A 9-5 job or a single source of income is no way to build wealth. Some people follow their passion for making some extra money; some develop a new business, and some learn crypto trading.
We are by no means crypto gurus who can enlighten you on how to get rich. We’re fellow traders, honing and refining our strategies, so our money works for us.
Without further ado, we’ll share a few crypto trading tips that we learned the hard way during our journey in crypto trading.
Consider these cryptocurrency investment tips as more of safety rules. If you practice them religiously, who knows, you may even make some big bucks.
Best Crypto Investment Strategies
Trading can be exciting yet overwhelming, especially if you are new. We have an extensive guide for new cryptocurrency investors. It covers all things you need to know before you start trading in cryptocurrencies.
However, if you are ready to start trading right away, here are 6 tips for investing in cryptocurrency:
1. Invest With a Plan
It may sound cliche, but it is one of the most essential crypto trading tips. Start your trade with a cryptocurrency investment strategy. It will be your roadmap to decide what, when and how to trade.
A cryptocurrency investment strategy generally consists of a trading plan customized to your goals and needs. A basic plan could include anything but should definitely cover:
- Your goal for trading – Think about the goals for the returns – do you plan to reinvest them? Or spend it on a vacation or a car? Having a goal in mind helps you trade responsibly.
- How much time can you commit to trading? Can you spend extensive time on research? Or would you place your order and forget about it for a week? The kind of time you invest plays a massive role in what cryptocurrency you should pick.
- Your risk tolerance – Are you risk-friendly, risk-averse or somewhere in between? Being risk-friendly means you can experiment with different altcoins and spend a little more of your portfolio on unknown gems, while risk-averse traders prefer to stick to well-established coins like Bitcoin.
- Capital availability – How much money can you afford to invest in crypto? This does not refer to how much money a person, but rather, how much can they afford to lose?
- Risk Management Plan – Plan an exit strategy if things aren’t going your way. For example, place stop-loss orders and limit orders periodically so you can cut your losses early on.
You can add further rules to control when and how to trade.
Conduct your own research and gather as much information about the market as possible before you chart your plan.
Make sure to write it down and follow it. Try to stick to a single plan unless you find that your plan is not working anymore or if you have ways to improve it further.
2. Do Your Own Research
The cryptocurrency world is expanding every day, with over 5000 currencies available in the market. Most of these currencies are legit, but it is always wise to beware of fraudulent coins. You can stay away from shady tokens if you conduct ample research. It is important to analyse the cryptocurrency in which you want to trade before you begin trading.
There are two ways in which you can analyze the potential of your crypto:
- Technical analysis: It includes studying the statistical trends, historical prices, volume and activity. Analyzing price movements and swings will help you make educated guesses on where the prices are headed in the long term and short term.
- Fundamental analysis: It involves studying the underlying basic information available about the crypto. The fundamentals of a currency can include its use cases, popularity, the team behind the project etc.
3. Don’t Give in to FOMO [Fear of Missing Out]
The fear of missing out on the best things in life is a feeling we all come across. It’s that nagging voice in your head that screams, “Everyone is having fun but you”. In the case of trading, the voice says, “You are missing out on huge profits”.
FOMO is a severe issue in the crypto world. The voice in your head forces you to buy when the prices are high and panic-sell the dip. However, if you give in to it, it can lead to making regrettable mistakes.
Try not to let your emotions come in the way of your investment strategies. The only trick to overcome FOMO is to allow logic, information and research to be the driving force of your trades.
4. Use Price Alerts and Stop loss
As a trader, you need to know when to enter and exit the market, whether you are making a profit or not. Unfortunately, establishing a clear exit price to cut off huge losses is a skill that most traders lack. Since the crypto market functions throughout the year, it is also difficult to track the prices constantly.
Using a stop-loss, limit order and price alerts could be a good trading strategy to enter and exit the market just at the right time.
- A stop-loss order allows you to set your selling price below the current market price. You can use this feature if you think that your cryptos price will dip further.
- Price alerts notify you when the cryptocurrency reaches a specific price set by you. Thus, it avoids the need to keep checking the market time and again.
- You can place a limit order if you want to buy at a price lesser than that of the market price or vice versa.
Whether your trade is profitable or not, stick to your trading plan and exit the market at the right moment. This is one of the highly effective crypto trading tips.
5. Trade Only What You Can Afford to Lose
It is not a secret that the cryptocurrency market is highly volatile. The same feature that enables traders to make huge profits also brings losses to many.
It is vital that you only trade what you can lose. For example, if you earn ₹50,000 a month, invest a fraction of it in cryptocurrency investments or trades. But, first, allocate it towards expenses, savings and other investments adequately. Most importantly, never invest borrowed money in the crypto market.
6. Bonus: Pay attention to Bitcoins
Bitcoin is the most popular digital currency on the planet with the largest market cap. Whether you buy bitcoin or not, tracking the Bitcoin price will help you gauge if your currency will go up or down in price.
Any drastic change in the price of Bitcoins may lead to a fall in the prices of altcoins. But when the cost of Bitcoins rises or stays stagnant organically, the real growth in altcoins may follow.
There is no ‘One size fits all’ in cryptocurrency trading. Each trader or investor has a unique style and strategy. The crypto trading tips that we have shared in this article are more general and could apply to any trader. Consider this as a skill; you need to constantly learn crypto trading to master it.
1. How to Trade Crypto for Beginners?
The easiest way you can get started with cryptocurrencies is through the CoinSwitch Kuber App. Create your account on the app and follow all the crypto investment strategies discussed above, to begin with.
2.How to Trade crypto Successfully?
To successfully trade in crypto, you must get your trading plan right with thorough research. Trade with only what you can afford to lose and follow other crypto investing tips like don’t give in to FOMO, using price alerts etc.
3. How to Get Good at Trading Cryptocurrency?
As you look to get good at trading in cryptocurrency, it’s important that you also become foresighted and think about things like the future of cryptocurrency, crypto market trends, alongside following the strategies discussed above.
PS: KuberVerse is an educational initiative. Anything expressed here directly or indirectly is not investment advice. And we ask you to do your own research before investing.
Disclaimer : Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. The information provided in this post is not to be considered as investment/financial advice from CoinSwitch. Any action taken upon the information shall be at user's own risk.
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