The world of cryptocurrencies is potentially lucrative. And that promise of money has led some people to consider making investments in coins and tokens.
However, before doing so, it’s always best to do a bit of research. And in this guide, we’ll help you do just that.
Below, we’ll cover four essential tips for beginners looking to get into crypto trading. We’ll talk about the importance of keeping up with market changes, the benefits of having a diverse portfolio, and why it can help to think about long-term goals.
But first, let’s take a look at the crypto trading market as a whole.
About the Crypto Trading Market
Cryptocurrencies are an interesting thing. These virtual coins are not controlled by any one central bank or government body. Given that they’re not issued by a government, they’re also not considered legal tender. However, despite that, they are deemed valuable to a huge number of people.
Crypto trading refers to the process of buying and selling cryptocurrencies. These prices are made against the dollar or against other cryptocurrencies. Trades and transactions are made using blockchain technology, which makes them very secure, anonymous, and instant.
There are many different types of deals that a person can make, one such example are contracts for difference (CFD). This type of deal in particular allows for more flexibility, giving you the option to make short and long term. Other types of deals involve simply buying and selling a cryptocurrency on an exchange.
It’s important to be aware of potential changes in the market and the factors that could influence prices. One of the biggest factors is regulation. Some countries have discussed introducing more laws around the tradablility of crypto coins, which can send a ripple through the markets.
There are also individuals, like Elon Musk, who, from time to time, send minor shockwaves through the market, which can impact prices. For example, a few years ago, he abruptly announced that Tesla would no longer accept Bitcoin as a payment method due to environmental concerns.
However, the crypto market is resilient and has a tendency to bounce back strongly. Now, let’s take a look at some of the tips that can help you when you get involved in crypto trading.
1. Do Your Research
There’s a lot that goes into buying and selling cryptocurrencies. It isn’t just a matter of buying low and selling high. You need to understand the market to know when the time is right to buy and when to sell.
On a broader level, this may involve researching the market as a whole and following some key commentators. You could also join online communities on the likes of Reddit, which can give you the lowdown on everything from emerging coins to tips on possible Luna price changes.
By doing this research, you’ll also gain a clearer understanding of what’s worth buying. For example, some crypto coins carry clever technology, such as greater encryption and security. Some people have gone as far as to say that other coins, like Dogecoin, are completely useless, yet they still carry some market value.
Being more connected with the industry and market as a whole will enable you to make better judgment calls. And you may be more aware of any dramatic changes.
2. Stay Up to Date With Market Changes
We’re going to elaborate further on something touched upon above, and that’s staying up to date with market changes.
Daily fluctuations in the crypto market are common. It’s possible to take advantage of those little peaks and troughs to earn a profit on trades on a daily basis.
If you’re investing in crypto as a side hustle, then you may not have the ability to keep up to date with market changes. To help you, some crypto exchanges allow you to set automated instructions to buy and sell at certain prices. This means that you don’t have to miss out on any opportunities or take a hit when you could avoid it.
To help you stay up to date with values, you could keep a cryptocurrency list handy. This will feed you live prices for a range of different currencies, allowing you to respond quickly.
3. Diversify Your Portfolio
One tip passed down by professional crypto investors is to diversify your portfolio. By this, they mean to invest in a number of different coins or tokens. This essentially allows you to spread your bets. It can allow you to profit from unexpected opportunities, but it also can offer some protection to your investments as a whole.
This means that, for example, if the SLP price suddenly dips, you’re not at a complete loss. You’ll have spread your risk, so one investment might suffer but the others may go unaffected. Others may even profit from the downfall of their rival coins—it’s just the way the market can operate, and it can be fierce.
It’s therefore worth researching different strategies of diversification. For example, you could invest some money in Bitcoin and keep a small amount for emerging coins in the hope that they take off.
You could instead look to buy a number of mid-value coins, or you could even go against this advice and place all of your eggs in one basket. It’s your money to invest at the end of the day.
4. Think Long Term
Nowadays, we’re generally a lot less patient. We want things now, on demand. It’s the reason why platforms like Netflix have sprouted up.
With crypto, it’s easy to fall into the trap of wanting a quick result. But most of the time, that’s simply not possible. Sometimes, you can buy some coins and the value falls below what you paid. It may not recover for months, but then the price could spike and an opportunity to sell and profit arises.
Many of these tips link together. They can help you build a more holistic strategy. If you do your research and understand the market, you can put a sustainable, long-term plan in place that will hopefully see you achieve a profit.