Crypto is one of the most popular assets nowadays. Sought by traders far and wide both for its immediate appeal and ability to become a store of value, many investors have decided to include one or more digital currencies in their portfolios. It all seems to be for the best because, based on all estimates, crypto is here to stay. Moreover, it’s likely to become more visible as the years pass. According to some estimates, we’re only a decade or so away from cyber money becoming used on a broader scale, even by people who don’t trade. This is already apparent in the increased willingness of brands to provide their customers with the ability to pay for items with crypto, particularly online shopping.
With all this in mind, becoming a trader certainly sounds like one of the best choices you could make. However, as with all financial undertakings, you mustn’t rush it. The best action is to take your time and ensure you understand the market properly. Crypto gets a negative reputation owing to its infamous volatility, but that doesn’t mean you should give up on your pursuit altogether. All you need to do is research and prepare before starting an investment. Here are some guidelines you should abide by to maximize the output of your investments.
Don’t go overboard
All savvy investors follow the rule of thumb: only invest as much as you can afford to lose. All trading comes with a certain degree of risk, and the amount you can tolerate depends on the funds you have at your disposal and your experience level. With that said, it’s always better to aim for slow and steady success. You’ll come across entirely reckless investors. They’re the ones likely to squander their life savings on a whim on a handful of stocks and assets, but this isn’t the path you want to follow.
As with all other holdings, the best way to make informed decisions is to check the market before buying or selling. If you’re a beginner, you’ll want to gravitate towards a well-known digital currency established in the market, such as Bitcoin. The price of BTC is subjected to fewer fluctuations, and they are usually not as extreme as in the case of altcoins. Nevertheless, you should always look into the current Bitcoin price before starting any investment. While Bitcoin is undoubtedly a safer choice than its successors, it’s never a good idea to enter a trade entirely unawares. Getting a general feeling of the shifts in price helps you make sounder, more profitable decisions.
Use DCA
Dollar-cost averaging is a strategy that helps reduce the risk by automatizing purchases. It’s also supportive of your efforts to invest regularly. The perfect tool to beat volatility, using DCA, consists of investing small amounts over a prolonged period. This way, you can stem losses and better use your capital.
The only drawback is that there’s an additional network fee you’ll have to pay, but the additional gains you earn will render this negligible. DCA can be done weekly or monthly, depending on your engagement levels. If you have a gut feeling that the market will slump into a low, you can put aside some extra capital you can use during this hypothetical time.
Safe storage
After buying Bitcoin, the most important thing is to store it safely. Unlike fiat money, BTC will never be in your digital wallet. The coin remains in the blockchain; what you store are the public and private keys that grant you access to your funds. The technology behind Bitcoin means nobody else has access to your data or information via the processes of decentralized finance.
Hardware wallets are the best bet in this situation. While the software option also exists, it’s not preferable for various reasons, the chief of them being that it’s much easier to crack by hackers. Its internet connectivity makes it more accessible, but this quality is also its heel. Cybercriminals can attack and infringe on your device’s integrity. Once they get their hands on your passwords, your crypto is as good as gone. All actions and transactions are final on the blockchain, so if your funds get drained, they will stay that way. Therefore, it’s best to invest in a hardware wallet, mainly if you’ve decided to become a severe Bitcoin trader. Keeping many digital coins on the blockchain or a software pocketbook is irresponsible.
Keep your cool
Crypto is very popular, and many people are likely to present themselves as experts when they’re far from being anything like that. But trading in Bitcoin requires common sense and keeping a cool head. If you want to be a flourishing investor, you want to ensure that you don’t get swept by the hypes and fads.
Common sense will help you avoid heavy losses. For instance, when a new altcoin enters the market, you’re likely to see many traders buying in on the hype and flocking to start placing their investments. However, it’s a double-edged sword, and while the immediate gains may be substantial, the subsequent fall might well surpass it.
When you start trading in Bitcoin, there are many things to consider. Because the market is relatively new, there still aren’t many rules set in stone, so your best bet is to trust your intuition but approach smartly and cautiously to avoid ending up with more losses than gains.
