Cryptocurrency is now the “in” thing. As a matter of fact, some people are desperately looking to invest in cryptocurrency and yet a majority of them don’t know what they are getting themselves into. In a nutshell, cryptocurrency refers to electronic currency. Investing in this kind of currency is rewarding and yet very risky. Most people are inspired by stories of traders who bought Bitcoin when it was still low and now they are raking in millions because the currency has risen steadily over the past few years. Below are tips that can guide you into becoming a successful cryptocurrency trader.
1. Do Your Research
Before you invest your money, it’s advisable you take some time to study the world of cryptocurrency. This will help you understand the dynamics of electronic currency so that you can make an informed decision. You can’t invest in a business that you know very little about and expect to make huge returns. Since there are many people that offer training on cryptocurrency, you should consider investing in such a course before you start trading.
By taking the course, you will know how to utilize market conditions to your advantage. If you have never traded before, it’s advisable you practice using a demo account for at least 3 months. By using a demo account, you will be able to gauge whether you understand the trading concept. The advantage of using a demo account is that you can afford to make any mistake without fear of losing money.
2. Buy Low Sell High
Trading in cryptocurrency is different from trading in other currencies that go in pairs. With other currencies, you can make profit regardless of whether the market is going up or down. All you have to do is sell when the market is going down and buy when the market is going up. With cryptocurrency, you only make profit when the value of the currency goes up. By the rule of thumb, you should buy when the value of currency is low and sell when it skyrockets. If you buy when the price is too high, you might experience a big loss when the value of the currency declines.
3. Focus on Money Management
Most traders fail in cryptocurrency because they don’t manage their money well. They invest using a lot of money which makes them become emotional. You can avoid such emotional dilemma by investing money that you can afford to lose. With such an amount, you don’t have to worry about what will happen to your money in case the market collapses. For every trade that you open, there should be a pre-defined entry and exit strategy. In fact, you should first spend less money then add more as your account grows.
4. Buy Different Cryptocurrency
Just in case you didn’t know, there are no guarantees in cryptocurrency. It’s actually a game of probabilities. You can hedge on your investment by trading in different cryptocurrencies. This is because some will rise while others decline in market value. Remember, cryptocurrency is not regulated by any government. The market can therefore be manipulated by big investors and go against you.
5. Withdraw Your Money to Mobile Wallets
There is no doubt that trading in cryptocurrency is lucrative. However, you should make a habit of transferring your gains from the trading platform into a mobile wallet. This is because the trading platform can go down with all your money. The mobile wallet stores your money in electronic format. And since these wallets are regulated by the government, your money will remain safe in the event of a market crash. For more insights on the best mobile wallets, please visit Cryptohead.co.