I have been closely watching the performance of cryptocurrencies for some time to get a feel for where the market is headed. The routine that my elementary school teacher taught me – when you wake up, pray, brush your teeth and eat breakfast has shifted a bit to waking up, praying and then going online (starting with coinmarketcap) just to know which cryptos assets are in the red.
The start of 2018 has not been great for altcoins and related assets. Their performance was crippled by bankers’ frequent opinions that the crypto bubble was about to burst. However, ardent followers of cryptocurrency are still HODLing and frankly, they are reaping big profits.
Bitcoin recently bounced back to almost $5,000; Bitcoin Cash approached $500, while Ethereum found peace at $300. Virtually every coin was struck except for the newcomers who were still in the excitement stage. As of this writing, Bitcoin is back on track and trading at $8,900. Many other cryptocurrencies have doubled since the start of the uptrend, and the market cap is $400 billion from a recent peak of $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’ve also probably gotten the news that this uptrend may not last long. Some skeptics, mostly respected bankers and economists, generally label them as get-rich-quick schemes with no solid foundation.
Such news can cause you to invest hastily and fail to apply moderation. A little analysis of market trends and currencies to invest in can guarantee you good returns. Whatever you do, don’t invest all of your hard earned money in these assets.
• Understand how stock markets work
I recently saw a friend of mine post a feed on Facebook about one of his friends who went on to trade a stock market that he had no idea how it worked. This is a dangerous move. Always review the site you intend to use before you sign up or at least before you start trading. If they provide a dummy account for you to play with, then take this 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 across a huge number of cryptocurrencies than you can effectively manage will reduce your profits. Just select a few of them, read more about them and how to get their trading signals.
• Stay sober
Cryptocurrencies are volatile. This is both their curse and their blessing. As a trader, you must understand that wild price fluctuations are inevitable. Not knowing when to make a move makes one an ineffective trader. Use hard data and other research methods to be sure when to execute a trade.
Successful traders participate in various online forums where cryptocurrency discussions are held regarding market trends and signals. Of course, your knowledge may be sufficient, but you must rely on other traders for more relevant data.
• Diversify meaningfully
Virtually everyone will tell you to expand your portfolio, but no one will remind you to work with real-world currencies. There are some crappy coins you can deal with for some quick cash, but the best cryptocurrencies to work with are the ones that solve existing problems. Real-world coins tend to be less volatile.
Don’t diversify too early or too late. And before you make a move to buy a crypto-asset, make sure you know its market capitalization, price changes, and daily trading volumes. Maintaining a healthy portfolio is the way to reap big profits from these digital assets.