7 Rules Of Digital Currency Trading For New Investors

Source: unicoindcx.com

When we talk about digital currency the primary thing we will be focusing on is cryptocurrency. There is very limited data available about the market trends and fluctuations related to different cryptocurrencies. This is white becomes important for new investors to be very careful with their finances.

New investors might find it difficult to navigate the market which is highly volatile and has no shortage of altcoins with different potentials and communities. In the article we will be talking about the seven rules of investment for any new investor who wants to try their hand at crypto.

1. Do Not Bet Big

It is always in your hand to choose how much you are willing to bet on any particular cryptocurrency. The past year has resulted in great numbers for many mainstream alt coins like doge and ether. It is very easy to be misguided by the numbers projected and invest more than you were planning to.

Experts advise taking it low especially if you are a new investor and not going with more than 2% of the overall investment portfolio. Anyone who invests should have the attitude that they are willing to lose the money that they invest. There is always a chance that things will go south in any kind of financial investment so only part with the money that you would not mind losing.

2. Market is Ruled by Volatility

The price volatility of Bitcoin is notorious and nobody needs an introduction to it. Even if a particular cryptocurrency is projected to reach an all time high there is always a possibility that the prices might reach 70-80% below what was expected.

As a new investor you need to develop the appetite for risk tolerance and understand that many of the aspects of the digital currency market will be beyond your control. Know more about the market trends with the website, Btc loophole.

3. Trust Your Research

Source: strongerbyscience.com

As cryptocurrency investment becomes mainstream, there are many financial Gurus who are giving free advice on multiple platforms. Try not to be caught up in the entire process of free tips from supposed millionaires who do nothing but invest and look at market trends.

We are not asking you to disregard everything that you see on the internet but take it with a grain of salt. If any advice seems too good to be true, do some counter researching on your own and see if it holds true on other platforms. Good tips will be mentioned repeatedly across different articles so verification becomes somewhat easier.

4. Only Use Reliable Platforms

Cryptocurrencies are traded with different platforms all of which have similar rules with slight variations. The digital wallets being used need to be first checked for a liability before submitting all your financial information into it. There has been an increase in scams and frauds especially in relation to digital currencies and assets.

It is therefore very important to look into the security system of a platform and how they help in protecting their customer data and money. There is no physical bank to break into so everything depends on the technological prowess of the hacker. As long as the platform is using adequate protection there is nothing to worry about.

5. Blue Chips for the Win

Each market has different sizes of coins which are divided into blue chips, penny coins and midcaps. There has been a history of many new cryptocurrency is dying because of high volatility and low investment. We mention this because many new investors buy a lot of penny coins because of cheaper prices.

There is no long term benefit from penny coins especially if they do not have a strong community to drive the prices up if and when needed. Mid caps are somewhat stable but not a great choice for new investors. Since you are still getting to know the market, we would recommend choosing blue chips which are the most stable cryptocurrencies in the market currently. Bitcoin is one and Ethereum Is the other.

Source: cnet.com

These two currencies have significant market share and relatively low price volatility. Choosing some obscure currencies just because of a seemingly good deal will do more harm than good. Look into the market statistics and the previous performance of any particular coin before buying.

6. Know What is Happening in The World

There is no shortage of investors choosing cryptocurrency. One also needs to look at how the world is responding to any of the new coins in the market. Institutional investment is a big indicator of how successful a particular crypto investment is going to be.

Institutional investment is directly related to a currency becoming more mainstream and chosen for family transaction practices. International markets like that of the US and Europe should be looked at regularly to see the general trends. Investors from the US largely impact the rise and fall of crypto. Since the trading happens without a pause all days of the week and all hours of the day, there is no limit to the data to be analysed.

7. Spread Out the Portfolio

A diverse portfolio is always better than putting all of your money into just one coin. We have already mentioned that price volatility plays a big role in any cryptocurrency. In case one coin loses its value, there will be others to help with your investment and finances. But if a new investor has all of their money located in just one coin the price crash can mean a big loss which will take months and probably years to recover from.

The Takeaway

Source: bbc.com

Consider the seven rules to be the most important: the cryptocurrency investment in the present and the future. These rules can also be chosen to be practised by investors who have been involved with the market for a while. As long as one has been cautious with their analysis and fine answers they will be able to read the benefits of the rises in the cap of any digital currency.

Previous articleHow To Trade Digital Currencies: A Beginner’s Guide & Skills You Need
Next articleIPO Expert Charles Gregor on the Current IPO Market 2022