Common Trading Strategies When Investing in Cryptocurrency
Blockchain technology is still evolving and as its value increases so will the value of the cryptocurrencies, making it an opportune moment for any advanced or novice traders. Investing in cryptocurrencies is different from other forms of trading; it’s relatively new and is highly unpredictable. Without sound trading strategies, you cannot earn any amount of profit.
Cryptocurrency was a craze in 2019 and will continue to be in the coming years. More and more people are discovering blockchain technology, and many are putting their money in crypto trading. Crypto coins such as Bitcoin, Ethereum, XRP, Litecoin or Bitcoin Cash are the most commonly traded crypto coins.
Many people who are in the crypto trading venture are new and come in with no strategy or prior trading experience. Such people tend to burn all their money and then regret their decisions. Before you start crypto trading, here are some things to keep in mind.
Cryptocurrency is Highly Volatile
No cryptocurrency has ever had a stable value for a long time. The values of these coins keep changing every second or every minute. It can go up all at once or go up a bit and drop drastically. There is no guaranteed profit from any crypto coin. The higher the value, the higher the fluctuation in its prices.
Common Trading Strategies
Invest What You Can Afford to Lose
People tend to go all-in when it comes to trading, and they end up losing all their savings. You need to keep aside an amount that you can invest and lose. There is a higher risk of losing your money with cryptocurrency as the market can be highly volatile.
Cryptocurrencies or blockchains are prone to hacks or getting bugged, and you may lose all your money. Most of the exchanges don’t provide any insurance, and they won’t compensate if you lose your money. Zipmex, on the other hand, is one of the few exchanges offering Insurance.
Research First Before Investing Your Money
Since you are putting your savings into crypto trading, you need some trading strategies. To come up with any plan, you need to research thoroughly. For instance, it would be best if you did your research by reading online blogs, watching YouTube tutorials, visiting forums and reading articles from reputable exchanges such as Zipmex.
Diversify Your Portfolio
Bitcoin is the main cryptocurrency and all other coins are generally termed as an ‘altcoin’. Since any crypto is volatile, it is advisable to diversify the portfolio that you invest in or trade-in. Some coins are less volatile than others and buying in and out at the right time might help you earn maximum profit. The cryptocurrencies other than Bitcoin which we recommend researching include, Ethereum (ETH), Ripple (XRP), Litecoin (LTC) and Bitcoin Cash (BCH)
Keep a Close Eye on Bitcoin
The value of altcoins has always been dependent on Bitcoin. The moment Bitcoin prices soar, traders tend to buy in Bitcoin, and the value of the altcoins comes down, and vice-versa.
Keep Taking Profits Over a Period of Time
Due to the irregularity of the cryptocurrencies, people need to claim their profits in intervals. The price can rise and fall anytime, so you need to keep an eye on the value of these coins and trade them as soon as you hit the right amount of profit.
Trading in such intervals can earn you a great deal of profit, and it keeps your income steady.
Be Patient – Really Patient!
Bitcoin has hit highs of $20,000 and has come down as far as $9,000. Some people have traded in at this high and ended up with huge losses. You can either be dealing with short term trading or long term trading.
Choose a Form of Trading
People generally tend to do short term or long term trading.
In short term trading, people buy-in when the coin is at a low price, and the moment the coin displays a steady increase in its prices, they trade it for a profit. It is quite the opposite of long term trading. The prices could fluctuate any second.
In long term trading, people need to analyze the history of the coin prices and make a prediction. This form of trading is perfect for coins that have been around for quite a while.
Learn From Previous Mistakes
Since crypto trading is highly risky, there are bound to be some mistakes along the way. You might end up losing quite some money in the initial stages due to the lack of trading strategies. You always need to check your losses and analyze what led to the mistake.
One of the easiest ways to know about crypto trading strategies is to follow various crypto traders. You can find out how they analyze the market and figure out their strategy.
They might be tweeting about their strategies and plans or just randomly talking about it in various blogs. Whatever the case, maybe don’t be fooled into listening to their point of view only. You should consider multiple views before investing your money.
Seek Help From the Community
No customer care can answer all your questions about crypto trading. You need to head over the community forums on their websites or various subreddits for any form of customer support. Alternatively, visit Zipmex’s website for a growing number of articles to assist you in your investment journey.
Be Secure with Two Factor Authentication
Many cybercriminals are constantly trying to steal various cryptocurrencies. Enabling two-factor authentication ensures that no one gets access to your account without the security code which is sent separately to your phone. Once you receive the code, you an then enter it after entering your username and password.
Avoid Getting Phished and Be Safe
Phishing is one of the oldest attacks in the cyber world. A simple email linking to a fraudulent website can retrieve all your necessary credentials. Once you begin dealing with cryptocurrencies, you need to be wary of various scams. At the end of the day using various trading strategies will ensure that you earn a good amount of profit. Be wise with your choices and don’t trade on emotion. Instead, trade on knowledge of the market and good research. You also need to be wary of the market and always use the right strategy. Even if you lose some money, you need to learn from your mistakes.