’s time to sit back and learn the basics of what it takes to become a profitable cryptocurrency trader. As the saying goes, “Don’t give me a fish; instead, teach me to fish.” This is true because you need to learn the art and science of cryptocurrency trading, so you don’t rely on others for guidance.

Before we go deeper into this cryptocurrency trading guide, let’s highlight some important points covered in this article:

• Trading Fundamentals
• Trading Strategies
• Technical Analysis
• Fundamental Analysis
• Psychology of Trading
• My Top 7 Alpha Trading Rules

Firstly, let’s start with the trading fundamentals.

Trading Fundamentals:

If you are new to crypto trading, you should learn fundamental concepts such as market capitalization, liquidity, and how to evaluate project goals before investing in them. You can find help on these topics by visiting CoinMarketCap.

Moreover, as an aspiring trader, you need to acquire technical analysis skills to learn how to place trades, identify trends, read candlestick patterns, and analyze charts on different time frames.

With that foundation in place, let’s discuss how to develop trading strategies.

Developing Trading Strategies

When it comes to trading cryptocurrencies, there isn’t just one perfect strategy for achieving trading success. Professional traders typically use multiple strategies to analyze the market before making any trades.

They don’t just blindly buy or sell cryptocurrency without any research. Instead, they use tools such as Tradingview or GoCharting to predict the market’s direction.

Also, they choose a specific timeframe for analyzing the market and stick to their preferred trading style, such as scalping, day trading, swing trading, or position trading. You too, need to choose a trading style and stick with it.

Therefore, to learn more about different trading styles, you can read this article: “Day Trading vs Swing Trading.”

Best crypto trading course for beginners: Did you know you can master technical analysis today? Click here to download The Trader’s Manual Handbook.

Technical Analysis: The Bedrock of Crypto Trading

Now, we have reached the most important part of this article which is learning basic and advanced technical analysis skills. In this part, you will have access to the best technical analysis indicators for crypto trading

First, learn how to add and configure popular technical indicators such as RSI, MACD, Bollinger Bands, and Exponential Moving Averages to your chart, and interpret their signals.

Also, you need to understand how to trade based on patterns and market structures. To achieve this, we will briefly discuss market structures and reversal patterns such as double tops & bottoms, and head & shoulders patterns.

Most professional traders often use various market structure patterns to make trading decisions.

So, to identify these patterns, you need to first determine the trend within a specific time frame to suit your trading style. Here are some of the most popular market structures you should be familiar with.

Double Top Reversal Pattern

The double-top pattern is an important chart pattern that provides us with important insights into possible market reversals. This pattern resembles two mountain peaks almost at the same height, with a valley in between, forming the shape of the letter “M”.

The double tops pattern indicates that the price attempted to breach a specific resistance level but failed, which suggests that the upward trend may be turning into a downward trend. See the screenshot below for a better explanation.

How to Trade the Double Top Reversal Pattern

• Identify the double top pattern in an uptrend
• Confirm the pattern on a higher time frame and take a position.
• Set stop-loss and take profit target using a 1:3 or 1:5 risk-to-reward ratio.

Double Bottom Reversal Pattern

The double bottom pattern is a well-defined chart pattern that can bring hope and excitement to traders who see the potential for profits if the trade goes their way.

This pattern forms when the price hits a low point, bounces back up, and then drops again to a similar low point, forming two troughs that are almost at the same level.

The double bottom pattern is easy to spot as it usually looks like the letter “W.” This pattern signals a potential reversal from a downtrend to an uptrend, making it a useful trade signal for traders to keep an eye on. See the example below for a better understanding.

How to Trade the Double Top Reversal Pattern

• Identify the double top pattern in an uptrend
• Confirm the pattern on a higher time frame and take a position.
• Set stop-loss and take profit target using a 1:3 or 1:5 risk-to-reward ratio.

Head and Shoulders Pattern

The head and shoulders pattern is a commonly recognized chart pattern in trading. It typically appears following a prolonged period of an uptrend (price increase). This pattern indicates a potential trend shift, suggesting that prices may begin to move downwards.

