Cryptocurrencies are now well established in the financial landscape as more and more institutions, managers or investors are interested in them as a market principle. The emergence of the cryptocurrency industry in just a few years has contributed to the emergence of thousands of different projects, each of which holds a cryptocurrency with a competing or different goal from the rest. So it has become difficult to navigate through thousands of cryptocurrencies, and develop a clear strategy and specific investment criteria.
Through this article, we wanted to help by providing important rules for trading encrypted digital currencies, which everyone interested in the crypto market should familiarize themselves with and follow in their footsteps.
Here are the basic rules for trading digital currencies
Identify yourself as a market trader
Choose digital currencies that are compatible with your identity as a trader
Select a cryptocurrency investment or trading strategy
Cryptocurrencies will not make you rich for sure
Diversify your cryptocurrency portfolio
Look for reputable and reliable news sources
Be prepared for market fluctuations
Frequently asked questions about cryptocurrency trading rules
Identify yourself as a market trader
The main rule for many investors' interest in cryptocurrencies is to be in line with expectations, especially if the project is serious and its team is diligent and active. Currently there are thousands of cryptocurrencies with different characteristics. Many of them are not serious and therefore more dangerous. Many of these cryptocurrencies are more like betting than investing. So in the long run, the important thing will be the good choice of the underlying asset for investment, and hence risk aversion.
Every investor has a different trading identity so it is important to determine your maximum loss acceptability to gauge the risk you are willing to take. It is also important to set time horizons, and answer the questions:
Should I invest very short term? Or in the medium term? Or in the long term?
The answer here will clarify the type of trader and investor you want to be. For example, in the identity of a particular investor who does not want to work full-time in trading, it is better here, for example, to prefer the medium/long term in order to avoid strong fluctuations in the short term (a few days/weeks).
Choose digital currencies that are compatible with your identity as a trader
Just as with stocks in the stock market, there are also several fundamentals to consider in the crypto market. Currently, based on the evaluation (market value), and if we were to apply it to the major cryptocurrencies, it would yield the following results:
The strongest projects in terms of evaluation are:
Bitcoin.
Ethereum.
Binance coin.
Ripple.
This mechanism is somewhat similar to the equation for major stock market indices.
As for the profile of each project, and let us take Ethereum for example, we find the definition:
Ethereum (ETH) is a platform for receiving new crypto projects, as many crypto companies issue “digital tokens” on it, as Ethereum is like a global computer that allows applications to be installed on it and to perform smart contract functions with high efficiency, despite its recent suffering from the size of fees and the difficulty of scalability. . Ethereum has many competing projects that bear the title of the Ethereum killer, such as: BNB, OMG, Augur...
All cryptocurrencies can be traded with great ease. But you must first research each digital currency in detail before making any investment. Choosing to bet on industry “indices” (ETH, BTC, etc.) or industry players (other digital tokens) there are two elements to take into consideration.
The largest cryptocurrencies allow for spreading risk and benefiting from the growth and prosperity of the industry. While this is not the case for small cryptocurrencies (especially those with a market capitalization of less than a few tens of millions of capital) where the risk is much higher.
Select a cryptocurrency investment or trading strategy
Depending on who you are in trading, it is important to determine your strategy, whether you are a day trader or a long-term investor. So to determine this, it is important to answer some basic questions, such as:
What is my investment capital?
What are my time prospects? What extreme movements can I expect during this period?
What would be the ideal distribution between cryptocurrencies of different sizes? Most liquid? Least liquid?
According to these criteria, it is important for you to choose an ideal money management strategy.
The most important thing is to get and get your bearings, especially for beginners. It is often recommended to enter into investing gradually.
Gaining experience is very important as it makes it possible to reduce risks that remain high with a lack of experience (through regular monitoring of the market, books, records, etc. There are dozens of articles that we have previously discussed on the Arab Trader website, which can be viewed from the link).
It is best to enter into financial investments slowly and gradually, we recommend paying attention to the effect of leverage. You should always invest and enter the crypto market gradually and not enter with money you need. There is a saying in this matter, which is that it is always better to consider what was invested in crypto as a complete loss. That is, trading cryptocurrencies should in no way involve entering with the capital you need.
Compliance with this rule is a safety issue. Cryptocurrencies do not follow an Asian price line and their volatility remains high, which is not necessarily a bad thing in itself in terms of trading. But poor management and a bad economic situation can negatively compound these characteristics of cryptocurrencies and be costly.
It is often observed that many investors deprive themselves of their personal needs to create capital and a cryptocurrency wallet, especially among the young audience focused on this industry. For our part, we recommend trading cryptocurrencies well and entering with funds that do not in any way affect your personal life.
#Cryptocurrencies will not make you rich guaranteed and guaranteed
Since cryptocurrencies have generated a very large number of wealthy people, but look at their percentage compared to the total size. We also recommend here that you beware of offers that promise you to become rich in a short time using cryptocurrencies. There is also a red flag that always looms on the horizon in this regard, which is that a good deal will not usually come to you and present itself to you, but rather a good deal is one that you search for and take time to search for.
It is also necessary to be careful of sites that convey the idea that your investments in crypto will make you rich quickly. Do not hesitate to refer to the blacklist of projects and research each project before investing in it. Although short-term trading can sometimes be profitable quickly, for the inexperienced, it is one of the riskiest methods. It is worth noting that there are no miracles about cryptocurrency prices. Managing cryptocurrencies requires significant capital and skills.
Diversify your cryptocurrency portfolio
There is a common saying in financial circles:
"Don't put all your eggs in one basket."
If the basket falls, all the eggs break, so the loss is greater. While if the capital is distributed among a number of cryptocurrencies, it will be a smaller step, taking into account good research and investment in large projects and allocating the largest part of the portfolio to them.
Look for reputable and reliable news sources
There will always be a lot of conflicting opinions about cryptocurrencies, as well as the people who own them. Many believe that cryptocurrencies are just a scam, and those who engage in them will be disappointed. If you're already convinced that cryptocurrencies can benefit you, stick to sources you can trust and avoid the hype of non-believers. If you want to be a successful investor or owner of an altcoin.
Be prepared for market fluctuations
It is no secret that cryptocurrencies are still not as stable as standard fiat currencies. It is possible to go back historically and see the price curve of Bitcoin over the months and years. Two years ago, Bitcoin reached the level of $3,000, and after that it rose to the level of $69,000. So you have to be agile in your decisions and think about what is best for the current amount of assets you have.
Even experienced cryptocurrency traders and owners still have no luck in mastering the trends of these cryptocurrencies, so don't be shocked if you find yourself in the same boat as them.
The bottom line is that the field of trading and investing in encrypted digital currencies is a relatively new field and is renewed on a daily basis, and therefore constant care must be taken to update knowledge and information about it.
