Cryptocurrency is a concept that’s been around for some time. Previously, the majority of the population wasn’t acceptive of the idea. However, today, the narrative has changed.
The general population is becoming receptive to cryptocurrency since it’s becoming lucrative. And due to the rise in demand and the associated risks with this venture, there’s a need for guidance on crypto trading, especially for newbies.
This article highlights some of the best crypto trading strategies you can adopt and consider. To start, it’d help to:
Read more: 5 Cryptocurrency Trading Tips For Newbies
1. Consider Automation
In most cases, learning crypto trading can take time to grasp. And as a newbie, you might think of giving up trading because of this challenge. However, you shouldn’t. There are crypto trading solutions you can use to help you trade even as you’re still learning the process. These solutions adopt automation.
You can decide to embrace copy trading, where you can copy the trading moves of well-known gurus and traders in the crypto trading industry. All you have to do is set up your account on the platform accordingly. Should the guru buy a given crypto coin, your account will make the same purchase automatically. Alternatively, you can set limits to how much you can buy or sell within a day. You can also set the price at which trading bots will buy or sell a given coin. These bots will do all these actions without your intervention.
As you adopt automation, it’d be good to identify the risks involved. With copy trading, there’s no guarantee that the said guru will always make the right move. Therefore, should they undergo a sustainable loss, you’ll also experience the same. On the other hand, by setting limits, the bots can make the purchase or sale, whether at a profit or a loss.
2. Diversify Your Portfolio
Diversification is a term you’ve likely heard in an investment discussion. Generally, it means spreading your risks to prevent total loss should you undergo losses. Diversification is an essential principle you could adopt as you trade crypto.
For one, there are many coins you can trade in cryptocurrency. Instead of putting all your investment money in one, you can divide the funds and buy a given portion of the other coins. More so, it’s crucial to understand that just because a crypto coin is popular doesn’t mean its prices can’t fall. Hence, the need to safeguard your investment.
And suppose you make a trade that leads to severe losses. In that case, you won’t undergo total loss since you have the other coins to fall on. The reverse can also happen.
3. Master Your Emotions
Emotions are part of your everyday life. For instance, you can be sad, excited, or moody. Although it’s said that you should embrace them for your mental well-being, it’s highly advisable to keep your emotions aside as you venture into crypto trading.
Crypto trading is a highly volatile industry. You can undergo both a profit and a loss in minutes, and this can evoke different emotions. And that said, it’s best to master your emotions to prevent wrong trading moves.
Suppose you make several profits in a row. By nature, you’re likely to get happy and excited. And chances are, you may get overconfident with your trading and decide to continue trading using the same technique without keenly studying the market. By trading this way, you might make one wrong move that could cause a significant loss, eliminating your previous wins.
Essentially, it’d help to set daily trade limits. This way, once you transact the given amount for the day, you can take your win or loss and wait to try the following day again. Such an approach can give you a mastery of your emotions.
4. Find The Right Platform
Before you start trading, you will need a crypto trading platform. Therefore, finding the right platform should be one of your priorities. With the many options available, you need to be wary as you make your decision. You may also need to look at and consider various aspects as you choose a platform.
One is the variety of options. Since there are many cryptocurrencies to trade, ideally, your chosen platform should allow you to trade as many currencies as possible. It is crucial since some crypto trading platforms have limited trading to one or two coins.
Alternatively, if you don’t mind the limitation, you can choose a platform that accepts trading in your desired coins. However, it’s advisable to have an extra two or three coins in case you’re interested in trading in newer coins in the future. The allowance can prevent a situation where you’ll be forced to look for another platform to meet your new needs. That said, ensure your chosen platform allows for scalability accordingly.
The other aspect is security. As you trade crypto, you’re investing your money. Like any investment, you must secure it to prevent possible theft through cyber-attacks. And with that, ensure your chosen platform has embedded the right security features, such as multi-factor authentication. You can find this information on the security and privacy policies of the tool.
Cryptocurrency trading can be an exciting yet challenging venture, but it requires adequate knowledge and guidance to profit from it. Hopefully, this article can be your guide as a newbie to help you with your crypto trading journey.