Best Crypto Investment Strategies for Beginners
Trading can be a very lucrative activity, and this is especially true when it comes to crypto trading. However, choosing the right investment strategy is critical. Otherwise, you’ll end up losing all your capital because crypto, being highly volatile, is a risky investment.
That’s why we have come up with this guide that contains multiple strategies for investing in crypto. We recommend that you carefully read each crypto investment strategy listed below to learn how to maximize your capital in the shortest time possible.
Follow Simple Tips
The first and perhaps the most important strategy is to follow simple investment tips. It means that you should follow the standard trading rules and techniques like:
Learn the Essentials
If you’re a beginner, then you should start by learning the terms and general rules of trading. For example, you’ll need to learn about order types such as stop-loss orders, stop-limit orders, market orders, and so on. You’ll also need to choose the best trading times and learn about the current market conditions.
Invest Only the Amount You Can Afford to Lose
Trading is a numbers game that operates on the laws of probability, which means that you’ll inevitably have to take losses from time to time. So, in order to stay in the game, it’s important to start your investment journey only with the capital you can afford to lose. Investopedia research shows that most successful investors risk only 1 to 2 percent of their capital on any given trade.
Use Educational Material
You can easily find educational material regarding the cryptocurrency you’re interested in for trading. We recommend you invest only a small amount of money into understanding how a particular coin works in the market and what factors affect its value.
Consider joining online communities and forums to learn about specific assets, and don’t hesitate to ask for guidance from experienced traders as well. Make sure that you research comprehensively about the crypto asset you want to invest in. The most important information includes trade volume, max supply of the cryptocurrency, market capitalization, and current value.
Accumulate with Patience
Consistency, discipline, and, most importantly, patience are essential if you want to become a successful investor. It takes time to properly understand how the crypto world works, and there is no magic pill or simple formula to achieve it overnight. You’ll need to build an accumulation plan with patience whether you want to trade as a hobby or are planning to do it full-time.
An accumulation plan is a crypto investment strategy that allows you to build the enduring value of your portfolio. A successful long-term accumulation strategy consists of two different parts.
Choosing the Right Crypto Asset to Buy
As mentioned earlier, you’ll need to perform comprehensive research to choose the right crypto asset. Make sure that you choose only the promising options that offer a detailed roadmap for their future plans. This will increase the chances of choosing the crypto assets that will increase in value in the future.
Buying at the Right Value
You also want to make sure that you buy the selected crypto asset at the right time. For example, you wouldn’t want to invest in any cryptocurrency asset when it has reached its highest price in the short term. Keep in mind that cryptocurrency is highly volatile, which means that the value of different crypto assets can fluctuate dramatically.
The DCA (Dollar Cost Averaging) is a great crypto investment strategy that you can use to overcome this problem. This strategy refers to the practice of buying a crypto asset with multiple purchasing orders distributed over a longer period of time. It increases the possibility of buying an asset at a lower average price. Resultantly, it can decrease your overall, average purchasing cost. You can take this strategy to the next level by placing your buying orders on the days that the market is the weakest.
Rebalance Your Portfolio to Take Advantage of Volatility
Unlike the traditional financial world, there are no business hours when it comes to the realm of crypto. It runs 24x7 and, in such situations, reacting to all market changes is a stressful and challenging task. At the same time, in order to take advantage of the volatility and any new information, you may sometimes have to rebalance your portfolio.
If you already have bought several assets, then you probably also check their prices multiple times a day. Moreover, it’s tempting to sell assets that are performing great while sticking to the underperforming ones. But, in fact, especially in trending markets, the best strategy is to sell and buy coins to rebalance your portfolio by following the current market trends. You would also want to sell the underperforming coins to keep your losses low and buy the new coins that have the potential to increase in price, as long as the overall market is not just trading sideways.
In bull markets, prices are rarely uni-directional, which means that prices usually rise after a dip and decrease after an aggressive bull run. In such situations, you can also buy back the coins at a low value that you previously sold at high prices. The core principle of this crypto investment strategy is to rebalance your portfolio on a daily/weekly basis to improve your returns by performing short-term tactical trades.
Only Start Investing in Solid Coins with Long Term Potentials
Last but not least, you should only invest in crypto assets that show long-term potential. Currently, there are about 6,000 cryptocurrencies out there (and counting), and none of them performs equally. Make sure that you choose trustworthy projects that address and solve real-world problems. There are many meme coins out there with no real purpose, and we recommend you avoid investing in such projects to protect your capital.
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DISCLAIMER
I am not an analyst or investment advisor. Everything that I provide here site is purely for guidance, informational and educational purposes. All information contained in my post should be independently verified and confirmed. I can’t be found accountable for any loss or damage whatsoever caused in reliance upon such information. Please be aware of the risks involved with trading cryptocurrencies.
