There are over 328,000 cryptocurrency transactions per day on average. This activity makes the crypto market a volatile yet profitable option for day traders and investors.
But, to make money in cryptocurrency, you must know what you are doing. Understanding the market is the first step in becoming a successful trader.
Use these 5 cryptocurrency trading strategies to invest your money wisely.
Follow the News
Cryptocurrency trading is controlled by world events, from government sanctions to business partnerships. To know when big crashes and large leaps in the market will occur you have to follow the news.
Many websites give hourly updates on market trends and global crypto news.
Monitor the Market Volume
People who hold large chunks of Bitcoin can make the market fluctuate when they buy or sell their coins. These orders change the volume of assets of the market and influence how you invest in cryptocurrency.
So, if you see the volume increase exponentially, the price will probably rise. This is the time to sell if you want to make a day-trading profit. Then if the volume decreases, you would place a buy order when the price is low.
Margin Leverage Trading
Trading cryptocurrency using leveraging is not for beginners. You should do your research before using margin trading. Here is how it works:
A broker will match your initial investment to give you more leveraging power. The broker holds your investment as collateral while allowing you to trade with their part of the investment.
Choose a leverage ratio to bet against a market drop or rise (short or long). The higher the ratio, the more of a risk you will take but the more potential profit.
This strategy can make you a large profit on borrowed funds, but it can also risk losing all of your money. If that happens, learn how to report crypto losses on your taxes.
Control Your Emotions
When you trade cryptocurrency, the highs and lows are like gambling. Don’t assume that you can predict the market every time. And when you get it wrong, you should reevaluate your strategy without getting emotional.
Investing with your emotions can lead to risky behaviors to make up losses. Always begin trading with the foresight of potential loss.
Spread Your Investments
The cryptocurrency risks can be lowered when you spread your investments. Pick a few coins for long-term investments. Then make a budget just for day-trading.
You can buy hardware wallets to keep invested coins secured and inaccessible for trading. Cryptocurrency exchanges should only hold coins that are being traded, not for large amounts of invested assets.
Improve Cryptocurrency Trading Strategies
Continue to improve your cryptocurrency trading strategies by following new trends in the market. Start following professional traders, innovative start-ups, cryptocurrency news sources on social media.
For the latest advances in digital currencies, visit the crypto section of our blog.