Cryptocurrency uses the digital medium of exchange and it is the best market for long term investment. Multiple companies in the crypto market issue their own currencies that can be traded to gain profit on exchanges like Bitcoin Loophole. You will need an online wallet that will transfer your real cash to buy/sell these cryptocurrencies. This internet-based exchange uses the Blockchain technology and is backed by a good security system which appeals to the crowd. Since cryptocurrency is still an emerging trend there are some basic do’s and don’ts that one needs to abide by to make the most out of the market & gain successfully.
Here are some essential tips and tricks to keep in mind before you set your foot in the crypto economy. These tips will guide you on how to avoid extra proceeding fees, what strategies to stick to, better investment plans, etc. They will also help you sustain a long-term position in the market.
Let us keep it simple and jump right into some interesting Bitcoin investing and trading tips.
Save money. Go for exchange over a broker
If you wish to save a little on transaction fees, then prefer an exchange over a broker like for example, buy, and sell with GDAX rather than Coinbase. Use limit orders over market orders. On exchanges like GDAX, limit orders are free if they do not fill up instantly and they charge a much lower fee than market orders. Meanwhile, GDAX market orders result in a 0.3% fee which is better in comparison with Coinbase that charges 1.4% fee. However, you can get that down to 0% if you prefer day trading.
Consider building an average position
The best way to prevent poorly timed trade is to avoid buying all at once & try to buy assets at its “average” price over time. Making too big a purchase at once can be challenging to sustain (and thus can also lead to poor decision making). Learn laddering and averaging. Purchase when the prices come down and sell when the prices go high. Laddering and averaging will help you to avoid ill-timed purchase in the tricky crypto market.
Aim to buy low, sell high
Try not to buy high, sell low. Follow the price trends closely. It makes sense to make a purchase while the price starts to breakout but making a purchase after the breakout when the prices have shot up is irrational. In case you still buy high and the price tends to fall short, hold your purchase. This might put pressure on you to sell low over an extended period.
Are you interested in long term trades or short-term trades?
Long term investors often have to pay a lower tax rate if they can hold well for over 12 months but, as a trade-off, they will have to go through corrections (possibly resulting in their balance to go down 50% plus on paper). On the other hand, for short term investors, corrections can be avoided if they are nimble. But they will owe taxes on the profits from each trade they make.
Do not invest all your money
Always consider having some funds on the side to negotiate an unforeseen downturn. Even if you still prefer to ‘go-all-in’ on crypto it is wise to leave at least a little money on the side to prepare for the worst-case or else it takes all the options off the table.
The secret is to not invest more than you can afford to lose
If you have some coins to hold, you will tend to benefit regardless of what happens. Also, diversify your purchase, have your money invested in multiple coins especially when prices are low.
Value coins in BTC
Bitcoin is a recent trend and those new to the crypto economy tend to value things in dollars. However, pro-crypto traders will value coins in BTC for it to matter. Be well versed with BTC charts to analyse the price trend that everyone else is reacting to.
Understand the relation between Altcoins and Bitcoins
Bitcoins and Altcoins react to each other sometimes exactly in the same manner and sometimes opposite. It is common to see Alts go up while Bitcoins go down (and vice versa). But many a times all coins go up/come down jointly. This often leads to Bitcoin outperforming Alts. Every x months Alts too boom and outpace Bitcoin. If one can time and spot this coming, there is big money to be made. Altcoins are commonly more unstable than Bitcoins.
Crypto economy follows a pattern
The ever so fluctuating crypto market often tends to follow a cycle and goes in a pattern. Learn technical analysis to be able to predict future trends. With experience, you will be able to spot and manage your positions consequently in the market.
Crypto economy is different from Stock Trading
In the Stock exchange, if a company is not able to perform well it is wise to sell their stocks but, the crypto economy shifts rapidly. A bearish coin can make a huge turnaround at any given point. Understand that some count may fall to zero and even good coins can lose up to 80%+ of their value. Hence, be well versed with the difference between a bear and a bull market. Otherwise, react to ‘the mood of the market’ but, always have your strategy, instincts, and plan to fall back on and stick to it.
Beware of scams and frauds
Anything that is not purchased under a good reputation is a major risk. Crypto is addictive and you should not be too eager to invest. You must share your public address to receive coins but make a point to never share your passwords and private keys.
All in all, the crypto economy is speculative and lucrative to invest in. Follow the economy patterns closely, know when to take a loss, know your tax implications, know what you are investing in, be aware of the risk and do not invest everything you have on digital assets. This way, you will be able to maintain your position in the market and enjoy its fruitful rewards.