With this handy guide any beginner can learn how to come up with the best trading strategies and avoid common cryptocurrency mistakes.
In this article, we will explain:
Six cryptocurrency tips and trading strategies
Five common cryptocurrency mistakes and how to avoid them
How to decipher crypto jargon
Six cryptocurrency tips
If you want to invest in cryptocurrencies, here are six tips:
- Have a strategy for crypto trading
It isn’t easy to separate genuine cryptocurrency recommendations from the scams; there are lots of sharks out there waiting to take your money.
Reports of crypto investment scams surged to 7,118 in the first nine months of 2021. This was up 30% on the whole of 2020, according to Action Fraud, with the average loss per victim at £20,500.
So when you’re confronted with a lot of information about a cryptocurrency, take a step back from the hype.
Try to look critically at the project or platform. How many users does it have? What problem does it solve? Avoid coins that promise the Earth but haven’t delivered anything tangible.
- Manage risk
Some people offering crypto trading tips might not have your best interests at heart. So don’t get stung making the same mistakes as others.
Set limits on how much you invest in a particular digital currency and don’t be tempted to trade with more money than you can afford to lose.
Cryptocurrency trading is a high-risk business and more traders lose money than don’t.
- Diversify your crypto portfolio
It doesn’t pay to have too much invested in one single cryptocurrency. Or as they say: don’t put all your eggs in one basket.
As with stocks and shares, spread your money out among different digital currencies.
This means you don’t risk being over-exposed should one of them plummet in value – especially as the market prices of these investments are highly volatile.
There are thousands to choose from, so do your research. Examples include worldcoin and safemoon.
- Be in it for the long term
Prices can rise and fall quite dramatically day to day, and novice traders are often duped into panic selling when prices are low.
Cryptocurrencies are not going to go away. Leaving your money in the crypto market for months or years at a time could offer you the best rewards.
- Automate purchases
Just as with regular stocks and shares, it can help to automate your crypto purchases to take advantage of pound-cost averaging.
Most cryptocurrency exchanges, including Coinbase and Gemini, allow you to set up recurring buys.
This is where crypto investors tell the platform to purchase a fixed amount of their preferred cryptocurrency every month – for example, £100 worth of bitcoin. It means they get a bit less of the currency when prices are high, and a little more when prices are low.
That takes the stress out of trying to time the market by either buying a currency at what you think is the lowest possible price or selling at the highest price. It’s something that even market professionals struggle to get right.
- Use trading bots
Trading bots can be useful in some circumstances, but they aren’t recommended for beginners looking for crypto investment tips. Often, they are just scams in disguise.
If real algorithm existed that timed your buy and sell trades to perfection, everyone would be using them!
