Cryptocurrencies are all the rage, but not everyone has time for all the technical details and market volatility that come with investing in cryptocurrencies. As a result, many people have turned to strategies that offer relief from the day-to-day grind of crypto trading.
Some of these strategies are better than others, so we’ve compiled some quick tips on how to pick one that works best for you—whatever your level of experience or risk tolerance may be!
Choose the right mix of storage
The most common way to store crypto is on a mobile or desktop wallet, which are available for most popular cryptocurrencies like Bitcoin and Ethereum. Mobile wallets allow you to use your private key through an app on your smartphone, but they’re vulnerable if your phone is lost or stolen. Desktop wallets are safer because they don’t need an internet connection, but they can still be hacked if a hacker gains access to them physically.
If you have large amounts of cryptocurrency that need to be kept safe and secure, then another option is using a hardware wallet like Ledger Nano S or Trezor. These devices connect directly with the internet through a USB port and generate private keys offline — which means that all transactions made from these products cannot be traced back to their original owner (but users must still be careful about not losing their hardware device).
Prioritize liquidity
Liquidity is the ability to buy and sell quickly. It’s important because it allows you to enter or exit a position at will, without having to wait for long periods of time. This can be especially useful when prices are dropping, as you’ll have the ability to get out of your position before they fall further.
A cryptocurrency exchange is one way that you can trade cryptocurrencies. These exchanges allow users to buy and sell digital currencies against each other or fiat currencies like USD or EUR with minimal verification requirements and low fees.
Harness volatility
Cryptocurrency trading can be highly profitable, but it also has its risks. There are many plans you can use to maximize your profit and minimize the chances of losing money on a trade. The most profitable strategy is to harness volatility.
Using trading bot which analyze the prices of cryptocurrencies and automatically make trades for investors can be a great tool especially for newbies in the crypto world.
It’s all about buying when the price is low and selling when it is high—but there are ways to do this more effectively than others. You should always use stop losses in conjunction with your trades, so that if the price moves against you, your losses are limited or eliminated altogether.
A trailing stop works similarly: It sets an automatic trigger for closing out a position after the market has already moved significantly in your favor (ideally by 10% or more). This way, if you get stopped out early because of volatility spikes or market crashes, no one will know what happened except for yourself—and hopefully not even yourself!
Another great way to harness volatility while taking advantage of leverage at the same time is through margin trading: Using borrowed funds from an exchange instead of buying cryptocurrency directly with fiat currency means that any gain are magnified while losses remain limited by how much fiat capital was used up front.
Invest what you can afford
Another thing to keep in mind is that you don’t have to invest the same amount every month.
You can start out by investing less than you are comfortable with, and as your portfolio grows over time, increase the amount of money you put in. It’s also perfectly fine to invest just a small percentage of what you earn each month—even if it’s only $20 or $50 per paycheck!
Just remember that investing too little will make it harder for your portfolio to grow as fast as possible and may delay when you’re able to buy a house or retire comfortably.
Diversify
Diversify. Diversification is the most important strategy when it comes to investing in cryptocurrency, and will reduce your risk if you are going to do it. Diversifying means owning different crypto assets, holding coins or tokens from different exchanges, and storing them in various wallets.
Diversifying lets you spread out both the value of your portfolio as well as where this value is stored (i.e., cold storage). If one exchange or wallet gets hacked or otherwise compromised, then only some of your funds will be affected.
Crypto cloud mining is far less likely to fail than any individual mining company would be, and so for similar reasons, it’s also good for diversifying your portfolio.
Use dollar-cost averaging
It’s always a good idea to expand your portfolio, but dollar-cost averaging is particularly helpful when the market is volatile. It can help you ride out fluctuations in the value of your investments, which means you won’t have to sell when the value dips.
If you’re wondering how to invest in cryptocurrency and don’t know where to start from, dollar-cost averaging is a simple way that’s worth considering. Here are some more details about this strategy:
- Dollar-cost averaging is a approach that involves investing a fixed amount of money at regular intervals (such as $100 every week). This helps spread out your risk if your investment goes down in value.
- It’s an effective way of building up an investment over time without having to worry too much about short term price swings or daily fluctuations in price.
- You can use this method whether you buy cryptocurrencies with fiat currency or other types like gold or silver coins/bars etc., so long as they’re liquid enough – meaning they can be easily bought/sold without causing significant changes in their price during trading hours.