6 Tips To Maximize Your Bitcoin and Cryptocurrency Trading
The number of cryptocurrency traders is on a steady incline despite the fact that the market has stagnated for quite a while.
However, it still seems like most investors and traders are struggling, and there is a lot to learn for most. Therefore, we collected 6 tips that we believe will make you a better investor. Some of them are tips to improve your skills while others will help you stay motivated even during the worst market conditions.
All things considered, there is something here for everyone, regardless of skill and experience. So without further ado, here are 6 tips that will make you a better cryptocurrency trader.
Trade with Brokers and Use Leverage
Most cryptocurrency traders invest and trade using cryptocurrency exchanges and even though there is nothing inherently wrong with that, it’s not the most optimal solution.
In our opinion, the best solution is a combination of exchanges and an online broker offering cryptocurrencies. The reason being that a broker allows you to trade on smaller market movements as well as maximizing your exposure for each position using leverage.
Now, the amount of approved leverage on cryptocurrency CFDs has been substantially lowered in the EU, but it’s still enough to maximize your opportunities to profit.
Diversify Your Portfolio
Bitcoin might be the king of cryptocurrencies but that doesn’t mean it’s a good idea to keep all your eggs in one basket. Not only will a diversified portfolio increase your potential profits, but it will also lower the risk.
We’re not telling you to invest in random small cryptocurrencies with limited potential, but buying some Ethereum, Ripple, and even Litecoin won’t hurt. Just make sure you analyze the currency and invest based on your own prediction instead of listening blindly to what others have to say online.
Learn How To Short Trade
Many cryptocurrency investors limit their ability to profit by only focusing on “buying low and selling high.” It’s the most basic investment concept there is, but it also means you’ll lose out on many opportunities.
In fact, when it comes to a volatile market like the cryptocurrency market, the ability to short trade and bet against assets is extremely valuable. Just imagine if you had been short trading Bitcoin during the crash after the bull run in 2017.
Controlling Risk is Not the Same As Avoiding Risk
As an investor you have to be comfortable with risk, it’s just a part of the game and the reason why it is so exciting to begin with. Anyone that wants to succeed as an investor or trader will have to learn how to live with and adapt to risk as well as understand when it’s time to avoid risk.
Just don’t think that avoiding risk at all times is a good investment strategy because it’s not, and without risk, there won’t be any reward.
Never Chase Your Losses and Don’t Be Discouraged by a Few Bad Investments
Everyone loses money at times and everyone makes bad investments and decisions. Just like risk (see above) it’s something you have to get comfortable with. You have to accept losses as a natural part of the process and you can’t let it discourage you.
However, the most important lesson of all is to never, ever chase losses. It doesn’t matter what happens or why, as soon as you start chasing losses you’re entering very dangerous territory that can financially ruin you before you know it.
There is even a saying that explains this perfectly:
Made profit? Forget about it! Experienced a loss? Forget about it quicker!
Don’t Listen to Wall Street – Bitcoin is Here to Stay
Lastly, don’t listen to Wall Street or any of the naysayers out there. Bitcoin is here to stay and the ball is already in motion.
The need for alternative payment methods is only going to grow and Bitcoin is the most natural and sustainable solution to many of the related issues. Also, there is too much money invested in the market for it to go away.