Digital currency is a massively adopted market. And for its short lifespan there are a lot of new people coming into this industry now. If you’re new to the whole sphere of investing and worried about how to approach it in a successful manner, be sure to familiarize yourself with our simple recommendations.
# 1 Strategize
So the big word in crypto trading is ‘strategize.’ You would be surprised to find out that the majority of people who have resolved to invest in cryptocurrencies do not bother to strategize. They do not understand why they’re putting their money into certain coins. They are pretty sure it’s just going to be a quick rich scheme and they’re going to rake it in in the nearest future.
And as a result of such an outrageous strategic short-sightedness, the beginner investors end up empty-handed. Prior to diving into cryptocurrency trading, make sure to do some research on the current trends in this sphere, familiarize yourself with the most promising coins and tokens available on the market, watch a bunch of useful videos, find out how to convert Bitcoin to PayPal, etc. It’s also important that you start small and don’t make rash decisions. Remember the golden rule of investment – never invest more than you’re willing to lose.
# 2 Choose the Right Coin
First of all, you need to do your own research to determine the crypto coins that you think are worth investing in. This may seem quite time-consuming and boring an undertaking, but it will definitely pay off in the long run.
So, how do you go about selecting a coin or token? Lots of people think, ‘Well, this coin is just 1 cent. I should go out and buy it because it’s really cheap right now. With time, it’ll go up to 200 dollars.’ Right? Wrong! It’s highly unlikely because the actual dollar value per coin doesn’t matter in the grand scale of things.
The market valuation is calculated by the number of coins or tokens multiplied by its current price. So, lots of experienced crypto traders consider large caps to be the top five coins in valuation. You can think of such popular cryptocurrencies as Bitcoin, Litecoin, Ethereum, etc. Those are well-developed coins that have good adoption and have deeply rooted themselves into the cryptocurrency market. So, we highly recommend that you start off with them.
# 3 Keep an Eye on Price
Once you pick the currency you think is worth investing in, be sure to monitor its price. Again, this may take up ample time and energy, but it’s worth it. It’s important that you pay attention not only to the current value of your coin but also take historical data into consideration.
Thus, you’ll be able to juxtapose the most recent prices with older values. Lots of investors rely on special tools knows as cryptocurrency price trackers wherewith they monitor, compare, and analyze prices. Based on the obtained results, traders figure out certain patterns. Much has been said about the peculiarities and importance of reading crypto charts and candles.
Though this practice can go a long way towards successful trading, you should keep in mind that there’s no universal recipe for success when it comes to trading. There’s no universal formula or pattern you can follow to make money for sure. Don’t chase the heights. Instead, you should make it your rule to buy low and sell high.
# 4 Use Indicators
The next think you should set your sights on is technical indicators. They go a long way in identifying short and long term price direction of cryptocurrency. In essence, they are mathematical calculations that help you predict any possible fluctuations in prices and thus make a right financial decision. Among the most popular indicators deserving of your attention are:
- Relative Strength Index. This indicator can come in handy when you need to roughly estimate possible gains or losses over a certain period of time.
- MACD (moving average convergence divergence). The MACD is really good at predicting bullish price actions and when investors are starting to get positively back into price. To properly calculate this indicator, you need to take away the 26-day EMA of your coin from the 12-day EMA.
- Bollinger Bands. The indicator helps to figure out the ratio of prices for your coins to the normal trading range. Bollinger bands create a frame within which prices are considered normal. It represents the range of price action that should be common. Its stepping outside the bands price action is indicative of the price action’s being a little bit overextended. The indicator is calculated based on the standard deviation from a simple moving average.
In Lieu of Final Farewell
Now you can dive into cryptocurrency trading. But make sure to keep cool and maintain composure when trading. Don’t succumb to panic, fear, and greed. Try to weight up each of your decisions carefully. Start small. And remember that there’s always room for further growth and development.