Cryptocurrency investors must decide how they want to navigate the crypto space to achieve their investment goals. Either by buying cryptocurrencies or trading in it. The natural appeal of cryptocurrencies attracts investors who are tempted to the high returns that can turn the fortunes overnight. While the volatile nature of cryptocurrencies can prove detrimental. They also offer lots of opportunities for those looking for gains from price movements. Here are some tips from crypto investor Eric Dalius for new investors who want to try their hand.
EJ Dalius tells investors to choose between buying and trading
Choose between owning cryptocurrencies and trading on the price movements. By speculating how it might go without taking ownership of the currency. To trade in cryptocurrencies, you must use some derivatives trading tools like cryptocurrency CFDs. You must pay in full for the price of the asset by using a unit of cryptocurrency. Putting up a small proportion of your total position size is the norm for trading. To leverage your position on the price and gain broader exposure than what would have been possible with available investment. As investors do not have to make a deposit or pay withdrawal fees, this process is cheaper too.
The trading approach is much riskier as the wrong strategy can magnify losses.
Create an account
Cryptocurrency buying and selling happen through an exchange, so you must create an exchange account for storing your cryptocurrency in a digital wallet. You will need only a brokerage account if you want only to trade in cryptocurrency as it does not require accessing the underlying exchange account. The broker remains exposed to the underlying market on your behalf, and setting up this account is faster and easier.
Decide the currencies you want to deal in
Usually, you should be able to trade in all cryptocurrencies like Bitcoin, Ethereum, Ripple, Digibyte, and Litecoin. New currencies keep emerging and expand the list of 1500 cryptocurrencies. However, choosing a few from the long list can be a daunting task. However, it is safe to choose the ones about which you know something. And have some expertise in the price movements by avoiding an approach to embrace too many currencies.
Create your trading strategy
Having a good understanding of your market is essential. A lot of factors influence the pricing of cryptocurrencies. From government regulations to media coverage of the crypto. Sector to government ministers’ statements and influential business people as well as the fortunes of the US dollar as it happened over the past year. How influential these factors become depends on the extent of involvement of people and the interest they take in cryptocurrencies.
Implement your strategy
Having decided about a trading strategy, you must define the point. At which you would exit a trade which in trade. Parlance is known as close, which can be an important discipline. Running large open positions in risky because of the volatile nature of cryptocurrencies. You must close your position when you have gone through your maximum loss or reached your target position.
Start small to gradually get a feel about the market’s behavior and the factors that influence them.