​3 Ways To Safely And Smartly Trade Cryptocurrencies​

by Andrew McGuinness     Jul 16, 2019

Cryptocurrencies are easily becoming one of the world’s most sought after investments. According to a recent study, more and more millennials aged 18 to 34 are interested in putting their hard-earned dollars into cryptocurrency instead of other available assets.

With more people developing interest in the market, it’s crucial now more than ever to find the best ways to safely and smartly outperform other traders. Part of outperforming other traders include knowing the risks that come with trading crypto. Here are the top 3 things you should know about the market before investing in a single coin:

1. Overtrading Impulse Is Real

After news of Bitcoin’s immense growth became mainstream, sentiments of regret have been resonant among investors and interested parties alike. Bitcoin’s growth has created a culture of fear where traders become anxious to invest in all of the altcoins on the market, precisely because they fear they’re going to miss out the same way they had missed out on Bitcoin.

The best way to cope with this impulse is to remind yourself that not everything is going to end up like Bitcoin. While it is important to diversify your portfolio and spread your capital among different types of coins, there is no way that you could cover all of the coins on the market. And even if you could, doing so would be fairly unwise.

Overtrading isn’t just about buying too many kinds of coins; it also applies to too much day trading. The strategy with cryptocurrencies should always be focused in long-term ROI instead of short-term trades.

Most people commit the mistake of obsessing over hourly, daily changes to the price instead of basing their decisions on monthly, if not yearly changes. Day trading can only do so much for you.

When suffering from a loss, the best thing to do is to layoff the charts and do something else. Just trading in hopes of getting your lost money back might only lead you to do worse trades, and therefore lose more money.

2. Reduce Risk Accordingly

For some reason, day traders tend to forget to allocate proper stop-losses. These devices are part of every transaction, giving you the choice to automate trades even when you are not there. The stop-loss clause allows you to set a price that is most ideal for your finances, giving you just enough room for profit. This instrument is especially useful for risky trades.

Another way you can reduce risk is by managing your funds according to how much you can afford to lose. Allocate most of your funds into the most established coins, and set a small percentage of your money to volatile but possibly high-performing coins. This way, you don’t have to worry about losing too much profit.

Research the newer coins more thoroughly and pick ones that make use of established technology. Check out their ICO and see how investors have reacted since then. If you’re lucky, you can get on board before they hit exchange platforms, making them more expensive.

3. Watch Out For Bots

If you’ve traded stocks before, it’s no surprise that some investors use bots to up their game. However, in the crypto market, bots can do some serious damage and manipulate you into selling coins at incredibly low amounts.

What bots do is manipulate the price and volume of the trades. You could be tricked into selling because of a “crash” only for coins to regain their high value in just a matter of hours. This gimmick is more influential in smaller, newer currencies, so beware.

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