Before entering the world of crypto trading, it’s important to educate yourself on the fundamentals, workings, and potential advantages and drawbacks of this market. Just like a shark who surveys the depths of the ocean before diving in, you should study the background of Bitcoin and other altcoins to gain a comprehensive overview of the market’s current status. Conducting thorough research is vital due to the market’s volatility, which can make it difficult to forecast its direction even for experienced traders.
Swim through the Sea of Crypto Exchanges
Crypto trading is a new concept compared to traditional stock trading, so it’s crucial to familiarize yourself with how each platform and trading website operates. To gain practical experience and better understand the software, it’s recommended to create a demo account on Changelly or any other crypto trading site. Keep in mind that trading in altcoins can take several hours to settle, unlike regular currencies. So, just like a shark who navigates the seas with precision, you should familiarize yourself with the crypto exchanges to trade with ease.
Hunt for Value in Cryptocurrency
Understanding the factors that influence the price of altcoins can be challenging, but in general, the value of each coin is tied to the performance of others. For instance, when Bitcoin increases in value, major altcoins like Ripple, Litecoin, and Ethereum tend to follow the same trend. Like a shark who hunts for its prey, you need to grasp the concept of value in cryptocurrency to make smart investment decisions.
Concentrate Your Investment
While diversification is typically beneficial in trading, it’s different in cryptocurrency. Altcoins tend to fluctuate together, although some more than others. When investing in cryptocurrencies, it’s advisable to thoroughly research and identify the best currency for you and concentrate your investment (as much as you’re comfortable losing) into that single currency for greater security and a more focused approach. Just like a shark who focuses on a single target to maximize its chances of success, you should concentrate your investment to increase your chances of success in crypto trading.
Avoid the Chum Bucket of Early Withdrawals
If you invested with the goal of maximizing profits and plan to monitor market trends, refrain from cashing out immediately after a significant price increase. With high levels of volatility, it may be tempting to take advantage of a quick profit, but there may be even greater potential in the long term. It’s recommended to hold onto your investment and wait for a second or third price surge, which historically have been larger than the initial spikes. Like a shark who waits patiently for the right moment to strike, you should avoid early withdrawals to maximize your profit potential.
Determine Real Market Peaks and Troughs
A complex aspect of cryptocurrency investment is determining when a market peak is authentic and when a low is truly a low. Before selling, thoroughly assess all markets for indications of a potential surge or dip or an upcoming period of strong growth. Altcoins are heavily influenced by public perception, expert opinion, and news releases, so it’s important to stay informed. Experienced investors also suggest selling only 20% of your holdings during a peak, as another peak could be imminent. Like a shark who senses changes in its environment to find its prey, you should assess the market carefully to determine real peaks and troughs.
Create a Stop and Trade Strategy
In a highly fluctuating market, it’s crucial to establish a clear stop and trade plan. A Stop and Trade strategy involves selling some of your coin when it reaches your desired price. This helps minimize losses in the event of a sudden drop in value. This plan is particularly important for cryptocurrencies, as their price fluctuations are often in the range of 60% to 80%, not just 2% to 3%.
Ensuring Cryptocurrency Safety
Just like sharks, the world of cryptocurrency can be dangerous if you’re not careful. To ensure the safety of your digital coins, it’s important to choose a secure wallet that meets your needs.
When buying coins, it’s recommended to use a reputable exchange such as Coinbase, but it’s not safe to leave your coins on the exchange. Instead, transfer them to a secure digital wallet like blockchain.info/wallet, Jaxx, or Coinomi, or consider using a paper wallet. There are many wallet options available, both online and offline, to provide secure storage.
Choosing the Right Wallet
The type of wallet you choose depends on your security needs and investment goals. There are several major types of cryptocurrency wallets, including paper wallets, hardware wallets, cold wallets, hot wallets, and multi-signature wallets. Each has its own advantages and disadvantages, so it’s important to do your research and choose the one that best suits your needs.
Secure and Backup Your Devices
If you choose to store your coins offline, it’s important to secure and backup your device. This will prevent loss in case of hardware failure or theft. A backup copy should be kept online or on a separate hard drive, and encryption is recommended for added security.
Media’s Impact on Coin Prices
Just like sharks can sense blood in the water, the media can greatly impact the price of altcoins. News of companies accepting altcoins can lead to significant price increases, so it’s important to stay informed of media releases. This information can guide your buying and selling decisions and provide insight into fluctuations in coin value.
New Laws and Regulations
Altcoins are subject to fewer regulations compared to traditional trading instruments, but new laws can emerge unexpectedly and impact the market. It’s important to keep in mind that all federal securities, trading, and tax laws apply to altcoins and must be followed. By staying informed and following the rules, you can safely navigate the world of cryptocurrency.
In conclusion, diving into the deep end of crypto trading can be a risky yet rewarding endeavor. Just like swimming with sharks, it requires caution, preparation, and a thorough understanding of the environment. By following the tips outlined in this article, such as selecting a reputable exchange, securing your wallet, staying informed of media releases, and adhering to regulations, you can increase your chances of success in the crypto market. So, be brave and dive in, but always keep your eyes open for potential dangers lurking in the depths. Happy trading, fellow sharks!