Starting crypto trading can be very intimidating, especially if it is your first investment.
So let’s discuss some rules to make crypto trading easier for you!
1. Buy Low, Sell high
If you’ve been a crypto investor for more than 2 hours there’s a 99% chance that you’ve already heard this advice. However, it is a very important one.
The prices in crypto are highly unstable, this enables many investors to make great profits. If volatility is used incorrectly it can damage your gains too. Buy low, sell high does seem like a piece of very easy advice, although at times it can be hard to follow.
For instance, many people like to jump on a bandwagon when a rumor starts that a certain asset is going to gain value rapidly. In any case, you should stay level-headed and calm, not let FOMO (fear of missing out) get into your head and then invest based on facts, not opinions.
2. Don’t put all your eggs in one basket
This is a strategy that many investors in traditional markets follow and one that you should follow too. The idea is that you shouldn’t invest all your money into a single asset.
Diversify your crypto portfolio by investing in several assets at once. The point is to put your money into different cryptocurrencies so that if one loses value, others stay afloat. On the other hand, a diversified portfolio usually gains more over time than a portfolio with only one crypto coin.
Currently, there are thousands of crypto coins to choose from, nonetheless, it is advised to invest in coins from the top 50 or top 100 just to be safe. This, of course, isn’t a guarantee to success and you should always monitor your holdings on your coin tracker.
3. Trade what you can afford to lose
This rule is particularly important for all crypto investors. Sometimes, people get too carried away with crypto investments investing their life savings to not lose the chance of becoming the next crypto billionaire. As a result, most of these people end up in terrible conditions that could’ve been avoided.
This is exactly why you should invest only the money that you’ll be able to lose without selling your kidney afterward.
4. Always keep an eye on Bitcoin
The correlation between Bitcoin and Altcoins is undeniable at this point. Although there are some that are more related to BTC than others. When Bitcoin price goes up, the general interest in crypto-assets rises too.
The relation to Bitcoin is particularly high when it comes to the TOP cryptocurrencies based on market cap. So before investing, take a look at Bitcoin and some predictions.
5. Do your research before investing
In the first point, we discussed that following the crowd mindlessly can lead to adverse consequences. That’s why doing your own research before investing is key. You should look at the coin’s whitepaper, the company’s background, what it stands for and what unique features the coin or its platform has.
You should also consider the market capitalization of the coin and the total supply.
Why?
Coins with the highest market caps (let’s say TOP 20) won’t disappear from the market any time soon. ‘Pump and dump’ schemes, which are very common in the crypto space, don’t work as well with high market cap coins. Simply said, they are much safer.
On the other hand, total supply is important for coin predictions. Cryptocurrencies differ from fiat money in that they have limited supply. However, usually the bigger the total supply the lesser chance of the coin price jumping.
The ‘best circulating supply’ of crypto assets is generally from 60 to 150 million. In short, less is more when it comes to the total supply of coins.
However, this is not to be said that crypto-assets with high total supply or low market cap are bad cryptocurrencies as they might have many interesting and innovative features.