Also, the head and shoulders pattern consists of four distinct parts: a left shoulder, a head, a right shoulder, and a neckline. Kindly see the screenshot below for a better understanding.

How to Trade the Head and Shoulders Pattern

• Identify the patterns and pay attention to their shapes and positions.
• Confirm the pattern on a higher timeframe.
• Enter the trade, set your stop loss, and take profit targets.

Inverse Head and Shoulders Patterns

The inverse head and shoulders pattern is a bullish version of the head and shoulders pattern. It commonly appears after a downtrend and suggests a potential shift to an uptrend. This pattern is formed by three troughs and a neckline, creating an inverted shape. See the example below.

How to Trade the Inverse Head and Shoulders Pattern

To take positions based on the inverse head and shoulders pattern, follow these simple steps:

• Identify the patterns and observe their shapes and positions.
• Confirm the pattern and look for a breakout above the neckline.
• Enter a trade once the price breaks above the neckline.
• Finally, to protect against potential losses if the price reverses, place a stop-loss order below the right shoulder. See the example below.

To learn more about trade patterns and market structures, download The Trader’s Manual Handbook below.

To be a successful cryptocurrency trader, you need to have the right mindset and emotional control. You must also be disciplined and follow a set of trading rules.

Also, you must learn to set stop loss and take profit targets while entering to protect your capital in case the market goes against you. But, many beginner traders often overlook this important aspect of trading.

So, practice risk management if you desire success in your trading career. Next, let’s discuss how to set proper stop-loss and take-profit targets when trading.

Setting Stop-Loss and Take-Profit Targets

Novice traders often fear accepting small losses and avoid using stop loss, hoping that the trade will always go in their favor. However, in the end, they accumulate heavy losses when the market goes against their wishes. As the saying goes, “If roses were wishes, we would all be rich.”

So, you must understand that accepting losses is a part of the game. Besides, even the top traders in the market still experience losses.

But the only difference between Pro traders and novice traders is that they have a set of trading rules and strategies that they follow. You can do the same if you desire to gain financial freedom through trading.

But before setting a goal for yourself, take a look at your financial condition.

Ask yourself whether you intend to earn a living from full-time trading or whether you’re trading as a side hustle. Your honest answer to this question will determine how you set your trading strategies and rules. I hope you understand.

Evaluating Risk-to-Reward Ratio

Personally, I evaluate my Risk-Reward Ratio before entering trades. Typically, I take a ratio of 1:5 while trading crypto, especially altcoins because of their volatile nature, which means risking $1,000 for the prospect of earning $5,000. However, some traders use a 1:3 risk-to-reward ratio.

So, find out what works best for you and avoid being greedy, as the market can quickly take back any little profit you’ve made if you fail to follow your trading rules.

My 7 Alpha Rules for Crypto Trading

Here are my 7 Alpha Rules for Crypto Trading:

1. Always stick to your trading plan.
2. Protect your trading capital.
3. Treat crypto trading like your full-time job.
4. Be a student of the market.
5. Don’t trade without setting a stop-loss target.
6. Only trade with the amount you are willing to lose.
7. Don’t forget the rules above.

Final Thoughts

The views expressed in this article are solely my personal opinion, and no guarantee following them will make you a profitable trader. However, learning trading strategies and having a set of rules to follow could enhance your trading skills.

So, do your research and only trade with the amount you are willing to lose. I hope you found this article helpful.

Finally, to gain more insights into cryptocurrency education, kindly follow and subscribe to receive email notifications when I publish new articles.

Thanks for reading.

Related articles:

How to Make Money in Cryptocurrency and Keep It

Don’t Be Fooled! Crypto Isn’t Dead, and The Bull Run Isn’t Over Yet

7 Amazing Crypto Websites and Apps for Beginner Investors

To improve your trading skills, download a copy of The Trader’s Manual Handbook below.