If you’re a newcomer to the market, here are some of the things you need to remember in order to navigate the market more efficiently and enjoy larger revenue streams.
Do your research
The crypto market is a mystery for many, particularly because many investors don’t take the necessary time to learn more about the market and just want to skip straight to the trading part. This excitement is understandable, but the decentralized Bitcoin market cannot be approached the same way as the more traditional assets. You have to take historical data, investor engagement rates and the news into account in order to have a positive outcome and actually boost your earnings. Going in with absolutely no knowledge means you will have to learn the hard way by making costly mistakes in the beginning and learning from them. But knowing a little about the blockchain and keeping an eye out on all the factors that could influence market movements can help minimize the risk of such events occurring so that your losses are not so pronounced.
Diversify
While it’s natural to focus on Bitcoin as a crypto trader, you can also not make a whole portfolio out of it. Focusing on diversification will help a great deal, as it means that your revenue will remain more or less consistent even in the case of market failures or devaluation. If you want, you can focus on other assets hosted on the BTC blockchain, such as magic eden ordinals, which are also provided by a trustworthy exchange, so you don’t have to worry about your capital being in jeopardy. Unfortunately, the crypto space is rife with scams and cybercriminals wanting to trick investors into relinquishing vulnerable private information that could be used to hack into their accounts, so the importance of always using a reliable network and a trustworthy exchange that are safe and secure should not be underestimated.
Holding
There are two main ways to deal with cryptocurrency assets: either buy them and trade them quickly after, or hold onto them after purchase in order to allow them to build their value over time. While both were equally popular at some point, the difficult market of 2022, where the recorded losses often exceeded 70% even in a reliable, relatively stable market such as Bitcoin, caused many to switch to long-term strategies in order to mitigate the risk of losses.
Since cryptocurrencies are only growing in value, holding on to your assets and allowing them to amass value is the most logical solution, but the fluctuations, potential for massive earnings and the fear of missing out act as potent catalysts, causing many to disregard their own strategies and make bold moves which don’t always yield the expected results. It can be difficult to maintain a HODLing strategy, as it takes considerable patience and resilience, but keep in mind that some of the earliest investors that held on to their funds saw a return on investment that made them into millionaires. Use that as an incentive the next time you’re tempted to stray from your path.
Buy low, sell high
If you nonetheless want to engage in some daily trading ventures as well, apart from the amount you’ve put aside, it’s crucial to remember this basic rule: buy low and sell high. It seems simple enough, but it can actually be quite complicated to achieve, notably because the marketplace offers so many opportunities but is marked by considerable changes. For instance, prices could have gone down at some point, but they might still be a bit too hefty for your budget. It could seem like the best time to buy, nonetheless, but there’s the possibility that prices will go down even lower over the next couple of days.
At the same time, they could also experience a momentary rally and become more elevated, leading you to postpone your endeavor completely. This is the kind of difficulties and uncertainty you’ll deal with within this trading environment. So, how can you be successful in this strategy that feels purely subjective and based on nothing else other than luck? You’ll have to become adept at working with algorithms and tools in order to track your portfolio and analyze the market as well in order to determine the best times for doing these market movements.
The best-known indicator is the weekly average, but you should also use the monthly one in order to get more security and predictions that are a little more accurate. Keeping track of trends is also crucial and allows for better investments overall.
Automation
When trading in regular stocks, bonds and shares, investors often choose to automate purchases in order to make the most out of the cost averaging. Most crypto trading exchanges allow you to set a similar strategy in motion and create recurring buys, such as a fixed amount every month. That ensures you get more when prices are low and less when they are high, but also that you reduce the incidence of losses so your portfolio continues to grow on a linear, more predictable path.
Automating purchases also reduces some of the stress that comes with trying to time your transactions perfectly to the market movements and choose the best points to sell. This is something that even professionals who have been in the market for a very long time struggle to get right, so it will be understandably more difficult when you’re a newcomer.
Dealing with cryptocurrencies is understandably tough, even when the coin in question is one such as Bitcoin, which is known for its resilience and ability to retain value. However, with just a few simple strategies and an extra dose of patience, you can get things right and enjoy substantial gains as well.
