Because bitcoin is a highly speculative asset, many traders find it attractive. The return it promises is staggering, so it piques the interest of investors. However, the investment must be driven by research. If done correctly, cryptocurrency trading can generate substantially higher returns than more conventional investment vehicles.
Naturally, the risk associated with such volatility is much greater than that associated with less volatile assets. If you are confident in investing in crypto, this is the right time to start. For this, you can visit various platforms. like this app and start your investment journey.
There are two common motivations for trading cryptocurrencies: either to store value in Bitcoin (BTC) and/or Ethereum (ETH) or to make a quick profit in US dollars (USD). Even in a cryptocurrency bull market, increasing the value of your US dollar portfolio is easier than increasing your Bitcoin holdings.
If you trade actively, you may lose part or all of your bitcoin holdings. This is why many Bitcoin and cryptocurrency enthusiasts choose to simply HODL their holdings.
Guidelines for investing in cryptocurrencies
Check out the six simple steps to start investing in cryptocurrency.
1. Open a digital currency brokerage account.
Making a profile with a cryptocurrency broker is the first step to start trading cryptocurrency. Similar to creating an account with a stock broker, establishing an account with a cryptocurrency broker will require you to provide personal identity information. However, you must first filter the best crypto exchange platform for the same.
2. Put money in the account.
A cryptocurrency brokerage requires linking your bank account once you've joined. The cheapest method to fund your account is an ACH (Internet Bank Transfer) deposit, which is usually free at most sites. Many crypto exchanges charge certain fees for this, therefore you should check this before making the final call.
3. Select a Cryptocurrency.
Professional investors allocate the vast majority of Bitcoin and Ethereum trading money. Trading using technical indicators could be made easier due to the more stable price action of these cryptocurrencies than more volatile altcoins.
As a result, many cryptocurrency investors invest some of their money in lesser-known altcoins. Cryptocurrencies with a small to medium market value are more volatile than their larger counterparts, but also have more potential rewards.
4. Decide your trading strategy
Most cryptocurrency traders evaluate several elements, and there are a wide variety of trading indicators to choose from. You should probably get a bitcoin trading course if you are a beginning investor. In the stock market, you may already have a plan ready if you are an experienced trader. Elliott Wave Theory is a widely used and appreciated trading approach.
5. Consider using cryptocurrency trading robots.
Automated trading software implements a strategy designed to maximize your profits according to your specific criteria. The global mania for virtual currencies has also spread to India. The Indian government's position on digital assets has been clarified in the most recent budget, making the possibility of a ban soon less likely. Even a 30 percent tax doesn't seem like much of an impediment for people who make a fortune trading cryptocurrencies.
To what extent does this require urgent investment?
Before investing money in something, it is important to do your research and understand the fundamentals.
- The cryptocurrency industry is still in its infancy, having only been around for a decade. As a result, it is significantly riskier and is not regulated by regulators. Because of this, it is highly unlikely that you will get your money back in the event of fraud or hacking. Creating a cryptocurrency that looks real but is a hoax is simple.
- Plan for the long term by establishing various savings and investment vehicles such as fixed deposits, equity mutual funds, debt funds, required insurance, emergency funds, etc.
- Research the market thoroughly before making any investments based on the advice of family, friends, or co-workers. However, you should keep in mind that if the investment fails, no one will be able to save your money. Before you invest money in them, make sure you understand their potential applications.
- Trade using a reputable platform, as it is not unusual for cryptocurrency trading platforms to be hacked or used to defraud investors.
Do's and don'ts when investing in cryptocurrency.
do:
- Make sure you understand the technology, adoption rate, regulatory landscape, and competitiveness of any cryptocurrency you are considering investing in before investing any money in it.
- It may be prudent to diversify your holdings to limit the risk associated with the fluctuating value of any cryptocurrency.
- Be Aware of Market Trends โ Maintain a level of familiarity with the crypto market as a whole and the patterns and trends that are developing within it.
- Use stop loss orders, which automatically sell your bitcoin if the price falls below a particular threshold. Doing so can reduce the potential for loss and maximize security.
not to do:
- The cryptocurrency market is extremely unstable and prone to frequent changes.
- Don't trade long-term success for short-term fluctuations in the market. Think patiently and long term when making any investment.
- Use a trusted cryptocurrency exchange and protect your funds by storing them in a secure hardware wallet and enabling two-factor authentication.
- Make your own informed investment selections based on your research.
- Don't panic when the market falls; fluctuations are expected. When the market falls, you should not panic and make rash decisions. Don't lose sight of why and how you are investing money.
Conclusion
You should learn as much about cryptocurrency investing as possible before you make any purchases. Because they are afraid of losing big profits, many people invest their money without considering it. Get your financial house in order with tried and true methods first.
Cover photo by kanchanara in Unsplash
DISCLAIMER: This article is sponsored and is not a substitute for professional advice or help. Any action you take on the information presented in this article is strictly at your own risk and responsibility.
