Cryptocurrencies now are getting more attention than ever, and since more and more organizations accept crypto payment options, this has become a good investment for entrepreneurs. Last year the stock market experienced the biggest crash in the last decade due to the pandemic and many investors transferred their funds into cryptocurrencies for a good reason.
Since 2020 one of the worse years for the global economy, it seems like cryptocurrencies were not affected. In fact, the price of Bitcoin jumped from around $8,000 at the beginning of 2020, and not it is around $39,000. This is an incredible return rate that is almost impossible for traditional stock trading.
This increased the hype over cryptocurrencies and now many people want to get a piece of the cake. That’s why in today’s article, we will go through some of the tips that will help you start cryptocurrency trading.
1. Choose a Reputable Exchange Platform
So, to buy cryptocurrencies, you need to find a platform that sells them. Many exchange platforms offer crypto trading and you can exchange real money for some of the cryptocurrencies.
However, since the crypto trading market is surrounded by scammers, you should do a lot of research and find a reputable brand on the market that provides exchange services.
In other words, it is more important to focus on finding a trusted and reliable source to purchase cryptocurrencies, rather than finding the best deal. Remember, avoid getting a sweet deal in crypto since most of the time it means that you are getting scammed.
2. Pick You Trading Strategy
As a beginner, your crypto trading journey will be hectic. Especially if you don’t fully understand the process you are getting involved in. It is very easy to lose your mind over choosing the right strategy since you’ll be bombarded with ideas for trading strategies.
Before trying some of the strategies from the self-proclaimed crypto trading guru’s on Facebook or Twitter, try to choose the simplest way to trade and learn the process along the way.
Remember, nobody can determine the right strategy for trading and it is impossible to predict the outcome in the future and estimate return rates. However, some strategies can reduce the risk of crypto trading. The most popular strategies are rebalancing and portfolio indexing.
These strategies are trusted by financial institutions for many years, so they might work for you as well.
Unlike a traditional stock exchange market where we have closing hours and holidays, the cryptocurrency market never sleeps. This means that you could lose or make a lot of money due to price change even when you sleep.
In order to track the process and manage your risk, you need to automate your trading. Monitoring the market every second of the day is exhausting and it will only burn you out.
Instead, you should go for an automated strategy that will sell or buy cryptocurrencies when the price is right.
4. Portfolio Diversification
Just like traditional trading, cryptocurrencies need to be balanced. In other words, putting all your eggs in one basket can turn out to be a recipe for disaster. Instead, you should buy multiple cryptocurrencies and build a steady portfolio that cannot be demolished by a single market change.
That way you’ll distribute the risk to a number of different assents and avoid losing all your money.
5. Store Your Cryptocurrencies
Since you’ll operate in an online market, it is hard to gain full trust in the companies where you get your cryptocurrencies from. History suggests that such exchange websites are a target for hacker attacks which means that your portfolio is venerable.
Instead of keeping your assets on the platform, you trade on, you should buy an external wallet that has extra security measures to keep them safe. The best way to keep your portfolio safe is to be the guardian of your own bank, but this can turn out to be hard since you need your assets online in order to trade.
Basically, it is all about balancing your risks. For example, take a large chunk of your portfolio that is more like a long term investment and put them into an e-wallet. It is important to know that not every exchange platform and cryptocurrency supports every wallet. This means that you might have to open multiple wallets to store your assets.
However, there are many apps like the Tezro App that are all-in-one platforms designed to give you all the necessary information from your crypto wallets in one place. It also has a chat, task feature to keep your team updated and a blog section with articles where you can read more about Bitcoin value.
These are some of the tips that will help you start trading with cryptocurrencies without any issue. The process is hard and involves constant learning, so make sure you are up for the task and ready to get your hands dirty.