Since cryptocurrency is highly volatile, here are few important tips to help you increase your profit margin and minimize your losses.
You must have a clear purpose for getting into the cryptocurrency trade. Whether your purpose is to day trade, scalp, swing trade, or auto trade, you must have a trading plan. Big whales control the cryptocurrency market, meaning traders who have huge capital in the market, so the slightest mistake without a plan will make you lose profit to these big whales fast.
Cryptocurrency short-term trading swings are very sensitive to relevant news. News such as government regulations or the hacking of a cryptocurrency exchange, prices tend to drop significantly. However, if a huge company announces using digital currency, like bitcoin, prices climb quickly. If you’re aware of any news and can react wisely, you’ll have the edge over the market.
FOCUS ON TECHNICAL ANALYSIS
History has a habit of repeating itself. The price charts of a currency tend to move in patterns. If you learn to build your technical, analytical skills to predict price movements, this will give you the edge you need to turn your trades into profit.
Invest an amount that you can afford to lose, and don’t be greedy. Invest wisely to earn and build. High trades require more tolerance.
It is wise to take a diversified approach to trade cryptos. The cryptocurrency market is unpredictable, especially because the market is relatively new. At any time, the market can come crashing down. Even the most popular used coin, in this case, Bitcoin, can drop in price extremely fast. Therefore, diversify your portfolio in different altcoins and ERC-20 tokens.
Also, you can diversify your risk by looking into other investments such as stocks, real estate, ETFs, etc.