Ethereum, one of the most popular cryptocurrencies, has risen to a value of more than $2,500 as of this writing. Other cryptocurrencies, such as Polkadot, Bitcoin, and Dogecoin have enjoyed similar tremendous rises.
With all this money flying around, no one should be surprised at the new interest in trading crypto. If you’re new to it, though, you want to seek out some tips for crypto trading.
We’ve got you covered. We’ll start with the basics on how to trade crypto and a few tips that will maximize upsides and minimize risks.
Risk Management Tips for Crypto Trading
The difference between trading and gambling comes in with risk management. A gambler can lose everything on a roll of the dice, while a trader uses tools to stop risk. Crypto for beginners and experts alike requires thinking like a trader.
Stop-loss orders serve as a key mitigation tool for traders. A stop-loss order involves setting a lower threshold for the value of your holdings. If they drop to, say, 80% of their value, you can sell your crypto as soon as possible afterward, limiting your loss to 20%.
Look Carefully at New Coins
If you look only for how to buy Bitcoin or how to buy Polkadot coin, you might miss some opportunities elsewhere in the space. New coins spring up regularly. The potential gain of making a smart investment in a low-value coin can tempt even the savviest investor.
Not all new coins are created equal, though. Some of them disappear just as quickly as they appeared, while others attract new investors and grow fast.
When crypto trading, you should take care in choosing the right platform. A good platform for beginners will have a low price for converting between fiat money and cryptocurrency.
Consider the fees your prospective platform charges too. A good payment processor can take a lot of the sting out of your initial investment.
Two common emotions affect traders almost every day: fear and greed. Keeping both in check will lead to better results in the long run. Too much fear can lead to missed opportunities, while greed can rack up big losses.
Sticking to a plan can help keep those emotions in check. Knowing what you want to do in case of a large shift in value before it comes up makes handling it easier.
Also read: How to Secure Your Bitcoin Holdings?
Look at Liquidity
Liquidity refers to the ease with which someone holding a resource can turn it into cash or turn cash into that resource. More people trading a currency makes that currency more liquid.
A currency that doesn’t have a high volume of trade can make it hard to get into or out of a position. This matters less for long-term traders, but when trading crypto in the short term, liquidity matters.
Ease Your Way Into Crypto
While these tips for crypto trading can help you trade with confidence, always remain careful. Remember that cryptocurrencies aren’t that different from the stock market, and to treat them with the same care you’d treat any other investments.
Speaking of other investments, if you’re looking to diversify your portfolio, try checking out our business section. Our articles cover a wide range of potential investment opportunities.