Although cryptocurrencies have high volatility and are therefore considered risky, they are also an excellent choice for those who use them as an investment tool. Learn how to successfully trade these assets.
Some trading results and achievements can be attributed to luck, but successful trading is mainly based on fundamental considerations and good habits.
These are the 3 rules to successfully trade Bitcoin, Ethereum and other cryptocurrencies.
1- Determine your investment objectives and needs
Before investing in cryptocurrencies, you need to know what to expect from the investment. Think about how to increase your capital.
Do you want to take advantage of rapid price fluctuations? Or make long-term investments or even use crypto in your daily life?
If you want to invest over a short period of time, it is best to choose derivatives such as CFDs, and depending on the strategy (advanced charts, one-click trading, strategy automation, etc.) find a broker that can meet your trading needs.
If you wish to obtain tokens to keep them for a long time, you may need to choose an unleveraged trading platform or margin trading. The most popular are Binance, Coinbase and BitPanda.
When using a platform to obtain cryptocurrency, it is strongly recommended that you do not store the token in the portfolio provided by the exchange. Because in this case the funds could be stolen.
On the other hand, you don’t really own the private key, because it is usually managed by exchange. Therefore, you cannot fully control your crypto.
Instead, remember to keep your cyptos in your own wallet. The most popular high-security physical wallets are provided by Ledger or Trezor.
2- Follow the evolution of Bitcoin
The development of most “altcoins” is more related to the development of Bitcoin than the development of Asian currencies against the US dollar during the Asian financial crisis.
Therefore, overall, the trend of Bitcoin has a significant impact on the cryptocurrency market. In fact, BTC is the most important crypto in the market. Currently, its dominant position exceeds 68%.
When the price of BTC rises sharply, the altcoin market follows. The opposite can also happen and prices fall. In this case, investors will take their positions out of the altcoin to be able to invest in Bitcoin.
Conversely, if Bitcoin falls sharply, the price of altcoin may also fall because investors want to exit the market in batches and sell altcoins to convert them into fiat.
In the end, when Bitcoin rises sharply or falls sharply in a more or less sustained manner, the price of altcoins will provide interesting price and trend movements.
3- Diversify your crypto portfolio
Diversify your positions by investing in many tokens instead of just investing in a single token.
Although Bitcoin is one of the most popular cryptocurrencies, other lesser known or less important cryptocurrencies have performed better than Bitcoin during similar periods.
So, take advantage of the overall growth of the crypto market by investing in different tokens. Consider looking for companies that develop tokens to solve different problems in various fields, so that you can enjoy the benefits of adding many different cryptocurrencies.