The financial world is evolving, adding cryptocurrency as the latest financial instrument to its family. The crypto market is a relatively new financial market, roughly a decade old, and it has shown its potential in the past.
Bitcoin and Ethereum are the two most dominant cryptocurrencies
in the crypto market. During the inception of these two cryptos, their prices
were trending in mere cents; today, each Bitcoin, the biggest in market
capitalization, is trending between $29,000 and $30,000, while each Ethereum,
which ranks next to Bitcoin in terms of market capitalization, is trending
between $1,900 and $1,800 at the time of writing this article.
Bitcoin was the first cryptocurrency; the rest of the cryptocurrencies are called ‘alternate coins" or "altcoins."
Trading in cryptocurrencies can be
fun, as they offer higher returns compared to traditional financial markets.
Nonetheless, choosing the right cryptocurrency is a must, as not everyone can
afford Bitcoin or Ethereum, and most cryptocurrencies on the market are
useless; these useless cryptos are also called "shitcoins."
Having said that, many still prefer investing and trading in Bitcoin and Ethereum.
We will share a few tips that will help you choose the best cryptocurrencies besides Bitcoin or Ethereum.
While trading in cryptos, you need to follow three golden rules
while researching that will ensure you make the most of the crypto market:
investing, holding, and securing investments.
Investing
Setting clear goals for investment
You should remember that without vision, you cannot go further; the same is true with cryptocurrency. Cryptocurrencies are the most volatile financial assets; their prices can rise or fall very quickly, and at times they can fall as far as 100%.
Thus, you must set a goal so that it gives you a clear vision. As a thumb rule, you should have two goals: one for the short term and the other for the long term.
Both of these goals will help guide you and keep you motivated,
so you can make changes in your strategy to maximize your profits.
Diversify your portfolio.
As mentioned earlier, cryptos are notorious for their volatility, so it would help to diversify your portfolio. Like the stock market, where financial instruments offered can be purchased in fractions, the same is true for the crypto market.
You should diversify your crypto holdings, which should make up between 10% and 20% of the money you save. You can always go for dollar cost averaging while investing in cryptos.
For example, if, with the above calculation, your 20% is equal to $800 and you want to invest in the next four months, then you invest roughly $200 per month in buying cryptos.
However, during a single trade, you should invest 2% to 5%, so
you do not gamble away all your wealth in a single trade.
Crypto brokers or brokerage firms
Although there are several study materials available online, it would be helpful for you if you approached a genuine, reputed, and trustworthy crypto broker or brokerage firm.
These online crypto brokers or brokerage firms offer self-paced cryptocurrency-related online courses. You can take these courses any time of the day; thus, you do not have to sacrifice your day job to learn about the crypto market.
Although the general idea is that buying low and selling high is the key to a successful trade, opting for these online courses is beneficial because they teach you how to research a particular crypto and strategies for entering and exiting the crypto market. They will also guide you on how to decipher information related to the crypto industry and how it will affect the price fluctuation in the crypto market.
Another advantage of joining a crypto broker or brokerage firm
is that they have a demo trading platform that is identical to the live one;
however, it uses virtual currencies instead of real currencies, so you can
trade and hone your cryptocurrency
trading skills without losing any money in a bad trade.
Trading platform
Several online crypto brokers and brokerage firms offer demo accounts. As mentioned earlier, such trading platforms are excellent opportunities to hone your crypto trading skills.
Since a demo account will ensure that any losses you incur will not harm your wallet, it is equally true that even with a profit, you will not make any real money.
These trading platforms have charts and graphs; once you know
how to operate them efficiently, you can switch between trades and charts and
keep an eye on them.
Trading platforms feature
Every trading platform has features that help crypto traders make research-based strategies to enter and exit the market when the opportunity arises. These features not only have charts and graphs but also "stop-loss" and "book-profit."
When you are honing your skills on a demo account, you should
also make a habit of using them in your trade. Thus, these risk management
tools will ensure that you do not make a loss, and when the window of
opportunity opens, you can book a profit automatically.
Crypto Community
You should also join a crypto community; they have crypto developers available as community members. You will gain added knowledge. You can also learn something new about cryptocurrency that will enhance your knowledge.
However, you should be cautious and avoid asking which cryptos are good to invest in since several crypto users could be scammers too, as rug-pulling is quite common in the cryptocurrency market.
You should base your strategies on your research. Each one is
unique and has a unique trading style; thus, their strategy also differs from
yours. They have different financial goals and aspirations. They may also have
financial resources that differ from yours.
Research
You should master the art of researching and tuning your skills. Since research is the key to a successful trade, reading the market news, how it impacts the crypto market, and deciphering technical and fundamental indicators
You must understand that initially, you will make mistakes and
also suffer losses when you trade in a live environment. Thus, it will serve
you best if you stick to your plans, no matter if there is an opportunity to
make a profit.
Journal
It would help you a lot if you were to record your profits and losses in a journal. After each trade, try to figure out what went right when there was a profit and what went wrong when there was a loss. It will further help you refine your research and trading strategy.
Keeping a journal will also erase the "lucky streak"
or "beginner's luck" when you keep winning successively while
trading. You must understand that the crypto market is not a gambling den where
you gamble away your wealth for fun. You are investing in the crypto market for
the brighter future that you have always dreamed of.
Holding
Emotions
Controlling your emotions is also very important when it comes to trading in the crypto market. It is important that you learn to control your emotions; otherwise, if they take over, then losses are guaranteed.
You can learn to control your emotions while trading on a demo account. Over here, you will not only learn to hone your skills but also master your emotions. If a trade goes well, you will not begin the next one impulsively.
And if you are making a loss, you will not continue your trade
by investing in it with the false belief that this last trade will cover all
the losses.
Don’t make a habit of frequently checking your crypto portfolio.
Give it some time to develop. Invest and make changes when your research tells
you that certain cryptos are not worth keeping.
Placing a price on trade
You must come up with a target price for each trade, and this
can only be achieved by honing your research skills. Research is the key to
success. Ascertain the goal price for each of your investments. Once you've met
these goals, don't be afraid to make a profit. It assists in ensuring profits
even in a choppy market.
Have long-term plans
It is advisable not to trade frequently; try to trade one
percent of your entire portfolio since it does not have any tax benefits.
Securing investments
Investing in offline crypto wallets
In recent years, many cryptocurrency exchanges have gone bankrupt. Many crypto investors and traders have lost billions of dollars. Thus, it is advisable not to keep your money on a cryptocurrency exchange.
Crypto exchanges are also frequent targets for cyber threats from hackers, viruses, malware, and so forth.
Thus, it is in your best interest to invest in a cold crypto wallet. Although these offline cryptos are a bit expensive, they are worth it since all your crypto holdings can be kept secure. It is always wise to do research on these crypto wallets before settling on one.
Although you can ask in the crypto community which one is the
best, you can also check reviews on different crypto wallets.
Beware of crypto scams.
Crypto scams are a dime a dozen, and you will find many crypto-related scams online. You should ensure that you keep yourself updated with the latest crypto scams and how they work.
Having awareness regarding crypto scams will ensure that you do
not fall victim to any such scams.
Final thoughts
We know for sure that cryptocurrencies are the future, as many
governments across the world are also showing a keen interest in them. Many
countries are considering having their version of cryptocurrency. Till that day
arises, we can trade in these cryptos and stay vigilant regarding any crypto
scam.