Cryptocurrency is one of the hottest assets to have in your portfolio at the moment. Since its introduction a little over a decade ago, it has gone through highs and lows. Nevertheless, its fame has been nothing short of a skyrocketing success. While in the beginning, it was nothing more than a fringe hobby practiced by only a few niche groups, digital money is now so widely recognized that renowned vendors and companies are beginning to include it as a viable form of payment on their websites. And while it still has quite a bit of a way to go before achieving the same status as fiat money, it’s clear that the tendency is in that direction. Indeed, there’s no shortage of experts and researchers that are certain cryptocurrencies are going to enter the mainstream over the next few years. While it cannot yet be accurately estimated exactly when this is going to happen, the enduring popularity and appeal of digital money make it a more than probable future.
With all this in mind, you are likely looking for ways to ensure your crypto trades are as successful as they can be. After all, it’s a commonly known fact that crypto tends to be volatile, and therefore transactions usually come with a certain degree of risk. While this cannot be avoided completely, there are ways to minimize it, so you reap the most revenue from your undertakings.
Limit orders
A limit order is a type of exchange that allows you to buy or sell at a specified price or lower. This allows you the freedom to better control the costs at which you trade. The way this works is that you keep an eye out for price fluctuations. If the current value is too high for your liking, you place a limit buy order. Once the price enters your pre-determined parameters, the transaction is executed. It doesn’t only work for lower prices. When you’re looking to sell crypto, you’ll generally want to sell it for a higher price. You can also set your limit to a higher value, and when the prices do spike up, you can take advantage of that.
Limit orders are also helpful if your schedule doesn’t allow for much free time to pore over the prices for hours. Once the asset reaches your limit order price, you’re free to go. It’s also a helpful tool when you’re looking to eliminate emotions from your trading strategy. When you’re an investor, you know that the fear of missing out is a very real thing. It can cause you to develop a herd mentality and perform transactions you wouldn’t do under normal circumstances. When you already have a limit set, that risk is significantly reduced.
Careful monitoring
Cryptocurrency prices register many variations in a relatively short amount of time. It’s impossible to be fully aware of all of them unless you’re a full-time trader, but you should always check the trend in prices before starting an undertaking. It will save you a lot of trouble, and you won’t waste your money on poorly planned moves only to see that the market has taken a favorable shift shortly after.
You should also aim toward performing transactions in the better-known currencies out there. Ethereum is a good example. As one of the strongest presences in the crypto ecosystem, the Ethereum price USD is more constant and reliable than that of other altcoins. While it is still susceptible to fluctuations, ETH is a more trustworthy investment. This is also due to its endurance in the crypto world, making it an asset with a considerable long-term store of value.
Dollar-cost averaging
This strategy signifies that a fixed amount of funds is invested in an asset at regular intervals over some time. This step-by-step approach means you’re building your portfolio at a slower but more self-assured pace. It’s useful in the case of cyber money, where the prices can often shift swiftly and dramatically. Investing 500 dollars over a period of two months is better than giving it all outright, as it reduces the risk you’ll be exposing yourself to if the prices drop suddenly.
Dollar-cost averaging is helpful for both buying and selling. If you’re a newcomer to the trading world, it can even give you a sense of psychological security. Entering or exiting any position can be anxiety-inducing, especially in the current bear market that’s regularly registering plenty of dramatic changes. Performing any undertaking over time is more prudent and helps you bypass the risk of making an emotionally-based decision.
If you notice the market isn’t doing great, you can feel tempted to sell. While not a wrong course of action for the short term, it may be an inefficient thing down the line. If you still can’t escape the nagging feeling that this is what you should do, however, you can choose the middle ground and sell based on cost averaging. This way, if you change your mind at some point, you can call it off, and you’ll still have the remaining coins in your wallet.
Charting
If you’ve already gained some know-how in the crypto world or are just looking for more sophisticated tools that’ll improve your trading ventures, charting is the way to go. Price charts enable you to see historic market changes and price movements, so you get a clearer picture of the way the asset you have in mind has evolved over time. The resulting patterns and data points can determine with reasonable accuracy the points that help improve gain and lower risk.
When you set an efficient chart, you’re able to exploit market data and analyze the information presented to you so you can make more successful decisions. It can also help you stay ahead of the game by recognizing situations that have occurred in the past and are repeating themselves in the present. Naturally, however, you’ll have some studying to do in order to learn how to perform these estimates accurately.
If you’ve set your mind to trading crypto, finding the strategies that work best for you is going to take you places.