Bitcoin trading has currently become a kind of overnight scheme to get rich. People are drooling over its insane returns and investing a lot of money in the trades to make high profits. Same goes for the Altcoins also. But the reality is, both of these crypto coins have high trading risks due to the volatile market. So, if you are interested in Bitcoin and Altcoin trading, make sure to follow these 5 tips.
- Research the crypto market
Before you opt for trading your Bitcoins and Altcoins, make sure you do thorough market research. Study the price charts of both the coins, their market fluctuation rates at different intervals and then form a strategy to place your trades. Never put a large sum of investment in the trades. Select small amounts like 2%, 5%, 10% of your total investment value that you can afford to lose.
- Set your Target and Stop
Set your profit margins and stop loss before executing trades. If you are trading Altcoins, be careful as they lose their value quickly. Also, when the Bitcoin price rises, Altcoins value falls. You can choose Etherum, Monero, DASH as Altcoins as they tend to make some amount of profits daily. Also, study their price charts properly before trading. If you find the Bitcoin prices highly volatile; stop trading for that period.
- Risk Management
Trading is all about selling the assets at a higher price compared to the cost price. So, when a coin doubles its amount within few minutes, traders simply rush to sell their holdings. Be patient in such scenarios. Observe the market cap of the coin and compare it with other trending crypto coins to see its stability. Also, check its price fluctuating trends in the last 6 months and any recent update related to the same. After identifying these factors, choose to trade your holdings in small proportions so that in the worst case, the loss is minimum.
- Beware of the ICO scams
Majority of the ICOs have suffered a huge failure in recent times. Also, many of them have found to be scams that literally ate up investor’s money. So, research on the ICO’s offerings before you choose it for investment and if you don’t find any information from trusted sources, drop the idea completely. ICOs definitely help in diversifying your investment portfolio but, posses’ higher risks.
- Stay tuned with crypto updates
Cryptocurrency is not governed by any central regulations or authority. So, it is very difficult to trace out the authenticity. Read as many articles, blogs as possible on Bitcoins and Altcoins performance from trusted sources. Go for Technical Analysis of the coins using past market data, volume, and primarily price. You can have a look at the Technical Analysis guide of Zerodha.com or Investopedia to understand how to do it. Also, check the latest news coverage on Bitcoins and Altcoins.