I’ve been watching cryptocurrency developments closely for a while now to get a feel for where the market is headed. The routine my elementary school teacher taught me – where you wake up, pray, brush your teeth and eat your breakfast, has shifted a bit to where you wake up, pray and then go to the internet (starting with Coinmarketcap) just to know what crypto assets are in the red.
The beginning of 2018 was not a pretty one for altcoins and related assets. Their performance was hampered by frequent opinions from bankers that the crypto bubble was about to burst. Nonetheless, ardent cryptocurrency supporters are still “HODLing” and to be honest, they are reaping a lot.
Recently Bitcoin has retreated to almost $5000; Bitcoin Cash came close to $500 while Ethereum found peace at $300. Virtually every coin was hit – apart from newcomers who were still in the excitement phase. As of this writing, Bitcoin is back on track, selling at $8900. Many other cryptos have doubled since the uptrend began, and the market cap sits at $400 billion from a recent high of $250 billion.
If you are just starting to embrace cryptocurrency and want to become a successful trader, the following tips will help you.
Practical tips on trading cryptocurrencies
• Start humble
You’ve already heard that cryptocurrency prices are skyrocketing. You also probably got the news that this uptrend might not last long. Some naysayers, mostly respected bankers and economists, usually refer to them as get-rich-quick schemes with no stable foundation.
Such news can make you invest in haste and not use moderation. A little analysis of market trends and sensible currencies to invest in can guarantee you good returns. Whatever you do, don’t invest all your hard-earned money in these assets.
• Understand how stock exchanges work
I recently saw a friend of mine post a Facebook feed about one of his friends who traded on an exchange he had no idea how it worked. It’s a dangerous move. Always check the site you intend to use before signing up or at least before you start trading. If they provide a dummy account to play around with, take this opportunity to see what the dashboard looks like.
• Don’t insist on trading everything
There are over 1400 cryptocurrencies to trade, but it’s impossible to handle all of them. Spreading your portfolio across a larger number of cryptos than you can effectively manage will minimize your profits. Just select a few of them, read more about them and learn how to get their trading signals.
• Stay sober
Cryptocurrencies are volatile. This is both their curse and their blessing. As a trader, you need to understand that wild price swings are inevitable. Uncertainty about when to trade makes you an ineffective trader. Use hard data and other research methods to be sure when to trade.
Successful traders belong to various online forums where cryptocurrency discussions are held on market trends and signals. Sure, your knowledge may be enough, but you’ll have to rely on other traders for more relevant data.
• Diversify sensibly
Virtually everyone will tell you to expand your portfolio, but no one will remind you to look into currencies used in the real world. There are a few crappy coins to deal with for quick cash, but the best cryptos to deal with are the ones that solve existing problems. Coins with real-world utility tend to be less volatile.
Don’t diversify too soon or too late. And before you take any step to buy any crypto asset, make sure you know its market cap, price changes and daily trading volumes. Maintaining a healthy portfolio is the way to reap big rewards from these digital assets.
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