The possibility of earning on cryptocurrency attracts many people. We are witnessing and participating in another cryptocurrency boom. It has become technically easy to enter the market, it is much more difficult to do it competently and be able to stay on it for a long time.
If you are serious enough, you have a lot of work to do. It includes the choice of a trading platform, the coins you plan to trade, market analysis, and trading strategies on cryptocurrency.
Every activity has a purpose and a motive. First of all, find out for yourself what you need to trade cryptocurrency. The next fact that you have to accept is that the probability of losing everything is much higher than the chances of super profits. In the market, someone always wins, someone loses, and most likely you will visit both categories of market participants. The best way to minimize losses is to refrain from trading too hastily by exchanging ETH to USDS in a panic.
It is very simple in theory and terribly difficult in practice. Setting profit targets (take profit) and maximum allowable loss (stop loss) is simple. Much more difficult is to resist the temptation to move the order and close the trade at the set level, be it profit or loss.
Caution – FOMO
Fear of missing out is one of the most common causes of large losses. Watching cryptocurrency trading from the outside, it is easy to be misled. The apparent simplicity of actions provokes hasty transactions, which often turn out to be unprofitable.
Don’t chase super profits. Relatively stable small profits from regular trades generally turn out to be a more profitable strategy. In addition, this approach frees up part of your portfolio to invest in more stable assets.
Don’t waste your strength
There is a simultaneous volatility in the cryptocurrency market. Bitcoin price changes are reflected in almost the entire market. The majority of altcoins are involved in the general trend, but each moves at its own pace. Do not try to embrace the immensity, focus on those trading instruments that you like the most. Successive exchanges of USDS to BTC and back within the next lateral movement are much more profitable than chaotic throwing from cryptocurrency to cryptocurrency.
Focus on market capitalization
The availability of a coin is a very clear and simple indicator, but it is not enough to make an investment decision. Pay attention to the capitalization of the coin. With the same value of a crypto unit, a coin with a larger capitalization is preferable for trading.
Raising funds through Initial Coin Offering is a fairly common practice in the crypto world. Early investments can be super profitable and sometimes many times higher than the predicted profitability. Crowdsale is perhaps the most high-risk way to make money on cryptocurrency.
If you decide to take a risk, watch the development of the project in which you have invested.
Be careful with altcoins
Not all altcoins are equally viable. Many of them lose their value over time, or even disappear altogether. If you are trading altcoins, be careful not to overexpose your open positions. Pay attention to trading volumes, this is a fairly informative indicator for identifying promising coins and tokens.
The unpredictability of cryptocurrency is one of the unobvious consequences of its decentralization. Diversification is a very effective way to reduce losses. It is advisable to distribute your investments between fairly stable, medium-risk and high-risk assets. Everyone chooses the ratio between them based on their own goals and tolerance for risk.
Use pending orders
Momentary impulsive purchases and sales can give the desired result, but one-time. In the longer term, impulsive action is the fastest way to lose all your money and shatter your nerves. Place pending buy and sell orders according to your own strategy.
There are really many opportunities to make money on cryptocurrencies. But the risk of losing everything is much higher compared to any other type of asset. Don’t invest more in digital money than you are willing to lose if something goes wrong.