Trading stocks and crypto are difficult, but here are some pointers to help you get started.

It doesn’t matter how skilled a trader you are; there is nothing that can protect you from the volatility of cryptocurrency prices. Bitcoin’s (BTC) volatility, which is a standard measure of daily fluctuations, is currently at 64% annualized. In comparison, the S&P 500 has a volatility metric of 17 percent, while WTI crude oil has a volatility spec of 54 percent.

However, by following five simple rules, you can avoid the psychological effects of an unexpected 25% intraday price swing. Fortunately, holding these strategies through periods of high volatility does not necessitate advanced tools or large sums of money.

Make a plan to not withdraw money for at least two years

Let’s say you have $10,000 to invest, but you’ll almost certainly need at least $4,000 of it within the next 12 months for family vacations, business expansion, car maintenance, or some other purpose.

The worst thing you can do is make a 100% crypto allocation because you might need to sell your position at the worst possible time, such as at the bottom of a cycle. Even if the proceeds are intended for use in decentralized finance (DeFi) pools, the risk of impairment losses or hacks that compromise access to the funds exists.

In a nutshell, any funds allocated to crypto should have a vesting period of two years.

Always use the dollar cost average

Fear of missing out (FOMO) can engulf even professional traders, leading to a rush to build a position as quickly as possible. But how can you just sit back and watch when everyone is getting 50 percent or higher returns on a consistent basis, including meme coins?

The DCA strategy entails buying the same dollar amount every week or month, regardless of market movements; for example, buying $200 every Monday afternoon for a year eliminates the stress and anxiety associated with deciding whether or not to add a position.

At all costs, avoid purchasing all of the positions in less than three or four weeks. Keep in mind that crypto adoption is still in its infancy.

When conducting analysis, don’t use too many indicators

The moving average, Fibonacci retracement levels, Bollinger Bands, the directional movement index, the Ichimoku Cloud, the parabolic SAR, the relative strength index, and other technical indicators are just a few examples. There are endless possibilities for tracking these indicators when you consider that each one has multiple setups.

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The best traders are aware that correctly reading the market is more important than selecting the best indicator. Some people prefer to look at correlations with traditional markets, while others only look at cryptocurrency price charts. Except for trying to track five different indicators at the same time, there is no right or wrong way here.

Markets are dynamic, and this is especially true in crypto because of how quickly things change.

Recognize when to take a break

You will eventually misread the market when looking for bottoms or altcoin seasons. Every trader makes mistakes from time to time, and there’s no need to compensate by increasing the bet size immediately to make up for the losses. This is the polar opposite of what one should be doing.

When you have a “bad break,” take a break for a few days. The psychological toll of losses is significant, and it will impair your ability to think clearly. Allow that one to pass even if a clear opportunity presents itself. Aside from trading, go for a walk or try to organize your life.

The most successful traders aren’t necessarily the most gifted, but rather the ones who have survived the longest.

Continue to put money into winners

This may be the most difficult lesson to learn because investors have a natural desire to profit from our winning positions. As previously stated, crypto market volatility is extremely high, so aiming for a 30% gain will not be enough to compensate for your previous (or future) losses.

Traders should buy more winners instead of selling losers. Of course, market data and overall sentiment should not be ignored, but if your expectations remain bullish, consider adding to your position until the overall market shows signs of weakness.

By being brave and holding on to the most profitable positions, one can eventually make a 300 percent or 500 percent profit. Don’t be alarmed if you see these returns because you expected them when you entered such a risky market.

Every rule is intended to be disobeyed

If there was a roadmap to cryptocurrency trading success, many people would have discovered it after many years, and the profits would have faded quickly. That is why, every now and then, you should be willing to break your own rules.

Do not blindly trust investment advice from influential people or experienced money managers. Everyone’s risk appetite and capacity to add positions after a setback is different.