Tips for investing in cryptocurrencies

Over the years, cryptocurrencies have begun to get more and more attention. As the attention and popularity grew, so did their involvement in numerous aspects of our society. For the past several years the most popular aspect that bitcoin and the other altcoins began to “invade” is trading.

For centuries humans have been trading one item for another. In modern times trading usually involved stocks. In recent years, the tide has turned, and cryptocurrencies are the main attraction when it comes to trading.

Today's topic will cover several tips to improve your trading game when it comes to trading with cryptocurrencies.

Diversify your trading

If you are a novice in this area, then it is most likely that crypto trading for you means trading with Bitcoins. More and more altcoins are appearing on the “market” meaning that you have tons of altcoins to invest in.

Diversifying your trading strategy can significantly reduce the risk of losing tons of money. In some cases, it may very well increase the profit as opposed to trading with only one cryptocurrency.

Research is a must

This rule applies to any kind of trading, but it should be mentioned. Before you start to pour your money in some ICO that you believe it worth investing, research it first. In recent years a lot of ICO scams have surfaced causing a lot of people to lose a lot of money.

If you already have your eye on a certain ICO, start researching it. Start with the team. Overall no one is a saint, but if you notice that a team member is involved in something illegal then think twice about going forward. Alternatively, you can look online to see if someone already got burned.

Plan your trading

One of the most common mistake investors make is trading impulsively. Head diving in every altcoin that you can think of rarely provides a positive result. Every time you want to start trading, the first thing you should do is build a strategy and then start thinking which will be the altcoin that you will invest in.

The most common mistake is going for the first altcoin that comes to mind. Even though that might produce some profit every once and a while, it is a very risky move. The best approach to this is to track the price for a while and then make a decision.

Get help

Speaking of tracking prices of altcoins, not everyone can do it. First and foremost, not everyone has enough available time to track price changes to know when to buy and when to sell. Secondly, cryptocurrencies are extremely volatile when it comes to price. That means that even the biggest experts can get it wrong.

eToro is a service that might help you in that quest. eToro is a social trading platform where you would be able to see the decisions of top investors on the site. You can track the tokens that they purchase the most and use that intel to help you decide. Additionally, you can also set your user account to make the same decisions as one of the other investors automatically.

Don’t get greedy

Greed can be your worst enemy in this line of business. The saying “quit while you’re ahead” usually applies for gamblers, but it can also apply in this situation. The volatility of the altcoins can cause you to lose a lot of money, especially if you are getting greedy.

A common mistake is to wait for too long hoping that the altcoin’s price continues to rise. The problem is that it doesn’t always go that way. The price may drop even less than the one you purchased it. For example, the Bitcoin was around $8000 in mid-November 2017. By the middle of December, the price was almost $20000. Several days after that the price dropped by a third, and it kept on dropping. Here’s a link with the details.

Aiming for small profit often is much better than aiming for large profit no so often.

Fear of missing out

Even though this is a social situation where someone is missing out on something, it can be used here as well. Fear of missing out or FOMO in the altcoin trading business occurs ins situations when inexperience traders are diving into a trading frenzy for altcoins that are “popular” at the moment. Getting aboard the FOMO train means that the decisions you make in regards to choosing the right altcoin is “guided” by the emotionally guided community and not by yourself and your personal decisions.

Conclusion

Trading with cryptocurrencies is a science, and there are a lot of things to keep in mind. If you are just starting with the trading business, these few tips should help you get started.

Happy trading.

This article does not necessarily reflect the opinions of the editors or management of EconoTimes.