Cryptocurrency trading can be a thrilling and potentially lucrative way to invest in the digital asset market. However, the market is constantly changing. There are many factors that can influence the value of different coins. In order to trade successfully, it’s essential to have a good understanding of the best practices and strategies.
More traders lose in crypto than win, despite those wins being sizeable. Never invest more than what you can afford to lose. A sure way to lose money is to invest money you know you might need to withdraw in a hurry within the next six months. You can’t predict where the markets will be. A long-term strategy avoids the day-to-day tumbles, but if you need your investment returned at a specific time, you forfeit the luxury of waiting to make a larger profit or a profit at all.
Here are some crypto trading tips to remind yourself of when you aren’t sure what to do next with your portfolio.
Crypto Trading Tip #1: Assess Your Risk Level
High risk yields high returns. Crypto is already high-risk. Don’t overextend yourself at a risk level you’re not comfortable with. Most crypto traders opt for low-risk strategies based on a strategy prioritizing long-term market growth.
You build sustainable growth in crypto by investing long-term, minimizing and eliminating any losses that may come up in the short term. Study the best crypto exchanges and assess the optimal risk level for your investments.
Crypto Trading Tip #2: Don’t Just Go ‘Bitcoin!’
Bitcoin dominates the crypto market. It’s #1 by far. Next in line is Ethereum. These big cryptocurrencies have a lot of buzzes, but you can often get a bigger return, especially short-term, investing smartly on other coins.
When trading on the best Canadian crypto exchange, look at what’s generating growth this quarter, this year, and over the last few years. Look at growth and not value.
Crypto Trading Tip #3: Research Your Crypto
Hype is good. The hype around crypto is natural. This doesn’t mean investing in what’s trending, though. Evaluate every crypto you come in contact with. See how many users they have. Identify the function it serves.
See if it’s linked to any corporations or organizations interested in it. Avoid cryptocurrency with no evidence of delivering anything tangible and long-term.
Crypto Trading Tip #4: Have a Strategy to Invest
Never invest in a crypto coin without reason. The risk is too large. Create a strategy once you know a little bit about what’s happening with a specific crypto coin. You may want to withdraw your money in, let’s say, a decade. A strategy like that will look different than a simple two-year strategy.
Crypto Trading Tip #5: Copy Trading is a Method
Beginners who are still learning about crypto trading tips may feel more comfortable doing copy trading. This is where you copy the trades that more experienced crypto investors make, i.e. if they buy ‘x’ amount of Ethereum, you follow the same path. Although this is still risky, it might help give insight to some on when to buy and sell.
It doesn’t hurt to get accustomed to investors in the crypto space who are willing to let you see their trades or provide advice. This doesn’t mean you have to do copy trading, but it can still provide important knowledge.
Crypto Trading Tip #6: Automate Your Crypto Trading
Automate to buy or sell at a given price. You can do this on exchanges, just like you can with stocks and shares. This takes the stress out of constantly watching the market to buy cryptocurrency at a specific price.
You set it, and when the price hits that sweet spot, the automation kicks in and you buy or sell accordingly. There are lots of ways to automate crypto trading.
Crypto Trading Tip #7: Diversify Your Crypto Portfolio
Diversify your investments. It applies to crypto trading, just like it does with stocks. Spread your money across multiple crypto coins. Play the market. This doesn’t over-expose you if anyone crypto coin plummets.
It also allows you to shift your market strategies as you analyze and note how conditions are changing, seeing what’s on the way up and what’s on the way down.
Crypto Trading Tip #8: Don’t Buy Because The Price Is Low
Prices fall for a reason. Once-great crypto coins could go belly-side up any moment. If you see prices have tumbled on a cryptocurrency you’ve been watching, find out why and do some research before jumping all over it.
Every day, new information comes out, and every day, cryptocurrencies fail. Not all coins go up, up, and up.
Crypto Trading Tip #9: Use a Crypto Wallet
A crypto wallet allows you to move your crypto coin off exchanges and online platforms and provides you with better security for your investment
If you intend to hang onto your cryptocurrency for years, put it on a crypto wallet. An online exchange is only usable when a trade has to be made.