Published by FrankNez Team.
Cryptocurrency has come a long way in a little more than a decade after Bitcoin, the first digital coinage, was launched.
From a niche interest confined within the circles of tech enthusiasts, this type of asset is now widely accessible, even to casual investors.
There are more than ten thousand different cryptocurrencies and tokens in the market that people can choose to invest in and trade, each with its own qualities that appeal to different markets and demographics.
What’s more, the price of Bitcoin has skyrocketed in the past few years, transforming the lives of the people who bet on it in its early days.
Still, it’s important to remember that putting your money in cryptocurrencies like Bitcoin (BTC), Ethereum (ETH), and Monero (XMR) comes with its own set of risks.
Trading in cryptocurrencies is not an assurance that you’ll always come out on top, but there’s a good chance that you’ll enjoy greater profits if you’re able to make some smart trading decisions.
To maximize the odds that you’ll make the best of your investment in cryptocurrencies, take note of these trading best practices.
Choose the Right Tools
There are two things that you need to have when trading cryptocurrencies: a digital wallet and a trading platform.
The cryptocurrency you want to own has an impact on your wallet and trading platform choices, as some wallets only work with specific coins and some markets don’t use certain coins.
For example, if you’re trading Monero, you should have an account with an XMR wallet service that works with the coin.
The same can be said of trading platforms.
The good news is cryptocurrency markets now accommodate an extensive range of digital coins, so it shouldn’t be difficult to find an option that works for you, especially if you’re thinking of trading with a popular coin.
Take note of the fees, if any, that these tools require of you, and check that they have the means to keep your assets and trades secure.
Select Coins Carefully
Again, there are thousands of coins in the market today, some of which are exclusively for the use of certain groups, but a good majority of which are accessible to everyday consumers.
If you’re a bit intimidated by the high price of Bitcoin and other popular digital currencies, it might be tempting to find an alternative coin to invest in.
You might even stumble upon a Bitcoin-in-the-making and turn up a huge profit some years down the road.
But before you give in to this thought, be sure to research the coin you want to trade—such as its history, the community behind it, and if there’s a good chance that it will remain viable in the future.
Otherwise, you might be throwing your money away on currencies that will never take off.
Diversify Your Trades
Diversifying your trades is a good move when dabbling with traditional assets as well as when putting your money on alternative assets like cryptocurrencies.
When you’re uncertain about what the future holds for your investments and trades, you’ll be thankful for having the foresight to diversify the cryptocurrencies in your portfolio.
By trading using different types of coins, you can balance the amount of risk you assume, and your portfolio will take less of a hit in case something goes awry with one of the coins that you are holding.
Beware of FOMO
The fear of missing out (FOMO) is real when you’re dealing with cryptocurrencies.
As an asset type, cryptocurrency is volatile by nature, and as such, it can be quite exciting to maximize the opportunities that the market presents.
But don’t let your emotions get the best of you–giving in to FOMO is the downfall of many cryptocurrency traders.
To make smart decisions in such a charged moment, it’s best to have trading objectives in mind and a strategy that you can stick to.
Know right from the start that you’ll be required to make quick decisions, so prepare for them by making guidelines that will help you arrive at the best possible outcome when using a trading opportunity as it is presented to you.
Clearly Define Your Purpose
Trading cryptocurrency is an experience in itself, but it’s also a means to an end.
Being clear about your financial goals from the get-go will help you set guidelines and select strategies that are aligned with your overall objectives.
What’s your purpose when trading in cryptocurrencies?
How would you define being successful in this endeavor?
What signs should tell you that it’s time to cut your losses and fold?
You’ll have to answer these questions at some point, so it’s best to ponder on them now so that you can make a firm decision when the moment asks for it.
Keep these best practices in mind when trading.
Following this guide will help you maximize your chances of earning a profit while also deeply immersing yourself in the trading experience.