There's one golden investment rule that you should know before you enter the “wild west” of crypto trading: never invest money that you can't afford to lose. It's important to note that the value of cryptocurrencies can be highly volatile, and their prices can fluctuate significantly over short periods of time. It's a good idea to carefully consider the risks before buying or selling any cryptocurrency. It’s not uncommon for cryptocurrencies to lose all of their value. However, although this volatility can be challenging to navigate through, it also presents an opportunity for the average person to get higher returns on their capital.
Before you start
In general it’s important to identify your investment goals and start creating a plan on how to achieve them. Everybody has their own preferences when it comes to their personal wealth and putting it to work. Some basic rules before investing in crypto:
Always do your own due diligence
Don’t listen to random people on the internet that are promising you high returns.
Don’t put all your eggs in one basket. Don’t fall in love with your investment.
Don’t be greedy
Take some chips from the table when you are in profit. Cash out and
Don’t chase losses
Tomorrow is another day, don’t increase your stake in an attempt to recoup losses.
Nobody can time the market, always have an emergency cash fund at hand.
Now that you know the golden rules in investing, let us help you with the basics of how to approach a trading strategy. To start it off, what is a trading strategy anyways? It is an extensive plan that helps you organize your trading activities and achieve your investment goals. It also eliminates risk if something unexpected happens in the market, it prevents you from making emotional decisions that could lead to big losses.
Trading strategy walkthrough
Select an investment asset
Pick a strategy
For most newly crypto investors and traders, a centralized exchange is going to be the best starting point. It has safety measures that can make buying and trading much easier. Sign up with a trusted crypto brokerage and fund your account. If you are more experienced, you can use a decentralized trading environment, also known as DeFi.
Like we mentioned before, don’t take financial advice from random people from the internet, always do your own due diligence. It’s important to pick a cryptocurrency or project that you feel comfortable with and have researched enough to invest capital into. Please don’t consider this a financial advice, it's more a general sense on how to get started
Most crypto investors allocate their capital to Bitcoin and Ethereum. The simple reason is that these cryptos move in a more predictable way than smaller riskier altcoins. Although smaller altcoins carry more risk, they potentially offer a way higher return.
Pick a strategy that suits your investment goals. It can be beneficial to allocate your capital to different strategies, to exercise proper risk management.
The name already implies it, the term day trading means entering and exiting the market on the same day to make a profit. Day traders will use technical analysis tools to try to
This trading strategy focuses on taking smaller gains in a short to medium time frame. The goal is to “catch” the market swings that play out over a few days to a couple of weeks. The gains might be smaller per trade, but done consistently will compound into a decent return.
Scalping is a trading strategy that focuses on making a quick profit from small price changes. It’s important that scalpers have a strict exit strategy. Because they use high volume in their trade, one large can whip out a lot of small gains.
Long term investing
People who want to use a more passive trading strategy should just buy the cryptocurrency in hopes of making a profit in a longer time frame, regardless of short term market fluctuations.
Leverage trading (not recommended)
Making an investment or trade with borrowed money as your main capital. This can lead to dangerous situations where you can be liquidated, meaning you can potentially lose a lot of your crypto collateral. This strategy only makes sense if you don’t care about money or love the casino.