Buying and selling cryptocurrency is a form of investment, and it is important that you know what you are doing if you want to succeed in this highly popular market. Below are some tips that we feel everyone should be using if they are thinking of investing in cryptocurrencies.
Know how powerful cryptocurrencies are:
Start by understanding the power of the exchange that you are using. Some, namely the more popular ones will be centralised, but there are more and more that are entering the market that are decentralised. This offers more security, as they cannot be shut down or manipulated as easily as centralised ones. Don’t look at cryptocurrency in the same way that you view stocks either. They are very different and must be treated differently.
Have a reason for trading:
Every trade should happen for a reason, so make sure you know what that is before you enter. Know why you are doing it and what your strategy is. If you do not, it is almost certain that you will not succeed, and you will make a loss. Make sure you know what your strategy will be before you enter a trade, and do not make foolish mistakes. Ensure you have a game plan and know how your chosen exchange works.
Understand the market conditions:
It is no secret that the cryptocurrency market is particularly volatile one, but turn this into a positive for you, and understand the market conditions. Take the time to learn about Bitcoin and altcoins inverse relationship. Know that when Bitcoin is more valuable, altcoin will be less valuable, and vice versa. Don’t be stopped by the volatility, as this is when you will experience losses. Just make sure you know what it means.
Set a target:
As well as target, set yourself a stop-loss level. Your target should be what you would like to reach in profit for the day, but your stop-loss refers to your cut off point for losses. Once you have set them, make sure you stick to them. Many investors and traders fall down at this hurdle, as they get too stuck into making gains, and lose sight of their stop-loss level. Remember the volatile market can mean that prices can fluctuate massively in just a few hours.
Hedge your bets:
Plan ahead, and make sure that you can bet either side of a sudden price movement of your chosen cryptocurrency. If you can do this well, you can really use it to your advantage.
Take the time to learn about Altcoins:
Although Altcoins come with a higher risk, they can also have huge rewards, so take the time to learn about them, and how to trade them. Ignoring them completely is essentially just cutting yourself off from the potential to have huge gains, but there are so many different ones, it is essential that you get to know the different coins, and which ones would be best suited to your needs and interests.
Finally, learn how the exchanges work:
There are so many various tips available that will teach you how to get the most out of your chosen exchange, so take the time to read them. If you can learn to really work the exchanges, you can really start to make profits.