I have been closely following the performance of cryptocurrencies for some time to get a sense of where the market is going. The routine my primary school teacher taught me – where you wake up, pray, brush your teeth and eat breakfast has shifted a bit to wake up, pray and then go online (starting with coinmarketcap) just to find out what crypto assets are out there in red.
The start of 2018 has not been pretty for altcoins and related assets. Their performance was crippled by frequent bankers’ opinions that the crypto bubble would burst. However, ardent followers of the cryptocurrency still “hODL” on and truth be told, they are reaping big.
Recently Bitcoin bounced back to almost $5000; Bitcoin Cash came close to $500, while Ethereum found peace at $300. Almost every coin was hit, except for 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 uptrend began, with a market cap of $400 billion, up from a recent $250 billion.
If you are slowly warming up 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 probably also got word that this uptrend may not last long. Some proponents, mostly respected bankers and economists, tend to call them get-rich-quick schemes without a stable foundation.
Such news can make you invest in haste and fail to apply moderation. A little analysis of market trends and currencies worth investing in can guarantee you good returns. Whatever you do, don’t put all your hard earned money into this property.
• Understand how stock markets work
I recently saw a friend of mine post a feed on Facebook about one of his friends who continued to trade in the stock market and he had no idea how it worked. This is a dangerous move. Always review the site you intend to use before registering or at least before you start trading. If they give you a fake account to play with, take that opportunity to learn what the dashboard looks like.
• Don’t insist on trading everything
There are over 1400 cryptocurrencies to trade, but it is impossible to handle them all. Spreading your portfolio over a huge number of cryptocurrencies than you can effectively manage will minimize your profits. Just pick a few of them, read more about them and how to get their trading signals.
• Keep your composure
Cryptocurrencies are volatile. This is their downfall and their boon. As a trader, you must 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 cryptocurrencies are 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 meaningfully
Almost everyone will tell you to expand your portfolio, but no one will remind you to deal with currencies that are used in the real world. There are some bad coins to deal with for quick cash, but the best cryptos to deal with are those 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 reap great benefits from these digital assets.