Cryptocurrency is an industry that is blossoming into one of the biggest money-making platforms for traders. It is one of the fastest-growing industries out there, and much like the stock market investing, gains or losses are dependent on the state of the market and the product.
Because it is a relatively new platform, people are still finding their feet to make it a steady income source. Many scammers out there prey on crypto newcomers, but if you are a bit vigilant, you can easily avoid them. Now, it might seem like we are only talking about the negatives, but there are simple ways you can make a profit trading cryptocurrency.
Keep A Bit reviewed the entire industry for you to come up with simple habits you can develop in your trading to ensure you make money at the end of the month. So without further delay, let’s get into it.
Looking For Long-Term Trends
It may be weird thinking about long-term cryptocurrency trends because it is a young currency, with the second-youngest altcoin being only a few years old. However, if you look at all the transcripts from the industry, you will see that the general trend has always been up.
Usually, traders who look to make a profit typically bet large parts of their position on the coins’ long-term gains. So looking into long-term trends is a sure-fire way to make a tidy profit when dealing with cryptocurrency.
Cryptocurrency usually has the tag of being one of the most volatile markets globally, if not the most volatile one. You can make or lose a fortune in mere days trading in crypto. Even the altcoins that have been here for a very long time can become volatile and swing up and down swiftly.
However, if you have experience as a day trader in socks or know about day trading, things will be more comfortable. All the technical indicators in stocks you will find in cryptocurrencies. These indicators will foretell you when the volatility is reaching its peak. So it would be best if you always kept an eye out when trading cryptocurrency.
Financial juggernaut Warren Buffet talks about cryptocurrency in contrast to owning stocks. He once suggested that cryptocurrencies have no intrinsic value beyond their relative rarity due to difficulty in mining and finite amounts. Take, for example, the oldest cryptocurrency, Bitcoin. There are only around 21 million Bitcoins in the world, with only 17 million in circulation.
Some things are intangible and yet possess value; however, with Bitcoin, the governmental risk is imminent due to its intangible nature. Governments usually think about regulating currencies and products, and regulating cryptocurrency is a hard thing. The SEC has already taken a stance against cryptocurrency in a recently released statement.
In that statement, they said the trading platforms are potentially acting illegally and should fall under SEC regulation. While not necessarily illegal, authorities have been known to seize cryptocurrency concerning other criminal activities. So keep in mind the risks and start trading when working within platforms that are entirely legal and have the SEC’s blessing.
Creating and hedging your bets on a cryptocurrency is a hard thing because most usually fail. Since 2017, almost half of all the Initial Coin Offerings (ICOs) failed. These currencies never got off the ground or failed after the initial fundraising. With a big group missing, the failure rate even ballooned to 60%. However, that is down again. So always be careful about the next big thing because that might be the next black hole that takes away your hard-earned money.
Like in all other types of investment, portfolio diversification is the way to go if you want to moderate your risks. Going all the way into one cryptocurrency is a sure-fire way to getting your money lost. The market is highly volatile, and any altcoin can fall in price. You may end up losing all the money. You want to approach it like you would approach trading stocks.
As a beginner, you should start slowly and build your position over time like dollar-cost averaging in stock investing. Usually, traders only use a fraction of the available funds or holdings they have to make trades. While moderating risks by limiting your trade fund may end up giving you low gain on trades, but it will help you fight another day when you start losing money.
You have to keep in mind with CFDs that you may end up losing money if you are not careful enough. These are complex instruments and need proper research before you invest in one because there is a high risk of losing money rapidly due to leverage. Remember that 74-89% of retail investor accounts lose money on CFDs, so make sure you complete in-depth research before investing in one. Keep A Bit can review CFDs for you if you want. All you need to do is get in touch with our team.
Keep A Bit For Yourself
So there you go, that’s all the ways you can make a profit on cryptocurrency trading. Keep A Bit reviewed prominent platforms and traders to determine what they do to make money when dealing with cryptocurrency and navigate the industry.
Hopefully, by now, you know how to make a profit. If you still don’t know which platform to use for your crypto trading, then feel free to get in touch with Keep A Bit. And with that being said, we are all done for now. We will come back with something new for you soon. Until then, see ya!