Only a small amount of experts clearly understands the new world phenomenon while many others take it as a pure gamble. The article will help prevent you from becoming the latter and facing losses.
When we talk about cryptocurrencies, we are primarily referring to digital cons which are transferred between the right parties through a virtual transaction. Thus these coins only exist as data, and a holder cannot possess it as a physical object like traditional money.
An owner has the power to trade its coins as per a collective agreement made by all the computers present on the network. Coins are produced through mining which is a method of solving complex mathematical equations. We have miners all around the world, with most of them situated in China. The multi-billion dollar industry is booming while many nations have banned or illegitimized the crypto trading as a whole.
After knowing about some of the basics related to cryptocurrency, we must also understand a few crucial things before entering the market.
Every trade must be part of a plan
Every time you enter a deal, it must fall under a strategy with long term goals. You must never undergo a transaction based on ‘just your instinct’ as the market is highly speculative and volatile. As it is a zero-sum market, someone incurs a loss every time someone gains profit, making gains is not a piece of cake.
The whole market is made up of huge dealers who patiently wait for smaller traders to make a mistake. Even though you might be trading on a daily basis, yet, you must be ready to come across days when nothing happens. Don’t rush into the stream and lose you coins but make a plan and act accordingly.
Be clear about stop signals
As per our experts, every trader must have a set goal to achieve with every trade he makes. The statement also means that one should even know where to stop. Crypto trade is nothing less than lucrative and blindly hoping for better gains mostly meets failures.
Do not act emotionally, every coin lost and gained is nothing more than business. Sell them whenever the situation demands, take your profit and move on. This is not the traditional stock exchange where possibilities of extreme market changes are less than 3 percent. Keep your ego aside and act like the smartest person in the room.
Manage the risk
Every profitable trader knows the value of never looking for peak profits. All they do is make small gains from various investments till it accumulates to a significant sum. It not only helps in minimizing the risk but also keeps your portfolio stain free. Do not invest the majority of amounts in one trade as a single bearish run can take all your wealth at once.
Again, keep yourself from investing in bullish runs which are moving far above the expectations. The bitcoin rush of 2017 is a great example where many lost fortunes in a single click. It also means that you should not be bothered by the fear of missing out. All those who have made wealth by following trends are just lucky and will probably lose it in an instant too.
Bitcoin vs. Altcoins
The most prominent cryptocurrency behaves almost in contrast to other coins available in the market. It merely means that altcoins or other coins lose their bitcoin value every time bitcoin’s value rises. Do not indulge in trading when bitcoin’s market is volatile. You must set small targets at this time or not trade at all.
ICOs are a method of crowd sale where new companies sell their coins to buyers at a cost which is used as capital for promoting its growth. Investors find it pleasant to buy currency from day one and wait for it to rise in value at the crypto exchange.
Recently, we have come across a lot of successful ICOs, but the majority of them have not been able to meet the expectations. Scam ICOs are a reality and you should be very alert while going for one.
Thus, crypto trade is very complex and should only be undertaken by a person who is calculative and risk-taking. Nevertheless, you will be facing losses but keep on hustling. All the best!