19 October 2020
Trading crypto can be as easy as opening a chocolate wrapper. But this can turn out to be fatal; if not done with utmost care as the entire crypto market is full of surprises; within minutes it may experience an extreme rise or fall due to its price volatility.
Many people worldwide are deciding to get into this industry and start investing in crypto with high expectations of good returns from the very first investment/trade itself. However, there are many factors you should focus on while crypto trading to get results in your favor.
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Good results are always favored through luck, good habits, and market experience. In order to earn good returns, people make many common mistakes for e.g. improper market research, mining or trading just for big profits, lack of patience, improper handling of private keys, sending crypt to the wrong address, not maintaining hard copies of mnemonics, 2fa not activated and FOMO (Fear of Missing Out) every crypto enthusiast should avoid.
Good returns from the investment depend on the price fluctuations of each cryptocurrency invested. Some of the factors that cause rise and fall in pricing of the cryptocurrencies are listed below:
Market share: Market Capitalization reflects the market’s dominance and popularity.
Regulatory issues: Current Affairs, Political and Legal issue also affect the cryptocurrency prices.
Bitcoin price: Each altcoin is pegged with Bitcoin so its price is completely dependent on the current Bitcoin price.
Reliability: The development team of each digital token should generate trust among the traders to increase the buying of their respective token created.
Innovation: The price of a coin is also affected by each new development and improvement done.
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These were the points to be kept in mind after investing. Apart from these, there are certain essential things to be understood before starting crypto trading:
Well-defined plan: Cryptocurrency is the highest volatile assets whose price can go up and down in large numbers several times a day. So it is necessary for every crypto trader to constantly monitor market information. Before investing it is recommended to study coin through many research websites available in the market like CoinsCapture - a website that provides in-depth information on a coin like the market capitalization, market supply, trade volume, etc.
During the research process, you will come across various categories of the coin. Some of them are very famous for having a good team, great vision, and a reputable track record. Its best idea to hold such coins for the long term and let it marinate into a sweet dish. If the price of these coins fall do not panic and sell off immediately. Anything hold for the long-term should be kept untouched for a set amount of time.
It is highly advisable to define your investment plan before any kind of crypto investment as the entire crypto market if fueled with hype and emotional sentiments of the individuals in which you should avoid to dive in. Without a thorough plan, your ship will sink in the big ocean of the cryptoworld
2. Understanding technology: It is crucial to understand the blockchain technology before investing your crypto assets. You can start by reading crypto articles, subscribing in various forums and communities discussing each unit of the coin. You must keep an eye on how the government and corporations are exploring this technology and are they trying to put it down by finding loopholes and lowering the growth of this amazing technology. This will help you to widen your knowledge and frame the potentials of the blockchain technology in your mind.
Never rely on anyone for your cryptocurrency funds, this will lead to failure of the purpose of cryptocurrency as it was created to empower everyone by maintaining the ownership of their money without trusting any third-parties.
3. Losable money: The rule of thumb in crypto-market is to invest only what you can afford to lose. This is because the market is exceptionally volatile that can cause you to earn profits or lose everything instantly.
Once your money is converted into cryptocurrency, consider it as lost forever because there is no guarantee to get it back because losses can occur from dips (fall) in the market and some factors like hacks, bugs or the government regulations.
It is advised to evaluate your current financial situations before investing as it can be an act of desperation. Avoid taking any mortgage loan for a house or any valuable property or taking the loan in an expectation of good returns. This is like you are happily signing your own death warrant.
4. Patience: Patience is the key to success, this old phrase works in a real-life scenario, whether it is success or investment. If you decide to trade for the short term have a plan and act accordingly, if you decide for long term trading then you must be patient enough as the tasty fruits from the crypto market can make you greedy and turn your greed into a bad loss if you take any decision without proper diligence and patience.
5. Always learn from your mistakes: If its a loss accept it and figure out the reasons behind it. Learn from that mistake and take the necessary precautions in your next move. No one is perfect and nobody always makes a profit in every single trade they do, so it's okay if you lose some money as its part of trading. Mistakes are building blocks to make you a better trader.
To succeed in the crypto-world, all you need to do is find-out trustworthy resources, do your own market research, note down important points, pick the best exchange and wallet as per your requirements and prepare an action plan and play the game accordingly.