Secrets about investing in cryptocurrency
Investing in a cryptocurrency platform is filled with lots of controversies and here we reveal some amazing secrets about this trade. Cryptocurrency trading is quite different from other trades because there is no physical good involved in it and this trade is still in its nascent stage with most tokens and coins managed by startup teams. Let us show you some recipe for success in this trade.
1. It is not always good to diversify: while most people online would suggest you to invest in multiple coins, this idea does not work for the crypto world. If you want to buy a lot of coins and increase volume then you can diversify. As a general rule, identify the coin that gives you the best value and invest in it as much as you are willing to. By investing in a particular coin after proper research can improve your overall profit. You should not look at the daily ups and downs but analyze the horizon over a period of time like a month or so.
2. It is more important to consider the market cap rather than the price: most people consider the low price of coins at a single point of time and purchase it and invest in it. But this is a highly risky decision and while some people make money just by luck, others lose a lot too. You should consider the market capitalization of the token which is the number of coins in the market and the price of the coins. While buying a coin you should check the number of coins you are buying against the total market cap of it. This will determine its supply, scarcity, and value in the market in the long run. Choose coins with low market capitalization.
3. Do not focus on the absolute price of a coin: while investing you should remember that the past performance of a coin is not indicative of its future performance, look for good future value and consider the sunk cost fallacy. Invest only 10-20% of the disposable income you have in these ventures to stay safe. Withdraw amount that you earn on a regular basis.
4. The aim is not to be always right: do not bring your ego in trading and do not try to be always right. Focus on profit.
5. Compare worth of coins against both BTC and USD: do not only compare price with USD because it is good to trade in coins which have a positive net effect on the BTC value.
6. Sell high and buy low? Crypto market is highly volatile and so it is quite difficult to judge when the price of the token that you are buying is the lowest. The speculative nature of this business makes the situation even worse. So hold on to your coins, analyze the trends and don’t get overwhelmed by sudden changes in price.
7. Invest only 10-20% of your income: some people get bankrupt after getting huge losses in cryptocurrency trading. This is because they invest 70-80% of their earnings and savings in this trade. While high investment means higher returns you should also consider the other way round. Invest only the amount you can risk and keep withdrawing earnings regularly.
8. Keep the day job: it is not advisable to start crypto trade as a full-time profession. Do not quit your day job and buy and sell tokens in your free time.
9. Remain updated: Read a lot about cryptocurrencies and remain updated with the latest news and trends of this trade. This is a fast-moving and volatile trade so keeping up to date is a must.
10. Keep in touch with people dealing with cryptocurrency: you can remain in contact with people that are having knowledge of this trade. But do not recommend or involve family or close friends with you in this trade as it is highly volatile.
These are some of the secrets of investing in cryptocurrencies.