The entire realm of cryptocurrencies, especially trading, is full of anticipation and excitement surrounding the potential of making a lot of money. However, if you’re not up to speed on the markets and all the ins and outs of trading, it can be hard to figure out what you’re supposed to be doing.
Although we cannot possibly teach you everything you need to know about trading cryptocurrencies, nor can we give you any guarantees that you’ll be making a ton of money, we can give you some very helpful tips for trading cryptocurrencies online that should help you succeed.
While there is no sure-fire formula for making a profit at trading in cryptocurrencies, these tips should give you a distinct advantage:
Devise a Strategy
Before going down this path ask yourself why you want to trade in cryptocurrencies in the first place. You need to have a good reason why you’re doing this and you’ve got to determine what your strategy will be, especially for afterwards. There is always a chance that you won’t win at this since for every winner, someone has to come out on the losing end.
You might be planning on trading daily, but think this through because it may make sense to observe the markets for a while before plunging in and possibly losing everything on an impulse.
In any type of trading it is vital that you know what markets you’re targeting and when you need to stop. Establish an obvious target for grabbing your profit while at the same time setting a stop-loss target as well. You have to decide ahead of time when you’re going to cut your losses.
It’s important to think with your head and not your ego. Crypto trades can be risky, so it’s best to quit when you’re ahead or simply leave to cut your losses.
Do Not Let FOMO Rule (Fear of Missing Out)
Although it may be exciting to watch others play this game and win or lose, it’s important that you avoid giving in to temptation. There is no point in being obsessed with the idea that you could be missing out because with every single day new opportunities arise. It is often better to take a back seat and observe how things are going before putting yourself in a risky position.
Spread Your Risk
You never want to put all your eggs in one basket, so do not go in search of huge movements in the market. This is not how you’re going to make a profit. What you want to do is focus on where you can make small gains that will ultimately add up to big profits. This will require that you manage your risk wisely across your entire portfolio. Avoid investing a lot of money in a highly risky market by placing small bets that have a better chance of a return.
Remember that the Market is Volatile
It is important to be reminded that most cryptocurrencies are tied to the value of the Bitcoin when it comes to trading. You need to know how volatile and unpredictable the Bitcoin is when you decide to trade in cryptocurrencies.
The Bitcoin and Altcoin have an inverse relationship, which means that when the value of the Bitcoin goes up the value of other currencies usually drop, and vice versa.
When there is additional volatility in the Bitcoin, trading conditions can be quite difficult because there is no way to anticipate what’s coming. During times like these, experts advise people to just stop trading.
Depreciation Must be Anticipated
It’s safe to say that most cryptocurrencies are going to depreciate over time. If you plan on holding onto your currencies for the long-term you might want to do some research to determine which currencies will likely hang onto their value and which ones are more likely to depreciate.
Currencies like Dash, IOTA, Monero and Ethereum all experience the highest daily trade volume since they’re all leading coins. However, it is up to you to examine each coin’s chart so that you can identify periods of stability and volatility as well as low valuation.
Be Careful When it Comes to ICOS (Initial Coin Offerings)
Many fledgling projects and start out by inviting a lot of investors to buy shares in the project early at a lower price and it is no different when it comes to launching a new coin or token.
The whole idea is based on the thought that the new coin will turn a nice profit once it starts trading on the exchanges. This has proven true over the past few years with quite a few successful ICO projects with early investors doing quite well. Many currencies actually doubled and even tripled in value. Augur in fact got a 1000% return for its ICO investors.
However, this is the exception and not the rule. Certain ICOs have ended up being complete scams with investors being left high and dry by the ICO’s organisers. Do not get caught up in the excitement, do your research and keep your head screwed on tight. If it seems too good to be true, then it probably is.
Find Out What the Fees Are
Certain exchanges have huge fees if you buy from the maker or from the order book. Shop around for the right exchange because these fees can go up to 0.1%, which can add up to a considerable amount of money when trading in currencies.
If you want to be successful at this you’ve got to have fun. The only way to do this is to establish certain limits and stick by them. Do your research and don’t get carried away. The important thing is to remember that cryptocurrencies have an actual monetary value so you need to behave accordingly.
Never bet more than you are realistically prepared to lose and don’t play games with your house payment or the college fund you have set up for your kids. Determine your limits ahead of time, a particular coin and a certain exchange and don’t deviate. Follow the tips listed above and you should do fine.
Now that you’re ready, check out the top rated trading platforms listed on our guide:
|Rank||Broker||Special Offer||Min. Deposit||Spreads From||User Score||Max leverage||Regulation||Available Currences||Start Trading|
|1||2% management fee and 100% spread rebate||$200||2 pips|
|400:1||ASIC, CySEC, CFTC, FCA, MiFID||Bitcoin, Ripple, Ethereum, Litecoin, Dash, Bitcoin cash||Visit Site|
|300:1||CySEC, Financial Conduct Authority (FCA), ASIC||Bitcoin, Ethereum, Bitcoin cash, Ripple||Visit Site|
|3||up to 50%, up to $20,000||$100||1 pips|
|400:1||MiFID, Central Bank of Ireland, ASIC, FSC, BVIFSC||Bitcoin, Bitcoin cash, Etereum, Litecoin||Visit Site|