Did you know that the market capitalization of crypto is at least several billion dollars? Many crypto investors have seen their wealth increase by 66% in the last year.
Therefore, it is no surprise that more and more people are jumping on the crypto trading bandwagon. Here are the best crypto trading tips if you are considering getting in on the excitement for phenomenal returns.
Crypto 101
It is no secret that digital currencies have grown remarkably over the previous years. The most popular ones you may have heard of are Ether (ETH) and Bitcoin (BTC).
Crypto trading is exciting for most people because digital currencies are a transformative technology that has revolutionized numerous industries.
Even though cash is still the most widely accepted form of currency, many businesses are now revamping their financial methods to trade with crypto.
After all, who can forget that the first time anyone ever used Bitcoin was to pay for their pizza? Investors love crypto because it is one of the fastest ways to send someone money.
You can effortlessly complete a transaction within minutes. When the block with your transaction gets confirmed by the network, you can settle and use all your funds quickly.
The cost of transacting in crypto is also relatively low. For instance, you may need to spend around $25 to send a wire transfer.
However, crypto transactions are much less expensive. Even if the demand for your blockchain increases transaction expenses, the median fees will still be lower than any wire transfer fees.
Even if you use the most congested blockchain networks, accessibility is what crypto is all about. Anybody can use cryptocurrency. The only thing you need is an internet connection and a computer.
Setting up a crypto wallet is rapid compared to opening an account with your local bank. You never have to go through many ID verification processes or credit checks to obtain and trade cryptocurrencies.
Those who are “unbanked” can access financial services without a centralized authority. People can easily send money to loved ones or make online transactions without hiccups, thanks to cryptocurrencies.
Crypto Trading Tips
Before jumping into our top trading tips, always ensure that you keep your crypto wallet’s private key close by and avoid sharing it with others. Otherwise, you may struggle to recover your funds.
Do Some Research
Even though plenty of researchers, financial experts, and YouTube creators share a lot of information to educate the enthusiastic crypto masses, it always helps to do your own research.
Remember that someone else may be suggesting that you invest your money in a particular coin so they can get a return themselves. It would be best never to blindly trust anyone, especially with cryptocurrencies.
Everyone has an agenda of their own, so you need one for yourself to maximize your investment returns. The first step is to study what cryptocurrencies are, how they work, and their potential benefits.
Your research should also include going over the disadvantages. For instance, any asset can gain or lose value. Even if the value of Bitcoin is up today, it can go down the next day.
The cryptocurrency market is volatile, like any market. Therefore, researching the history of altcoins and Bitcoin will go a long way to explain the current state of the market.
This is valuable insight that will drive the investment decisions you make. Remember that you need your research because no one can accurately predict where the market is heading.
Understand Exchanges
If you are going to become a crypto trader, you need to understand the exchanges. This is because cryptocurrency trading is new compared to trading stocks on the New York Stock Exchange.
You must understand how each trading website and program works. Unlike leading cryptocurrencies like Bitcoin, altcoin exchange processes may take longer. So, avoid panicking if your purchase has yet to go through.
Focus on Value
Many people in top investment firms have blasted cryptocurrencies as volatile and dangerous. Some also believe this could be a “bubble” waiting to burst. However, it is always necessary to understand how the price of altcoins changes.
Consider that the price of each crypto is generally affected by the others. Therefore, if the price of Bitcoin goes up, you can expect other major coins like Litecoin or Ethereum to experience a similar price increase.
Altcoins can fall or rise in synch with each other. But some can fluctuate more than others. Therefore, it is safer to do a lot of research on fewer currencies to know which ones to invest heavily in and which ones to avoid.
It would help to remember to invest only the amount you are prepared to lose. This way, you can reap the benefits when your crypto value increases without putting everything from your professional or personal life on the line.
Go Long
It is best to cash out slowly if you want to engage in crypto trading for a healthy profit while seeing how far your investment can take you. Imagine if a person sold all their Bitcoins several years ago before its meteoric rise.
That person would be kicking themselves today when they realize how much their wealth would have increased if they held onto their investment. Avoid cashing out the minute you see a significant jump in price.
Remember that crypto trading is very volatile. So, you do not want to be caught up with quick profits each time the price jumps. There may be more returns in the long term.
Therefore, you should try to leave your wallet until you notice more price jumps, especially if they are significantly larger than the initial jumps.
Chasing the High
When it comes to crypto, things are complicated. Cryptocurrencies are relatively new. You will always see new ones pop up all the time. Therefore, it can be easy to get swept away in the madness with all the highs and lows when prices fluctuate.
Avoid making rash decisions under pressure. You must carefully determine the price highs and lows before buying or selling. Always check all markets for signs of any drops or incoming spikes.
