Practical tips on how to trade cryptocurrencies
For a while now, I have been watching the performance of cryptocurrencies closely to get an idea of where the market is headed. The routine my elementary school teacher taught me – where you wake up, pray, brush your teeth and have breakfast has shifted a bit to wake up, pray and then go to the web (starting by coinmarketcap) just to know which crypto assets are in the red.
The start of 2018 was not a pleasant one for altcoins and related assets. Their performance was crippled by frequent views from bankers that the crypto bubble was about to burst. However, ardent cryptocurrency followers are still “HODLing” and truth be told, they are reaping big.
Recently, Bitcoin has returned to almost $5,000; Bitcoin Cash came close to $500 while Ethereum found peace at $300. Virtually all the coins were minted except for the newcomers which were still in the excitement stage. As of this writing, Bitcoin is back on track and selling at $8900. Many other cryptos have doubled since the start of the uptrend and the market capitalization is limited to $400 billion from the recent peak of $250 billion.
If you are slowly learning about cryptocurrencies and want to become a successful trader, the tips below will help you.
Practical tips on how to trade cryptocurrencies
• Start small
You have already heard that cryptocurrency prices are skyrocketing. You also probably learned that this uptrend might not last long. Some opponents, mostly reputable bankers and economists, generally call them get-rich-quick schemes without a stable foundation.
Such news may cause you to invest in a hurry and not apply moderation. A little analysis of market trends and worthwhile currencies to invest in can guarantee you good returns. Whatever you do, don’t invest all your hard-earned money in these assets.
• Understand how exchanges work
Recently I saw a friend of mine posting a Facebook feed on one of his friends who continued to trade on an exchange, he had no idea how it works. It’s a dangerous move. Always review the site you intend to use before signing up, or at least before you start trading. If they provide a dummy account to play with, take the opportunity to find out what the dashboard looks like.
• Do not insist on exchanging everything
There are over 1400 cryptocurrencies to trade, but it is impossible to manage them all. Spreading your portfolio over a large number of cryptos that you cannot effectively manage will minimize your profits. Just select a few of them, learn more about them and how to get their trading signals.
• Stay above
Cryptocurrencies are volatile. It is both their bane and their advantage. As a trader, you need to understand that wild price swings are inevitable. Uncertainty about when to act makes someone an inefficient trader. Leverage hard data and other research methods to know when to execute a trade.
Successful traders belong to various online forums where cryptocurrency discussions regarding market trends and signals are discussed. Of course, your knowledge may be enough, but you have to rely on other traders for more relevant data.
• Diversify significantly
Virtually everyone will tell you to expand your portfolio, but no one will remind you to deal with currencies that have real uses. There are some crappy coins you can manage for quick cash, but the best cryptos to manage are ones that fix existing problems. Coins used in the real world tend to be less volatile.
Don’t diversify too soon or too late. And before you jump into buying any crypto-asset, make sure you know its market capitalization, price changes, and daily trading volumes. Keeping a healthy wallet is the way to reap big from these digital assets.
