A cryptocurrency is a form of digital medium of exchange which is highly secured and is entirely based on probabilities. It uses strong cryptography, which ensures that financial transactions are secured, and the transfer of assets is verified. The ‘distributed ledger’ technology, which is typically a blockchain, is used in having a decentralized control of cryptocurrency.
The world of cryptocurrencies might look quite confusing to the new traders. Well, you have nothing to worry about! We have all been there, and we all have slowly unravelled the mystery of crypto trading. However, let me break it to you that in an industry where a tremendous amount of money is involved, the trial and error method can cost you an arm and a leg. To be successful in this field, you need to be aware of quite a few things. Here, we have compiled a guide on the five things which you should know to trade successfully.
Do your research:
This is one of the most critical steps you need to take to succeed in the world of crypto trading. The term “Do your own research” or “DYOR” is quite famous in the world of crypto trading. Like, it has already been stated, crypto is a world full of trials and errors. What works for you may not work for the next person. Hence, the most essential part is to develop your perspective, do your research, and then conclude whether you want to invest in a particular trade.
A person who has to buy a stock may look on the market for the stocks of various companies on sale, and wherever he/she matches the asking price of someone else’s stock which they put for sale, they can buy it while also paying a brokerage fee to the broker, through whom the deal was done.
There are also Over The Counter (OTC) stocks that do not meet the requirements to be traded on the stock market. These stocks are very thinly traded, and as the name suggests, one has to buy them directly from the counters. You might also find a massive gap between the asking price and the bid price of these stocks.
There are numerous resources available over the internet from where you can boost your knowledge from. Sites like YouTube, Quora, etc. will surely help you in your endeavour. Trading is entirely your personal decision; however, stepping into the industry without any prior research knowledge might prove to be fatal.
Invest a safe amount:
This is an important point which needs your attention. Never invest more than what you are willing to lose. People often get blinded by the numbers on the screen, and with a greedy mindset, they invest in trades that are much more than what they can pay.
Always maintain a safe amount, which should be somewhere half of the entire property you own. Trading big surely has its profits, but the losses are too huge to be ignored. You surely wouldn’t want to incur a loss of twice more than what you currently own. Crypto is a risky market that is only based on possibilities with no positive outcome. Hence, always invest a safe amount, which will not cost you your entire property. No matter how well you have researched any particular coin, the risks are still huge.
HODL stands for holding on to your coins. You need not invest in every opportunity you come across. Instead, wait and analyse the whole situation before taking the next step forward. Let deals go if they do not look promising enough. Remember, your money is at stake. Move ahead only when you find a deal giving your green signals.
A majority of the traders who trade in cryptocurrencies have mastered the concept of “HODL.” When the market falls, do not sell your coins for some spare cash. Hold on it, and then sooner than you know, the market will be up again, and these very same coins will help you make a whole lot out of it.
Remember December 2017, when the market dipped down, and the traders rushed in to sell their coins? They still remember this day as the day when they made one of the biggest mistakes of their lives. Soon after, the market rise back, and the coins were being sold for double they’re worth. Wait, and have patience. Do not make any hasty decision which you will regret in the time to come.
Your portfolio should be diverse
Just like you should not put all your skills and time into doing one business, similarly, you should not rely on only one coin while trading in the market. Spread your expenses and try your hand at different sources. Invest in as many coins as possible, obviously after doing thorough research about the coins. Do not stick to only one coin.
You are likely to make a success with two or three coins, then you will make with one coin. Litecoin Bitcoin (BTC), Ripple (XRP), and Ethereum (ETH) are the types of cryptocurrency which are working based on the blockchain technology. It works on a peer to peer basis.
Investing all your money in one particular trade and incurring losses in the same might cause you an arm and a leg. Mitigate your losses and invest in numerous coins at the same time.
We hope that this guide helped you to overcome your fear of trading in the crypto market. Follow the steps mentioned above, and you shall succeed in the industry. Also, remember to follow your gut feeling. Do whatever feels right to you. You can find additional information related to trading tips and tricks on 5coinsto5million.io
The stock market and trading in cryptocurrencies are purely based on possibilities and one wrong move can cost you heavily. Hence, move ahead with your investments only when you are sure about them. Also, make sure to invest less than what you entirely own.