The invasion of the current world by new digital methods does not seem awkward any more to a great majority of the population. Moreover, learning cryptocurrencies deeper stimulates to new experience with less fear and more consciousness. There is nothing similar to digital coins as they combine a great number of features making this type of investments exciting and unique.
At the same time, newcomers may get into troubles being not aware of all possible hidden hazards. It is easy to lose money while storing, buying or selling cryptocurrency. In this article, we provide you with a brief instruction how to develop some skills in crypto trading, but becoming an expert requires much more profound study of the subject.
Choose the strategy
There are two main strategies of working with digital assets: crypto investment and crypto trade. This should be the first point to decide starting acquaintance with the currency of a new era. Choosing crypto investment users acquire digital assets and store them for a long term.
In addition, some crypto enthusiasts use specialized calculators designed to enable investors to calculate the measure of loss or gain that investment can generate. A lot of dynamics of the crypto prices is observed and it is necessary to take into account.
This can be quite stunning for beginners; that’s why a crypto investment calculator is highly recommended. It enables inexperienced investors to master these price dynamics, and help to make an informed investment decision. The second strategy is short-time speculations. Crypto enthusiasts become crypto traders speculating on the price direction of a cryptocurrency. A trader makes numerous digital transactions in order to get profit in a short period of time.
Successful crypto traders have a defined crypto trading style and do their own research and analysis. Another great feature is that they are unemotional about crypto trading and focus on risk relative to reward.
The risks of crypto trading
The high volatility is observed in crypto market causing a high-risk market to trade on. Beginners should consider essential risks involved in crypto trading. First, it is volatility. Cryptocurrency volatility is one of its most peculiar elements. It is a critical characteristic of digital coins as it demonstrates both their risks and possible earnings that come with purchasing an asset.
Moreover, the volatility of the crypto market has caused a number of huge crashes. Let’s remember 2018 when over $700 billion was wiped off the overall cryptocurrency market cap with a number of negative issues affecting cryptocurrencies such as money laundering, excessive speculation, cyber thefts and so on. The second greatest fear is hacks. There have been many successful hack attempts on cryptocurrency exchanges.
Crypto trader styles
Each trader works using his own scheme, but anyway there are several styles to reveal. These are day trading, swing trading and auto trading. Day trading is very short-term trading, and traders might hold an asset for just a few seconds or to a couple of hours.
The idea is that you sell your asset before the end of the day waiting for a small, but quick profit. Swing trading is described as a kind of fundamental trading in which positions are held for longer than a single day.
Traders implement a mixture of technical analysis and fundamental analysis to be successful in this style. Finally, the last most criticized style is auto trading. It involves trying to program a crypto trader bot to take trades automatically.
To conclude, crypto assets are a high-risk investment. You should consider if you evaluate the possibility of losing money due to leverage.