Cryptocurrency may have hit a fever pitch back in 2017, but the industry is still too new to predict its staying power. The novelty is perhaps one of the reasons why stability remains an issue in crypto trading and investing, but there is a slew of other factors that also go into good trading decisions, making it quite tricky and even overwhelming sometimes, especially for beginners.
For starters, digital currencies are hard to accurately value because they have nothing to base their prices on other than market sentiment that is often dictated by the media. Plus, there’s the lack of regulation from governments and lack of backing from established financial institutions.
Valuable Lessons from Expert Crypto Traders
Newbies in the industry should take cues from the experts—those who have seen the birth of the industry or from people who have plenty of trading experience. Here are a few top tips from crypto and blockchain experts like Kyle Hill and Jamie Smith that can be beneficial for starters.
- Learn how blockchain works
Blockchain is perhaps the foundation that laid the groundwork for crypto, so it is essential that you understand its role in crypto trade. Goldman Sachs believes that blockchain can “redefine transactions and change everything,” but truth be told, people are yet to fully understand how it works, even though you don’t really need to know it to use it well.
For the uninitiated, blockchain is made up of blocks or a list of records that is continuously growing, linked and secured using cryptography. It may be a public ledger of transactions between two parties, but it cannot be easily modified and hacked due to its decentralized and transparent nature. The more extensive the network of computers working behind crypto, the more stable the system becomes.
- Learn the top digital currencies
BTC may still be the top dog of crypto, accounting for 50% of the market, but there are a thousand altcoins today, with over a hundred of them selling for more than $1. A good example would be Litecoin, which has a higher trading volume than BTC and Ripple despite its small market cap.
Discover more cryptocurrencies worth considering by reading this post.
- Invest only in ICOs that have a product
An easy way to prevent being scammed is to only invest in ICOs that have an actual product already. The has expressed the same sentiments, stating that
- Read the news every day
When it comes to crypto, you should treat it as if you’re learning in school. Don’t let a day go by without reading up on crypto news or learning a new crypto concept. Check out some great websites, discussion boards, and YouTube channels to bookmark for BTC news here.
- Study charts to find trends
The goal for traders and investors is for crypto to increase in market cap value over time, which is why they collect as many coins as possible. They do this by getting in at the right prices (“buying the lows” and letting profits run) and building a strong, diversified portfolio of assets. They also try to avoid buying or selling over big, reactionary swoops and trading for more than the necessary times in a week.
In order to understand if a stock is over or undervalued, you should learn how to read moving averages or the plot on stock charts that help smoothen out volatility and accurately follow trends. Knowing how to read charts can help you discover at which point and price you should be willing to buy or sell before it corrects.
- Set limit orders and be patient
Limit orders are set once you are ready to place an order as a means for investors and traders to enter a position without being affected by price fluctuations. For example, if a stock trading is around $2.60, the limit order can be $2.50, which means that if the price drops at that amount, the order is automatically executed.
Once you’ve set the limit order, be patient and let the price fluctuate. Resist the urge to change your limit order or canceling it altogether. See if the limit order catches a buyer or seller.
- Consider Lower Cap Currencies
Newer and lower cap cryptocurrencies can be great opportunities for traders because their lower price point means getting into the game doesn’t mean breaking the bank. There are just as many growth opportunities with currencies like these, but you still need to do your research to determine their suitability for the market.
Important aspects to look out for with lower cap cryptos are idea legitimacy, an experienced and innovative team, brand culture/personality, realistic goals, communication, and community support.
Take a Cue from the Experts
Hopefully, in time, crypto valuation and stability will increase alongside settlement over regulations. Being able to gather more diverse investors, from millennials to Gen X-ers, will give the industry a more mature outlook, especially in the eyes of financial institutions that can elevate crypto to a more reputable status.
Until that time, what investors and traders can do is to keep on making smart moves that are backed by research and data. Do your due diligence and take all the help you need to get the hang of working in crypto. Finally, diversify your resources and listen to what different experts are saying. With enough of the right information, you’ll be on your way to becoming a better and more successful crypto trader.
Ready to take on the crypto trading world? Noah Coin is now available on these crypto exchanges.
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