Many people have heard of Bitcoin. It is a distributed peer-to-peer payment network powered by its users with no central authority or mediators. Since launching in 2009, Bitcoin has become the most widely used cryptocurrency and is now being accepted as a form of payment on various online shops and increasingly in physical stores.
The popularity of cryptocurrencies such as Bitcoin has increased so much over the last year that even those who were sceptical about them are starting to realise their potential value. The fluctuating price and volatility of these currencies may be one reason why some people hesitate to invest, not knowing whether it will be profitable or not. However, there is another good reason for investing: trading.
Crypto trading involves buying and selling cryptocurrency coins based on their expected value, similar to trading stocks. To start investing or trading in cryptocurrencies, one needs a reliable exchange platform that securely handles all transactions. There are several popular exchanges such as Bitfinex, Kraken and Saxo Bank. Another way to invest is by using a CFD broker like eToro, and you can even use your credit card to buy Bitcoin through Coinmama.
Create a crypto portfolio
Before getting started with crypto trading, it’s essential to have a diversified portfolio of cryptocurrencies. It will spread risk and ensure that you can still rely on your other investments if one cryptocurrency doesn’t work out. To sustain a balanced portfolio without too much hassle, buy into three or four cryptos using eToro, as they offer several different cryptos from which to choose.
Use technical analysis
Many traders use technical analysis (TA) to predict where prices are heading next. TA involves the study of past price charts and trading volume, with indicators such as moving averages, RSI or MACD lines; this helps investors predict future prices and thus take advantage of timely trades.
Only invest what you can afford
Only invest as much as you can because nothing is guaranteed like most things in life, so your investment could fluctuate depending on market conditions. It’s important to remember what your risk tolerance is and what your time horizon is. An investor’s risk tolerance refers to how comfortable they feel with taking on risk – for example, if the market is in a state of volatility, you might want to invest less money into it.
Do not rely on one source
While many people are offering cryptocurrency investment advice, keep in mind that they may have a hidden agenda and could be steering you toward certain investments for their benefit rather than yours. Therefore, it would be best to do your research first to ensure that any advice given isn’t biased and only follow expert opinion where it’s helpful. For example, if someone tells you why they think Bitcoin will rise soon but don’t mention anything about other cryptocurrencies, then this might be a ploy to get you to invest all your money in Bitcoin and that the price may fall afterwards.
Don’t panic sell
When investing, it’s important not to panic when the market falls as this is where you can often make the most profit. If you panic, sell, then there is a chance that you will miss out on even more significant gains such as those made by Ethereum over the last month (almost reaching $400). It would be best to always look at charts before selling or buying to see how the currency has increased since its launch. It’s also worth noting that many currencies have corrections, so if their price were to rise significantly soon after its first significant correction, it might be best to hold off for now unless there are indications of further falls.
Look to the future
Although it’s easy to get set back in the short-term price fluctuations of cryptocurrencies, you should also consider looking at where they could be going in the future and take a long-term approach. Although many people have made significant gains from investing in cryptocurrencies, this shouldn’t distract from other potential opportunities such as Litecoin, which is currently undervalued compared to its earlier valuation before reaching all-time highs in December last year. By taking a look at what each currency has to offer, you can decide whether it is worth it to invest in them for the long term or not.