Political strategies

Your go-to guide to crypto trading strategies

Cryptocurrency can be a good investment, especially when you understand it in its entirety. However, if you go into it with a haphazard mentality, things might not go as planned. Like any other form of investment, cryptocurrency requires you to have relevant knowledge. Therefore, if you are just starting out, this guide may be for you. Another thing you need to understand from the start is that cryptocurrency is not a get-rich-quick scheme.

Social media personalities can be a bad influence in this regard, and many people lose a ton of money as a result of half-baked strategies peddled on social platforms. Although you could make money from crypto trading without knowing enough about it, your luck would only be short-lived. This guide will not only cover the fundamentals of investing in cryptocurrencies, but will also give you valuable tips on trading strategies.

Why cryptocurrency?

Cryptocurrencies are popular because of the blockchain technology that backs them. Blockchain is a concrete technological innovation that allows these digital currencies to be safe for investing. It is thanks to the blockchain that cryptocurrencies remain decentralized. There is no government or bank involvement in the cryptocurrency minting, distribution and transaction process. Of course, exchanges and fluctuations in the dollar have an impact when you have bitcoin to dollars, but this does not limit cryptographic decentralization. In addition, decentralization allows it to remain transparent.

Transactions are recorded on the blockchain, which itself is a digital ledger that records every purchase or sale. Since the blockchain is supported by various end users, it is highly secure and cannot be tampered with, unlike records stored in a central database. Finally, the acceptance of cryptocurrencies is increasing across the world. Although many countries are trying to restrict cryptocurrency operations, there are some that are increasingly promoting them. This reduces the need to transfer money into another form of fiat currency when traveling abroad.

Cryptocurrency trading strategies

Like any other investment, cryptocurrency has its own set of trading strategies that you must adhere to in order to be successful. Your priority in any form of investing is to minimize the risks you face. Careless trading can cost you huge losses, and if you’re not smart about diversification, you could lose everything you had in hours or days. The cryptocurrency market is very volatile.

This means that it is extremely sensitive to external market factors and tends to rise or fall frequently over short periods of time. Thus, a short delay or rush could cause your investments to plummet. To avoid such instances, you need to keep a close eye on market events. As a precaution to make the right investments, try to understand what you are getting into. That said, here are some strategies to help you trade cryptocurrencies.

Learn more about the market

Knowledge of the market is a prerequisite for this discussion and must be the first thing to do. Unless you are clear on the market, you can’t be expected to make a smart move. You need to understand the patterns, trends, and influencing factors that make up the markets. Learn to read and observe the markets. To identify patterns, crypto trading platforms have candlestick charts that you can read.

The charts are not easy for beginners to understand and would require you to do some research on your own to figure out what the red and green candles mean. The up and down trends on the chart are the barometers of public sentiment for a particular currency. Without making an effort to understand these patterns, you would not be able to make calculated movements. Therefore, start by regularly monitoring the market. Find out what factors influence audience behavior and how it leads to an increase or decrease in market capitalization.

Follow the news

The second thing you need to do is follow the news. Every moment, something is happening in the world. Political decisions affect the markets which interpret these events as favorable or unfavorable. If you follow the news, you will be able to see trends more clearly.

For example, when the US Federal Reserve raised the interest rate to counter inflation, it led to a crash in the cryptocurrency market. Those who followed the news closely exited their investments just before the ship began to sink, saving their investments and making a profit in the process. When the news spread far and wide, everyone else panicked and rushed to get rid of their investments, but it was too late.

Have a diversified portfolio

Have a diversified portfolio can help you minimize the risks. A diversified portfolio should include 80% investments in established currencies and 20% in less established but promising currencies. This way, instead of putting all your eggs in one basket, you would put them in separate baskets so that if one of them leaks, you could have the others to fall back on. However, if you have all your investments in one popular currency, price fluctuations can have a significant effect on you and you stand to lose a lot. Therefore, be smart and minimize your risk by diversifying your portfolio.

Act in a timely manner

Making the right decisions at the right time is essential when it comes to investing in cryptocurrencies. If you don’t act in time, you could miss big wins or get yourself into trouble for not being proactive. As mentioned above, if you follow the news, you will be well informed to know when to make the right decision. Understanding the market allows you to identify the right time to act, and that’s exactly what separates good investors from average investor scores. For example, if the market is falling and you have the capital to invest lying around, you can invest it, given that you expect the market to rise in the next few days.

Conclusion

The strategies mentioned above are the basics of responsible cryptocurrency trading. Of course, there are plenty of other tips and tricks when it comes to making investments and reaping the rewards, but if you know your basics, you’ll be miles ahead of others in the game.

Photo credit: The characteristic picture was directed by Vitalik Radko.
Editorial Note: This article is not investment advice. All investments have the potential for loss, and a profit is not guaranteed with any type of trading.

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