The cryptocurrency market is one that, with the right trading strategies in place, can potentially earn you a lot of money. In fact, though its value fluctuates over time, the current value of the crypto industry as a whole is steadily approaching $1 Trillion.
Accessing the cryptocurrency marketplace is much easier than many people initially assume. Once you have created a wallet or have created an account on some other trading platform, cryptocurrencies can be traded as easily as stocks and other financial instruments.
In this article, we will discuss some of the most important things for individuals entering the cryptocurrency market to know. By paying close attention to the details and taking active measures to prevent risk, you can become a successful cryptocurrency trader.
Begin by Creating a Wallet
Your crypto “wallet” is what will enable you to own various different types of cryptocurrency.
There are many different wallets currently available. Robinhood is one of the most popular trading platforms because it is free, easy to use, and allows to access several different markets—however, with apps like Robinhood, your “ownership” of the coin is a bit more indirect. In order to fully own a cryptocurrency (and have access to more coins), you may be better off choosing a platform such as Coinbase or Trezor.
Invest in a Diverse Array of Cryptocurrencies
While cryptocurrencies market are often moving in the same direction as one another, each currency’s specific price movements will still be unique.
In order to minimize the exposure to risk that comes with holding each given coin, you should invest in many different types of cryptocurrency. This will make it easier to assure you can still exploit the general growth of the industry as a whole.
Bitcoin is often the foundation of a cryptocurrency portfolio, but there are certainly many other currencies worthy of exploring. Coins such as Ethereum and Ripple are large enough to be somewhat stable, yet young enough to still produce occasional gains in a short amount of time. You may also want to consider investing in coin indexes, making diversification even easier.
Use Technical Indicators
As you will find in any marketplace, technical indicators will be the most reliable way to reduce the “guesswork” involved in crypto trading. These indicators make it easy to determine where a coin’s price is most likely moving.
Moving averages, Bollinger Bands, and the Relative Strength Index (RSI) are all among the most useful. Many of today’s top crypto trading strategies will involve using multiple moving averages at once. Furthermore, paying close attention to developing stories in the news (on a daily basis, if possible), will help protect you from the risk of the unknown.
While you may certainly be eager to be making money in the crypto space, it is crucial to remember the importance of patience. Though the old saying “buy low, sell high” is not too exciting, it certainly remains a good rule of thumb.
Earning returns on your crypto investments will take a considerable amount of time. If you abandon your position as soon as prices begin to drop (something that can often be very tempting), you’ll end up losing more than you’ve gained.
Remember—there is no way that every position will increase in price every day; what you’re trying to do is put yourself in a position where your crypto portfolio is generally increasing in value at a steady rate.
If you can maintain a diverse portfolio, take the time to understand the dynamics of the market, and actively use technical indicators, you can become a successful crypto trader. There is an ample amount of money to made in this industry, but it will be up to you to go get it.