Unlike most markets, the cryptocurrency market is more volatile and sees frequent upswings and downswings. For beginners, these frequent fluctuations might seem intimidating — you’re not sure if a silly mistake might make you a loss in the next day or even the next hour. Here’s the good news, though: it’s not as difficult as it seems. Getting a hang of trading takes time and experience and that means you’ll need to start trading in order to become better at it. If you’re new to crypto-trading, here are some tips that you’ll find helpful when you’re just starting off.
Keep your eyes on the Top 10
This first strategy is pretty simple and it requires very little thinking on your part. The safest cryptocurrencies to start buying are, obviously, the most reputable in the market. According to Coin Market Cap, the top 10 cryptocurrencies (based on market capitalisation, in Feb 2019) are:
- Bitcoin Cash
- Binance Coin
These coins have been around relative longer than most and are oftentimes, more stable. One way to start trading is to put a portion (eg. 10%) of your capital on, say, Bitcoin, and then spread out the remaining capital on the other coins.
While this strategy gives you more stability than trading other coins, there are a few disadvantages that come with it. For starters, there’s a higher barrier to entry since prices for these coins are much higher than newer altcoins. Additionally, since this strategy is more conservative, you may not yield as much profits.
Follow crypto news
It’s not enough to simply follow where the crowd goes. Knowing what you’re buying and selling is important too. If you’re going to start trading in the cryptocurrency market, you’ll need to keep up to date with the latest crypto news. Reading on new developments can give you an idea of how a certain coin is doing and can definitely impact whether you choose to hold or sell your crypto-assets.
Additionally, being in touch with the latest news helps you understand the business models of different tokens. This will give you an idea which coins have a higher chance of success and which coins to stay away. Having the right knowledge and doing your research can only benefit you. That being said, cryptocurrency markets are highly unpredictable and whether a company’s business model is good or not really depends on your own insight.
Keep away from pump and dump schemes
Since cryptocurrency markets are so volatile, it’s not as easy to tell whether a token’s price is rising due to improvements in technology or whether it’s the result of pump and dump schemes. If you’re new to crypto-trading, you might fall prey to these pump and dump schemes. Scammers spread misleading recommendations about these coins and try to get unsuspecting traders to buy in. When the prices of these coins reached their target, these scammers immediately dump their assets.
To avoid becoming a victim of these schemes, it’s advisable to only invest credible coins as pump and dump scammers tend to target newer altcoins. Additionally, it’s also important to follow various forums and listen to different podcasts to have in-depth understanding of tokens you’re buying.
You can read more about pump and dump schemes here.
In the cryptocurrency world, HODL means to “hold”. The term first came about in 2013 on a forum where a member who posted with a typo on the subject, “I am hodling”It’s important to hold on to your crypto-assets even when markets are not progressing as you might have thought it would. It’s common for tokens’ prices to fluctuate on a day-to-day and hour-to-hour basis so if your crypto-assets’ prices are falling, don’t panic!
Reading up regularly on news and picking the right tokens to start trading is quite a feat in itself. If you follow the news and watch the space closely, you’ll be able to identify which tokens are worth buying and which you should stay away. Cryptocurrency jargon used in news and forums may seem complex at first but with a bit of research, you’ll get a hang of it. Here’s a list of cryptocurrency jargons commonly used — knowing what they mean is a great place to start in your crypto-trading journey.
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