- January 10, 2018
- Posted by: Michael
- Category: Cryptocurrency trading
Cryptocurrencies, Cryptocurrencies and again Cryptocurrencies. We are talking about one of the most dominating markets today that successfully overshadowed in its growing popularity almost any other market in the world. By now you should be aware of the fact that the cryptocurrency market is very risky, but also very rewarding. Traders that want to succeed in crypto trading have to follow certain rules to stack the odds in their favor. We have selected for you top 6 tips that we consider to be the most important when it comes to cryptocurrency trading.
1#Tip – Portfolio diversification
In a stock, a commodity or any other financial market, portfolio diversification is extremely important and it is not anyhow different in the cryptocurrency market. Most people want to buy only Bitcoin and hold it as their only cryptocurrency. However, by practising this you put your capital at a greater risk than if you had at least 3 to 5 other cryptocurrencies in your pocket. To completely rely on a single investment is not recommended. When the prices of cryptocurrencies rise, they usually rise in big. And if you have more different coins you significantly increase the odds of having at least one of them in the portfolio.
2#Tip – Determine your crypto strategy
Before jumping on the bandwagon, determine your cryptocurrency strategy and your style of trading. Cryptocurrencies are great as short-term investments as well as long-term investments. Traders who focus on short-term investing are called day traders and they tend to stay in a position for a maximum of hours. Their aim is to get in when the price seems low, get out when it skyrockets and run somewhere else with the made profit to open another position. From my point of view, day trading is more complex and risky. Nonetheless, the bigger risk is greatly rewarded and cryptocurrency day traders can double or triple their capital in no time. Not every investor, however, has the time or the will to learn how to day trade cryptocurrencies. Even more popular choice is long-term investing in cryptocurrencies. By choosing this option you do not need to watch the market every day and you don’t have to think that much about the current price as about the future price. In long-term investing, it is a little to no concern what is the current price because you trust it will rise by dozens, hundreds or thousands of percent.
3#Tip – Don’t panic when the price drops
The cryptocurrency market is known for its volatility. And traders who decide to get their hands on cryptocurrencies can not panic when their coins suddenly lose their value, especially if they focus on long-term investing. Beginner traders who do not know how this market works and behaves can freak out and make a hasty decision which they later on regret. There is nothing worse than buying Bitcoin when the price is $15 000, selling it in fear when it drops to $10 000 and then realizing that the price again climbed up, perhaps surpassing even the previous all-time price high. My tip is, therefore, not ever to base your decision on fear or panic.
4# Tip – Select a reputable broker
It does matter where you create your traders. Not only all companies have different fees on which you can save loads of money if you choose wisely. But there are also many scams or brokers with a bad reputation that are not worth trading with. Pick a crypto company that is trusted by traders and is licensed either by the European CySEC or is in the register of the British FCA. One of the companies that comply with these requirements are: IQ Option, Plus500 and Markets.
General warning: When trading with real money, your capital might be at risk
5# Tip – Don’t fall for crypto scams
When binary options started out, there were so many scams that we didn’t even know about which to warn our readers first. And it is the same with cryptocurrencies. The more is certain trading instrument popular the more shady companies and scammers appear on the market. Cryptocurrency scams have very often similar signs which are quite easy to detect and are as follows: Incredible investment returns, The system is only for a limited number of people, the system requires no knowledge about cryptocurrencies because it works fully automated and so on and so forth. One of the most known that we have exposed on the web are: The Ethereum Code, Bitcoin Loophole, BitCoin Code. But know that there are also many others.
6# Tip – Know your financial options
You might have heard of people who sold everything they had in order to invest as much as possible in Bitcoin or other cryptocurrencies. Bitcoin rose in its value by 1300% in 2017, from the price 959 $ which he had on 1.1.2017 to $ 13580 – 31.12, so some people might actually understand them, I, however, consider such radical decision to be insane. Bitcoin and the crypto market, in general, are still relatively new and even thou BTC turned out to be one of the best investments of 2017, we are still uncertain of future development. Traders should only, therefore, invest money they can afford to lose