I have been closely watching the performance of cryptocurrencies for some time to get a sense of where the market is headed. The routine my primary school teacher taught me – where you wake up, say a prayer, brush your teeth and eat breakfast has changed a bit to wake up, pray and then visit the web (starting with coinmarketcap) just to know what crypto assets are in the red.
The start of 2018 has not been pretty for altcoins and related assets. Their performance was crippled by bankers’ frequent opinions that the crypto bubble was about to burst. Despite this, ardent followers of the cryptocurrency are still “HODLing” and truth be told, they are reaping big.
Recently, Bitcoin bounced back to almost $5,000; Bitcoin Cash approached $500 while Ethereum found peace at $300. Almost every coin took a hit except for the newcomers who were still in the excitement phase. As of this writing, Bitcoin is back on track and is trading at $8,900. Many other cryptocurrencies have doubled since the start of the uptrend, and the market capitalization rests at $400 billion, up from the recent $250 billion.
If you’ve slowly warmed to cryptocurrencies and want to become a successful trader, the tips below will help you.
Practical tips on how to trade cryptocurrencies
• Start modestly
You’ve heard that cryptocurrency prices are skyrocketing. You’ve also probably received word that this uptrend may not last long. Some opponents, mostly respected bankers and economists, tend to call them get-rich-quick schemes without a stable foundation.
Such news can make you invest in a hurry and not apply moderation. A little analysis of market trends and valuable currencies to invest in can guarantee you good returns. Whatever you do, don’t put all your hard earned money into this property.
• Understand how exchanges work
I recently saw a friend of mine post a Facebook feed about one of his friends who continued to trade in a stock market that he had no idea how it worked. This is a dangerous move. Always review the site you intend to use before signing up or at least before you start trading. If they give a fake account for the game, take this opportunity to find out what the dashboard looks like.
• Don’t insist on trading everything
There are more than 1400 cryptocurrencies to trade, but it is impossible to handle them all. Spreading your portfolio to a huge number of cryptocurrencies than you can effectively manage will reduce your profits. Just pick a few of them, read more about them and how to get their trading signals.
• Stay sober
Cryptocurrencies are volatile. This is both their downfall and blessing. As a trader, you need to understand that wild price swings are inevitable. Uncertainty about when to make a move makes one an ineffective trader. Use hard data and other research methods to know when to trade.
Successful traders belong to various online forums where cryptocurrency is discussed in relation to market trends and signals. Of course, your knowledge may be enough, but you have to rely on other traders for more relevant data.
• Diversify purposefully
Almost everyone will tell you to expand your portfolio, but no one will remind you that you are working with currencies that are used in the real world. There are a few crappy coins out there that you can dabble in for a quick buck, but the best cryptocurrencies to tackle are the ones that solve existing problems. Coins used in the real world tend to be less volatile.
Don’t diversify too early or too late. And before you decide to buy any crypto asset, make sure you know its market capitalization, price changes, and daily trading volumes. Maintaining a healthy portfolio is the way to get the most out of these digital assets.