Some say we’ve reached the peak of cryptocurrencies and from here on out, we are in a downfall. Reality is quite different – we are just at the beginning of the crypto revolution. Investors, normal people, finance gurus, even governments and politicians like Donald Trump are all turning their focus on crypto.
The change is becoming more widespread as more people are more informed on how to acquire and invest in the long-term with crypto. If you are a newbie you feel quite overwhelmed – and with a good reason. There is tons of stuff that is unfamiliar to you like terms, exchanges, networks and so on. But, there is zero room for panicking – it’s not as complicated as it looks like. It is a natural instinct to be cautious when it comes to investing and finances, especially when it comes to exploring new territories that everyone speaks about so fondly. We will explore all things you need to enter this world, the rest of which you will learn as you get familiar with crypto.
Crypto HODL
During the start of the golden age of crypto, on social media and in news publications you’ve seen the use of the term HODL. It is defined as a process of keeping your digital assets (cryptocurrencies) for a longer period of time regardless of market movements. This means you won’t sell your crypto assets even if the market is going down. It is an approach for the ones who have patience and have done their homework on the potential value of crypto, because if it comes from a good developer and in a good eco-system – you will get most out of the investment in the long-run.
This strategy is backed by well-known investors like Warren Buffet, who have been in the investing game for decades, bringing attention to the importance of patience in playing smarter than the average investor on the market. The first cryptocurrency ever is, as you’ve already known, Bitcoin. Already, those investors that HODL have seen the fruits of this strategy. Despite the market fluctuations the ones who believed in it since the beginning, have seen enormous returns – going over 10,000% or even more. Back in the day, the value of Bitcoin was low $0.01 per coin and during the start of the golden crypto age the value increased enormously and reached over $70,000. As a long term investment Bitcoin has confirmed that HODL is a great strategy for the ones who wait. On the other hand, Ethereum (the second most valuable crypto), confirms the validity of this strategy as well. With many governments globally recognizing its influence over each transaction the crypto market has only one destination – going up, up to the moon!
Diversifying Your Crypto Investments
Now, purchasing and holding one crypto like Bitcoin without having a great amount of investment funds is not a good strategy for both the short and long-term. Same as with stock investing, the rule of diversifying your assets applies also in the crypto world. It is a really relevant strategy because the crypto market is rapidly and unpredictably changing, so in order to keep your returns safe from volatility, diversifying your digital assets is a must. The ideal portfolio should consist of different crypto assets that will not react the same to the market fluctuations. Moreover, by spreading out your investments, you reduce the impact of any single poorly performing asset on your overall portfolio. However, diversification doesn’t just mean investing in different coins all the time, there are many other crypto options you could explore such as decentralized finance (DeFi), investing in non-fungible tokens (NFTs), and much more. This approach is a perfect fit for both traditional and cryptocurrency investments.
Technical Analysis for Low-Cost Purchases
If you have basic knowledge in finance then you probably know the term technical analysis. For the ones who are totally new to this world, technical analysis is the process of monitoring historical price charts and trading volumes to predict future price movements. It is proved that past trading activity and price changes can indicate future trends. For beginners primarily we recommend starting from the basic concepts as support and resistance levels. Learning when to buy and when to sell is a key ability for successful trading.
- Support Levels: These are points where prices tend to stop falling and bounce back, offering a good buying opportunity.
- Resistance Levels: These are points where prices tend to peak and may start to fall, indicating a good time to sell.
Risk Management
A smart investor knows when to take risks and when to exit the market. Risk management in crypto investing and trading involves identifying, assessing, and reducing the impact of potential losses to protect your investments. Make sure you can handle the consequences if you lose the amount you invest. In order to cope with risky situations, here are the most effective risk strategies that each investor should be including in his financial decisions:
- Stop-Loss Orders:Set predetermined exit points to sell your assets if their price falls to a certain level, preventing further losses.
- Position Sizing: Limiting the amount of your portfolio you’re willing to risk on a single trade, typically no more than 1% of your total investment.
- Psychotrading: Managing the psychological aspects of trading, such as fear and greed, to make rational decisions.
- Cold Storage: Keep aside a portion of your crypto assets offline to protect them from hacks and cyber threats. Using a cold hardware wallet, as opposed to a hot online wallet, is the best way to safeguard your digital assets.
The Concept of Swing Trading with Crypto Contracts for Difference (CFDs)
Swing trading is a concept opposite of HODL, it aims to buy and hold a crypto asset for a short period, typically from a few days to several weeks, to profit from expected price fluctuations. If you don’t have the time to be glued to the computer 24/7 that it is the right strategy for you, because of the existence of CFD (Contract for Differences) which is an agreement between a buyer and a seller in which the buyer compensates the seller for the difference between the asset’s current value and its value at the time the contract was signed by both parties.
Understanding CFDs in swing trading is a game changer for each investor and could potentially lead to great gains. One thing to note is that exchanges play a crucial role in facilitating swing trading with crypto CFDs. They provide the platform where traders can access various CFDs and execute trades efficiently. These exchanges offer tools and resources to analyze market trends, set stop-loss orders, and manage trades effectively. By using reputable exchanges, traders can ensure secure transactions and access a wide range of crypto assets for CFD trading. To find more information about exchanges and their features, you can always check informative sources online.
Final Words
The opportunities that cryptocurrency trading offers to investors who embrace innovation are endless. Make sure to be one of those who could potentially be part of the 1% of the whole population by smart investing in crypto markets. Always keep in mind the rules we are sharing in this article, keep in mind that if you are aware of the basics nothing is impossible. Make sure to give them a try, and enjoy the returns on your account.
