It’s impossible to deny the appeal and impact of cryptocurrencies today. Apart from allowing people to have secure, seamless, and convenient transactions, cryptocurrencies have also become one of the most popular and lucrative investment assets today. Business Insider reports that more than 100 million people around the world are now using cryptocurrencies, with most drawn by the surging price of Bitcoin and other digital tokens. However, it takes a lot of skill, knowledge, and experience to understand the crypto market and actually make money off of it.
Here, we list down some of the things that budding crypto investors should watch out for to ensure the success of their investment.
Keep up with the news
Global news surrounding the various financial markets can significantly impact the prices of your crypto investments. Even something as seemingly harmless as a Tweet from an industry leader can quickly affect how well a digital currency is doing. Because of this, it’s important to match your pace with the crypto market by subscribing to crypto news websites that can provide you with reliable, honest, and timely information. William Thrill from Crypto Research notes that you should be careful when choosing crypto news websites as some may be biased and untrustworthy. Coinspace, CoinDesk, and CoinTelegraph are some established websites where you can find dependable news that can inform your crypto decisions.
Ensure that your portfolio is diversified
As with any type of investment asset, diversification is key to a healthy and secure cryptocurrency portfolio. Don’t make the mistake of putting all of your eggs in one basket. Trusting in only one digital currency may cause you to miss out on other profitable coins — or worse, lose all your investments in a bear market. So be sure to do your due diligence, look beyond the top cryptocurrencies such as Bitcoin and Ethereum, and invest in other potentially profitable coins.
To further diversify your investment portfolio, you should try investing in other assets, too. Thankfully, it is easy to access other investment vehicles with the help of various online platforms. FXCM highlights how opening a forex account that allows you to invest in other commodities can be done in three steps. All you need to do is to fill out a form, finish the application via a secure server, and log in to deposit your capital and start trading. By diversifying your portfolio, you can reduce the high risk associated with crypto investments.
Manage your risk
Risk will always be a part of crypto investing — or any investment vehicle for that matter. However, how well you manage your risk can help you mitigate any significant losses. This is especially important for short-term traders who rely on the volatility of the crypto market for their profit. Aside from not investing money that you can’t afford to lose, Coin Insider states that you should also study different risk management strategies such as position sizing, setting stop loss and take profit functions, as well as having a risk /reward ratio. By effectively managing your risk, you can further maximize your crypto investments.
Hopefully, the information and insights that we’ve discussed above can help you on your journey to becoming a successful crypto investor.
Exclusively written by Jamie Baldwin for devere-insights.com