8 tips to be a successful trader in cryptocurrencies

The cryptocurrencies are now a trend that promises to change the economy worldwide, there are already commercial operations where they are involved, and some countries have chosen to accept this currency as a means of payment, which means that the economic future is in cryptocurrency; Although, most people see them more as an investment and not as a means of payment.

The cryptocurrencies as a means of investment

It is impressive how the value of cryptocurrencies has increased in recent years, this has led many people to be interested in them, so that they can obtain some kind of return through an investment; that is why it is increasingly common to hear people talk about cryptocurrency traders, as it is quite common among people who handle cryptocurrencies.

What is a cryptocurrency trader?

A trader is a person who deals with financial assets. These people are responsible for making the famous trading, which is nothing more than the purchase and sale of stocks, bonds and all types of financial derivatives.

In this sense, a cryptocurrency trader is a person whose activity is directly related to the purchase and sale of any type of digital currency, seeking in some way to obtain a profit.  It should be taken into account that this is an investment that requires some care, since the cryptocurrency market is volatile, which means that the investment risk is high, however, there are strategies that can be applied to reduce the risk, and even increase profits.

Everything you need to know to be a successful trader in cryptocurrencies

The cryptocurrency market can generate many profits, however, it is essential that you have the necessary experience to make successful investments. Among the things that should be taken into account, the following stand out:

1- Invest in several cryptocurrencies

Although Bitcoin is the cryptocurrency that leads the ranking of the highest value cryptocurrencies, it is not the only one, as there are many other cryptocurrencies in which you can invest and obtain a good profit margin. The reason why the investment in different cryptocurrencies is recommended, lies in the instability of these currencies in the market.

It is important to be clear that the value of cryptocurrencies is defined by the market, which means that there is no entity that sets its value, therefore, its value can go up or down at any time, so it is not a good idea that the investment depends on a single cryptocurrency.

In this sense, if you have an investment portfolio that covers a certain amount of cryptocurrencies, it may be the case that a group of them falls, however, when this happens, normally another cryptocurrency increases its value.

2- Analyze the market trend

It is fundamental that when investing in a cryptocurrency, the behavior of the same in the market is studied, the objective of this is to ensure the investment, through an analysis that allows predicting if a currency will rise or fall in value; it is not a matter of guessing, if not interpreting the behavior of the market in the past, to estimate a value in the future, taking into account that the market tends to move in cycles.

Then, the analysis of the market is a key element in this type of investment, and for this it requires the help of an online platform, showing through graphics, the history of the currency, ie; a graph that represents the value of the cryptocurrency over time, with which you can determine if the trend of the currency is going down or up.

3- Safeguard your capital

One of the actions that must be done when buying a cryptocurrency is to establish an acceptable limit for the losses, in this way the investment can be safeguarded; however, this strategy turns out to be more effective when buying up.

This technique consists of defining a value below the amount of money that is going to be invested, so that if the value of the cryptocurrency reaches that number, the action that must be taken is to sell; a practical example would be, if Bitcoin is bought at a price of US $ 8000, the trader can set a loss limit of US $ 7900, if the value of Bitcoin reaches US $ 7900, it should be sold, so that the loss does not exceed 100 dollars.

This technique is very useful since it avoids large losses of money when cryptocurrency suffers a significant drop in value. On the other hand, if the value of the cryptocurrency goes up, the trader may sell it at any time, at a price higher than the initial investment, generating profits.

4- Invest in an ICO (Initial Coin Offering)

The ICOs are cryptocurrency projects that are not yet in the market, and that also look for a type of financing, this is obviously a slightly more advanced option, but it can be very profitable since one of the benefits is that the investor receives a greater amount of cryptocurrencies.

Also, before investing in an ICO, you should go deeper into the project, see what it is about, its characteristics, compare the benefits against other cryptocurrencies, and a host of other things, to ensure that said ICO is reliable and profitable, since that, despite being an excellent option, does not mean that it is always profitable for the investor.

5- Success comes with patience and discipline

Whoever enters the world of cryptocurrency trading, should be aware that he will not become a millionaire overnight, he can certainly obtain large profits but this is a type of investment classified as long-term. That is why one of the tips that must be taken into account is that a successful trader must be patient and above all disciplined.

The discipline is a very important aspect to develop since to begin trading, a plan must be devised, which must be oriented to obtain optimal results; In this case, the discipline helps to fulfil each step of the plan to reach the success that is expected.

6- Record the results obtained

Keep a record of the operations that are made in the trading process, is one of the things that can be very useful, this is just to keep a log, where it is explained in a very detailed, which were the decisions that were they took, in what type of situation those decisions were made and what were the factors that intervened.

The objective is that this information serves as a sample, to be analyzed over time, and thus refine the strategies used; This also involves learning the possible losses, since this market is so unstable, it is very likely that there are losses of money at any time, however, this serves as an experience to reach success.

This is also useful for accounting purposes when reporting your taxes for the year.

7- Know where and how to buy cryptocurrencies

An exchange is a web platform, in which you can carry out the purchase, sale and exchange of cryptocurrencies, it is in this place where the trader must carry out his operations; In addition, one of the characteristics that must be taken into account to choose an exchange platform, is that it is totally secure.

On the other hand, you should also look at the price per transaction, since this factor can also significantly affect the profits and losses that are obtained.

8- Trading Fees

When trading on an exchange, the exchange will take a small fee for the transactions.  It is important to remember this if  you are doing day trading with small profit and loss margins.  Always remember to account for the fees when setting sell and buy limits when trading.

 

Leave Your Comment

Leave a Reply