The cryptocurrency market holds a lot of potential. Last year alone, it generated a large number of profits for investors all around the globe. It is powered by Blockchain technology, which is being adopted by a number of industries. Cryptocurrency, itself, is expected to become the new virtual currency and will transform the world of digital payments in the future. Therefore, a greater number of people have become interested in this market and wish to trade in it. While this seems like a good move, it is necessary that they know how to trade.

As the market is still evolving and expanding, there is something new to learn every day. Nonetheless, there are some simple yet amazing cryptocurrency trading tips for everyone that can be quite useful in the long run:

1.    Be aware

When jumping into the cryptocurrency market, your first step should be concerned with understanding what it is, how it works and the potential advantages and disadvantages associated with it. Similar to other markets, doing research on the history of Bitcoin and other altcoins will give you an in-depth look into the market’s current state and enable you to decide if it is the right time to buy, hold or sell cryptocurrency. This research is deemed essential because the cryptocurrency market is highly volatile. Professional investors and brokers like Guy Galboiz recommend that you study the market carefully before jumping into it.

2.    Know about the exchanges

As compared to stock trading, cryptocurrency is a relatively new market. As a result, it is necessary to understand how every program and trading website works. It is recommended that you first make a demo account on one of the cryptocurrency exchanges for practice purposes. This will help you in knowing how the software works before you fully commit yourself to making trades. Moreover, when you are trading on an exchange, you should bear in mind that a cryptocurrency trade might take a while to settle, unlike traditional currencies, so there is no need to panic.

3.    Understand the concept of value

One of the biggest risks associated with the cryptocurrency market is the fact that it is highly volatile. It can often be difficult for traders to understand exactly what will affect the price of altcoins. But, there is one thing that’s quite apparent; the price of one cryptocurrency is affected by the price of another. For instance, as the value of Bitcoin has grown, other major altcoins such as Ripple, Ethereum and Litecoin have followed suit.

4.    Keep diversity to a minimum in the cryptocurrency market

This might sound odd. After all, diversification is the key to minimizing risk. Yes, it is true that investing in different assets can ensure a diversified portfolio and minimize your risk. But, the rules are different in the cryptocurrency market. The price of altcoins normally rises and falls in synch with each other, some more than others. When you are dealing with cryptocurrencies, the safer and better choice is to do some heavy research for determining the best crypto for you and investing in that one alone instead of a bunch.

5.    Don’t cash out immediately

If you have made the investment for the purpose of profit and you intend to observe the market to see how far it can take you, then experts like Guy Galboiz suggest that you shouldn’t immediately cash out when there is a jump in price. Due to the high volatility levels, it can be easy to get caught up in a quick profit when the price rises, but there might be more potential in the long term. Therefore, it is recommended that you wait for at least the second or third jump, which tend to be larger than the initial ones, historically speaking.

6.    Is a high an actual high?

A complex part of cryptocurrency investment is determining when lows are really lows and highs are really highs. Since cryptocurrencies are a relatively new asset, and new ones are being introduced on a regular basis, the market hasn’t really shown any consistency. Therefore, when you are planning to sell a cryptocurrency, it is a good idea to check all market signs in order to determine if there will be a price drop or a price spike or there will be a high growth period. Public perception has a major impact on altcoins, along with press releases and professional opinion, so you need to be aware. Furthermore, it is also recommended by leading investors to just sell 20 percent of your stock during a high because there might be another high right around the corner.

7.    Know about the exchanges

You need a cryptocurrency exchange when you wish to start cryptocurrency trading, but there are several things that need to be considered when choosing one. First, you need to look at the exchange’s reputation as well as the trading fee their charge. Next, you need to check the availability of the exchange in your location and also verify if they use secure payment methods. You should also check if the exchange is regulated and get an idea of what kind of ID verification they require from traders. Hundreds of billions of dollars were generated during the time of crypto boom last year and this promoted fake exchanges to pop up along with other similar scams. So, it is crucial that you ensure the authenticity of your chosen platform.

8.    Come up with a stop and trade plan

When you are investing in a volatile market, it is a good idea to have a stop and trade plan in place. Just because a cryptocurrency is experiencing unhindered growth doesn’t mean it will continue in the future. As a matter of fact, it could come to a stop and start moving in the opposite direction. With a Stop and Trade plan, you will be alerted when a target price has been reached by your altcoin so you can sell some of it. The coins that you sell will be able to save you from an entire loss if there is indeed a fall in value of your cryptocurrency. Having such a plan is vital in the cryptocurrency market because price jumps don’t usually happen in the range of 2 to 3 percent. In fact, they are between the range of 60 and 80 percent.

9.    Ensure the security of your coins

There are two ways of storing your cryptocurrency when you have bought it; you can keep it with the exchange or you can invest in a digital wallet. Bear in mind that it can be highly risky to leave your coins with an exchange as exchanges get hacked and cryptocurrency has been stolen in the past as well. Investors like Guy Galboiz suggest that while it is perfectly acceptable to buy cryptocurrency through an exchange, it is best to invest in a third party wallet for keeping it secure. There are different types of wallets available and you can choose the one that’s most convenient for you.

10. Select a wallet

The selection of a wallet will depend on a trader’s own security requirement and also whether you are a short-term or long-term investor. Some of the major cryptocurrency wallets that are available include:

  • Paper Wallets: Similar to traditional money, these are printed sheets of paper, but they feature QR and other kinds of codes. Generally, they are considered unsafe because these can also be stolen.
  • Hardware Wallets: These are physical wallets and kept in storage devices like USBs. These are kept offline and not connected to the internet so cannot be affected by malware or other similar threats.
  • Cold Wallets: This refers to the removal of coins from any active or connected digital device like a disconnected USB or paper.
  • Hot Wallets: This storage type is connected to the internet and is idea for those who wish to use their cryptocurrency frequently.
  • Multi Signature Wallets: More than one signature is needed by these wallets for processing a cryptocurrency transaction, making it difficult for anyone to steal them.

11. Effect of Media on Price

Press releases and media have an impact on the traditional stock market and altcoins are also susceptible to these media releases. You need to stay updated with media releases because they can lead to surges and falls in the price of altcoins thereby affecting your investment. You can determine the right time to buy and sell through media releases. They also give an insight into why a cryptocurrency fell in value and when it may go back up.

12. New rules and regulations

As cryptocurrencies are new, they are not subject to a lot of laws and regulations as found in traditional trading instruments. However, this means that new laws can come out any time and throw a spanner in the works. Currently, it is best to follow all securities, trading and tax laws when trading cryptocurrencies to avoid problems in the future.

Knowing these cryptocurrency trading tips can benefit a number of traders and investors because they can use them for making a profit and minimizing the risk they face. 

Published by Justin Jersey