Remember that altcoins are determined by public perception, press releases, and professional opinion. These can be riskier to deal with. So, you should invest carefully after doing as much research as possible.
Then you can make wiser decisions using your own knowledge and instincts. Top investors also suggest selling only 20% of your stock when the prices are high.
You never know when another high could be around the corner. Holding onto some cryptocurrencies to sell later to help you make more money is best.
Choosing Exchanges
Navigating all the exchanges can be overwhelming if you are trading crypto for the first time. When you stumble on an exchange you want to use, you should go through its website and application carefully.
Try to find out whether the exchange has a good reputation or not. Do they have high exchange fees? Are their payment methods secure?
If your chosen exchange is regulated, it is worth discovering who regulates them and from where.
This is because the crypto boom has earned people a lot of money. So, you will also come across many fake exchange platforms and scams that specifically target crypto traders to steal your wealth.
Stop-And-Trade-Plan
Crypto trading is a highly volatile market. You may be experiencing the same high as betting at casinos because of how much activity happens quickly.
However, it would help if you had a clear stop-and-trade plan to protect your wealth and investments. Avoid cashing out too fast and set a target of when you want to sell.
If you have an altcoin, you should select a target price increase that you want to reach before selling some of your coins. This will prevent you from losing all your fortune if the currency collapses.
Cryptocurrencies that experience price jumps of more than half their value can be risky. So, you need a target price to start selling them to avoid losing too much if everything falls.
Crypto Security
When investors buy a coin, they have two ways of storing their crypto. You can either put everything in a digital wallet or use an exchange. However, it is highly risky to leave your coins on an exchange.
This is because millions of coins have been stolen from exchanges. To keep your coins safe at all times, you should always have a mobile wallet or create a paper wallet while keeping some on the exchange. A diverse array of wallets will ensure you benefit from online and offline storage.
Choosing Wallets
Choosing a wallet for your cryptocurrency can be tricky. This depends on your own individual security requirements and whether you want to be a long-term or short-term investor.
The main ones to choose from are hardware wallets, paper wallets, hot wallets, cold wallets, and multi-signature wallets. Hardware wallets are stored in USBs and can hold the keys to your funds.
These are often kept online without being connected to the internet 24/7. Therefore, hardware wallets are safe because they cannot be affected by malware or other cyberattacks.
Paper wallets hold printed sheets of paper, like traditional funds. However, they feature codes like QR to help you access your funds. These can be unsafe because printed sheets of paper can always get lost easily.
Hot wallets are those that are connected to the internet. They are perfect for those who want to exchange their crypto frequently. Cold wallets are also like hot wallets but are disconnected from the internet to minimize security risks.
Finally, multi-signature wallets need more than one signature before a transaction can occur. Multi-signature wallets are probably the safest bet because it becomes more difficult to steal your coins if multiple signatures are needed to access them.
Account For Slippage
When crypto traders buy or sell on an exchange, they expect things to happen at their chosen price. However, this does not always happen because of slippage.
Slippage occurs when traders must settle for a different price than the one that they initially requested. This can happen because of a price change between the time the order gets logged onto the market and the execution of the trade.
Whether you trade in stocks, forex, or crypto, this can happen to anyone. Remember that cryptocurrencies experience high levels of volatility, so you must always have room for slippage.
More slippage can cost traders a lot of money. To reduce your chances of losing funds, you should avoid executing market orders and execute limit orders instead.
These orders will not settle for an unfavorable price. It is necessary to understand what slippage is and why it occurs.
This will also help you understand the volatility of the trading platform you are dealing with and your chosen cryptocurrency. Click here to learn more about slippage.
Is Crypto Trading Profitable?
When you start trading crypto, you will dive into a magical world with the most flexible trading options and a 24/7 market. You will also have to deal with lower fees and commissions.
Since the market is less regulated, you can gain more freedom regarding investment choices. Crypto trading can be a very lucrative endeavor thanks to the potential for huge gains.
This is because cryptocurrencies are a high-risk investment, so the returns are very high. As long as you have a solid understanding of how the market works and how to predict price movements, you can take in a lot of money in a short time.
However, be careful not to go in with the mentality of becoming an overnight millionaire. Success with crypto depends on your dedication and willingness to adapt and learn to keep making better investment choices.
Invest Safely Today
Now that you know some of the best crypto trading tips, it is time to pick a currency to start researching. Whether you invest in Bitcoin or other coins, you should always gain as much information about them as possible to know when to expect price hikes or lows.
Then you can set up your wallet and strategize how to maximize your returns most safely. If you enjoyed reading this post, check out some of our other trading tips.
