Thursday, September 29

Crypto trading tips and strategies you should know

Everyone wants to jump on the cryptocurrency bandwagon. You want to get started and thus you’ve managed to get the hang of the jargon, learned and made peace with the risks, and have sorted your financial priorities. Now, you’re ready to take the bigger step, i.e., you’re ready to buy, sell, swap crypto. 

You can choose from thousands of cryptocurrencies. Remember that the cryptocurrency market is a highly volatile one and the prices keep fluctuating every now and then, particularly when we’re dealing with lesser-known tokens. The established cryptocurrencies, Bitcoin and Ethereum also have bouts of volatility but they have a proven track record of growth and can be considered relatively stable. Bitcoin is by far the most valued cryptocurrency and is also very widely held. As the prices in the cryptocurrency as well as in the stock market are tumbling, it might be a good idea to buy these digital assets. 

1. Choose an Exchange

The simplest and perhaps the most convenient way to buy and trade cryptocurrency is through an exchange. You can choose from over hundreds of the best crypto exchanges to buy crypto online. To be able to pick the right platform for you, take a look at the following: 

Security

Cryptocurrency investments are not regulated by a central authority such as a bank. In case your account goes through a data breach or if the platform that stores your cryptocurrency coins gets hacked, you may end up losing all your investments in one go. 

If you choose to keep your crypto tokens with an exchange instead of a crypto wallet, it is a good idea to ensure that they’re stored offline in a cold storage so they’re safe against theft. 

Fees

Exchange fees could also differ a lot. You might have to pay it upfront as a flat fee or as a percentage of your trades. It can be affected by volatility in prices and can be changed per transaction. You should always take the fees into account. However, experts would always advise you to stick to the big, established exchanges for their reliability. For more security and features, paying a little extra should not be a cause of worry. 

Available coins

You won’t find every cryptocurrency listed on each and every exchange. While the leading cryptocurrencies like Bitcoin and Ethereum are available on most exchanges, the lesser-known altcoins can be found on select exchanges. 

2.  Fund Your Account

On the basis of the exchange you pick, personal details such as your Social Security number, ID proofs, and your source of income have to be submitted before your account is created. Generally, it is simple to connect your bank account or debit card to add funds to your exchange account. However, the fees for each kind of transfer can be different but usually, bank transfers tend to be much more cost-effective.  

3. Place an Order

As soon as you have your payment method in place, you should be able to start trading cryptocurrency. Bear in mind that this process will also vary from exchange to exchange. If you opt for an exchange that has been created for active trading, you will find the option to place market  orders as well as limit orders. A market order indicates that you are willing to buy the cryptocurrency at the market price. A limit order indicates that you have already identified a price you are ready to pay to buy a crypto token. When the cryptocurrency reaches your price, the purchase will be carried out automatically. 

4. Practice Safe Storage

Several exchanges let you keep your investment in your account and of course, new players find it convenient. However, you should be moving them to a personal crypto wallet if you want to keep your digital assets safer. There are many different types of crypto wallets with varying levels of security. Even your exchange might offer wallets or you could opt for a third-party software. Another option is to store them in an offline hardware device such as a USB. 

Now that you’ve found your exchange and made an account, let’s look at some strategies to trade crypto.

Once you’ve picked the right exchange for you and created an account, you’re ready to put some trading strategies in place. Here are a few options: 

7 crypto investing strategies to maximize profits:

  • Choose the right mix of storage. 

Safe storage of your crypto assets is extremely important. To ensure your assets are secure you either hold them in an online wallet/hot wallet or opt for an even safer cold wallet/offline wallet.

  • Prioritize liquidity.

Liquidity is an indicator of the ease with which an asset can be converted to cash while keeping its value intact. Liquidity plays an important role when we one needs to take a call and decide how much and what needs to be invested in the crypto market. Needless to mention, Bitcoin is the most liquid cryptocurrency at present. 

  • Harness volatility. 

Cryptocurrency can be very volatile. This is beneficial for those who can make the most of the price swings but can turn out to be tricky for long-term investors.

  • Invest what you can afford.

Take a leaf out of the book for traditional investments. Only put at stake what you can afford to lose. Cryptocurrency investments can be risky, go in only if you know that you will be able to take losses. 

  • Take your gains often. 

Have a profit-taking strategy in place. Most crypto experts will tell you that you should be taking profits frequently. Try to avoid getting into the business of holding onto an asset for way too long as they may result in the prices falling down again. 

  • Diversify.

Invest in a variety of assets rather than focussing all your finances on just one instrument. This is a great risk management strategy as you do not have to worry about losing all your investments at once if the prices for one asset are fluctuating constantly. 

  • Use dollar-cost averaging.

Dollar-cost averaging is one strategy where you can invest a particular amount in consistent intervals rather than paying all at once. This will help in capitalizing on market swings without worrying about the asset’s volatility. 

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