Crypto Trading Strategies You Need To Know

June 16, 2022
Crypto Trading Strategies You Need To Know

Cryptocurrencies have taken the world by storm, introducing a highly-profitable but also very volatile asset for traders all around the world to invest in. While investing in cryptocurrencies can definitely be profitable, you need to know how to make the most of blockchain technology to make real gains. Here are some strategies to consider when trading cryptocurrencies.

Don’t put all your eggs in one basket

Just because an excellent opportunity seems to have opened up doesn’t mean you should invest all your funds into that one trade. Remember that there’s always risk involved in trading, no matter how companies try to sweet-talk you into thinking their platform is risk-free. The market is unpredictable to a large degree and random events happen that can turn it whole upside-down.

When trading crypto, it’s extremely important to diversify your assets. From stablecoins to NFTs and DeFi projects, there is a wide range of securities you can invest in, and many of them will bring you profit in the long-term. The more crypto securities you own, the lower the overall risk factor of your portfolio. Creating a diverse crypto strategy is the key to ensuring stable profits.

Make the most of volatility

You probably have already heard that cryptos are an unstable and volatile asset, which is why many old-time investors disregard it and dissuade others from investing in them. However, volatility can actually be profitable. That doesn’t mean you should invest immediately in cryptos that dramatically increase or decrease in value during a single session – but you can make the most of it if you’re a keen trader.

Short-selling is one of the financial instruments that can make you a profit on volatility. If you expect a certain cryptocurrency to dramatically fall in value in the near future, you can try shorting to make a big profit from it. However, short selling is a leveraged financial instrument, which also increases its losses potential – never short-sell if you’re not sure you can make a profit.

Do your research and avoid hype

As with all manners of investments, you should always do your research first before committing to a trade. That being said, you don’t need to be a financial expert to do such research – follow the news regarding the crypto industry and the specific cryptocurrencies you’re interested in. Check out Reddit and see what other fellow investors are currently doing – it’s a good source of knowledge, but remember to be skeptical about every bit of information you find there.

The GameStop incident of 2021 showed us how dangerous hype-building can be in investing, with many homegrown investors achieving astronomical losses simply because someone on the internet told them to invest at the wrong time for their own profits. Remember that there’s no “friendly advice” in the world of financing – other investors have their own agenda and you should always stay wary of cryptos that are described as a “perfect investment” with extremely high gain.

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