Cryptocurrency is getting popular with each passing day. People are gradually moving from holding fiat or traditional currency to digital currency. But do you know how you can safely trade crypto? Despite its popularity, cryptocurrency is considered highly volatile. This means that the value of crypto can fluctuate at any time.
Is this freaking you out?
Crypto has come a long way since it was introduced into the global financial market. Experts recommend that you should devise a sound crypto trading strategy when investing in cryptocurrencies such as Bitcoin (BTC) or Ethereum (ETH).
So, let us find out how you can safely trade cryptocurrency and make a lot of money with it.
What is Cryptocurrency?
Cryptocurrency can be defined as a digital currency that exists online. There is no physical form of crypto and you can buy it through a cryptocurrency exchange.
The transactions of crypto are recorded online on a public distributed ledger called a blockchain. These transactions are anonymous and secured by cryptography.
Carl Runefelt, alias, The Moon, is a global crypto leader who is pushing for the mass adoption of cryptocurrency.
Carl says, “Cryptocurrency is recognized across the world and is not affected by exchange or interest rates. It would also provide individuals living in economically fragile nations more stability and predictability.”
Why Should You Invest in Cryptocurrency?
You can use crypto not only to make payments but also as an asset to invest and earn money.
Many global leaders and government officials have come forward in the support of cryptocurrency and labelled it as the best alternative to fiat.
Here are the reasons why you should invest in crypto:
- Crypto is decentralized and operates free from the influence of a bank or government.
- The transactions of crypto are fast and have lower fees.
- You can send or receive crypto at any time as it is available 24/7.
- Crypto is stored online. So, you can move anywhere without the worry of holding currency.
Carl on his YouTube channel, The Moon, says, “Bitcoin is the best hedge against inflation that we have in the world right now and Bitcoin is also the best form of money that we have and have maybe ever seen in the history of humans.”
How to Safely Trade Cryptocurrency?
You may have seen people making millions of dollars with crypto. And the one thing they must have kept is “patience with cryptocurrency.”
Crypto is a game of patience and you should never let yourself be baffled by its short-term fluctuations.
According to Carl, “If you want to make money through crypto, the easiest way is to buy at a low price and sell when it is high. Also, you can intelligently take advantage of massive volatility and volume.”
The following are some important things that you should do when trading crypto.
Understand Your Investment
The first thing that you should do is understand exactly what you are investing in.
It is the golden rule of the market. Whether you are investing in stocks or buying crypto, you should have complete knowledge about it.
Today, over 18,000 cryptocurrencies are circulating in the crypto market. Bitcoin has become the largest cryptocurrency by market capitalization, thanks to its positive adoption and profitability.
So, if one Bitcoin is out of your reach, you should build your knowledge beforehand about the other cryptocurrency that you are looking to buy.
Manage Your Risk
If there is one word that is often associated with crypto, that is “volatility.”
The value of crypto can fluctuate within seconds as it is a decentralized asset.
You should conduct a rigorous market study before investing in crypto. This will help you observe the trading chart of a particular cryptocurrency that you want to buy.
Moreover, you should know that cryptocurrency is a game of patience and making decisions on short-term changes can hurt your investment.
Never Invest More than You Can Afford to Lose
Finally, it is important to avoid investing more money in cryptocurrency than you can easily afford to lose.
Crypto is extremely volatile and your returns can go up and down within seconds.
You should avoid being emotional when buying crypto. It is wise to make decisions based on market facts rather than hype in cryptocurrency.
This will help you make productive decisions at the right time.
In addition to this, you should avoid putting all your money in a single cryptocurrency. Crypto experts will always recommend that you should have a diverse crypto portfolio.
Cryptocurrency is rather a new currency when compared to fiat. It will take some time for the world to understand its trade and adopt it systematically.
You can incorporate these above-mentioned crypto trading strategies to avoid unwanted losses in the cryptocurrency trade. The skyrocketing rise of Bitcoin depicts that the time is not far away when crypto will be traded at large. So, you should buy cryptocurrency now when it is affordable.