Cryptocurrencies have become a popular investment opportunity over the past few years. Not only is this an extremely liquid marketplace, but the sheer number of underlying assets (tokens and coins, in this case) can provide plenty of growth opportunities.
However, a modicum of foresight is still required for those hoping to enjoy both short- and long-term success. Let us examine some practical tips and tricks to appreciate from the onset. These can provide any entry-level investor with a powerful edge.
Money Management: Adopting a Proactive Stance
One of the first recommendations is associated with the ability to monitor your funds within a real-time scenario. This can be accomplished through the use of innovative e-wallets such as Mountain Wolf, which recognizes both FIAT and crypto holdings and makes it easy to exchange. Users are likewise able to perform a host of actions, such as:
- Depositing and withdrawing FIAT currencies and cryptocurrencies.
- Sending instant payments.
- Trading via built-in crypto exchange platforms.
- Transferring funds via internationally recognised systems such as SWIFT and SEPA.
- Accessing real-time values of cryptocurrency holdings.
The bottom line is that individuals who are able to embrace a proactive approach are more likely to enjoy higher rates of return (similar to any investment).
Appreciate the Differences Between Cryptocurrencies and Traditional Stocks
Crypto holdings are noticeably different from standard assets such as Microsoft shares. One reason involves the liquidity of the crypto marketplace. This signifies that prices can rise and fall much quicker than blue-chip stocks. Although such movements can be advantageous within a bullish climate, money may also be lost. This is why risk management plays a crucial role within any type of cryptocurrency investment strategy.
Are NFTs Worth the Effort?
Another pronounced trend recently involves the rise of non-fungible tokens (NFTs). Many individuals mistakenly believe cryptocurrencies and NFTs are cut from the same digital cloth. While they both employ blockchain technology, there is one important difference. NFTs are unique tokens often viewed as collectible items. Some may also have virtually no open-market trading volume. This makes an NFT incredibly difficult to sell.
Cryptocurrencies are instead fungible; signifying that they can be exchanged without a depreciation of value. Furthermore, the market for cryptocurrencies such as Bitcoin and Ethereum is much larger than those catering to NFTs alone. Simply stated, NFTs carry a fair share of risk.
A Look at Margin Trading
Margin trading was (at least partially) popularised by the Forex marketplace. This type of strategy involves investing only a fraction of the total value of an underlying asset. In the event that the price of the asset rises, the payoff can be substantial. This attracts many novices and unfortunately, it could also come at a cost.
Margin trades may also result in what is known as a leverage-induced loss. Investors could lose exponentially more money than they initially allocated into a position (such as a Bitcoin CFD). Any type of leveraged trade should therefore only be performed by those who are aware of the dangers.
Know Your Limits
Psychology is a final piece of the cryptocurrency trading puzzle. Never let emotions dictate trading or investment strategies. In the event that you have begun to incur a loss, know the right time to pull out of a position. Do not make the mistake of “letting it ride” in the hopes of a sudden reversal. It is much better to walk away for the time being. Additionally, appreciate the immutable fact that errors can and will be made. These are nothing more than part of the overall learning process.
Whether you are looking to top-up your prepaid crypto card, comparable to a prepaid card but funded with crypto assets, as a result of recently realized profits or hoping to earn a side hustle with the help of a cryptocurrency position, there are plenty of options to explore. Time and insight are nonetheless needed in order to point yourself in the right direction.