The conversation that digital currency could one day replace cash has been ongoing for quite some time now. There are many forms of digital currency, but there are several reasons why many financial watchdogs argue that cryptocurrency could be the future of money. One of the reasons crypto is currently so popular is the incredible versatility and anonymity offered by digital currencies like Bitcoin.
These currencies are also increasingly becoming accessible, even though they took a small hit after COVID-19 struck. This is not to mention the degree of money security they offer, but is Bitcoin trading foolproof when it comes to security? Here are six things to know before you start trading cryptocurrency.
1. Do Your Own Research
Starting to trade crypto is a personal decision that needs lots of guidance and, above all, research. Knowledge is power, and with the availability of resources online to help you up to your trading game, you can never run out of new findings every day.
Doing your own research is a common practice among online traders. However, do not just invest blindly. Explore the coin patterns before any trade, find a good trading partner, and utilize technology to keep a close watch of how different coins are performing.
2. Know When to HODL
This is slang in cryptocurrency, which means the holding back of the coin instead of selling it. Holding is believed to be the trick to many crypto investors who have had a successful history. This is a trend we have observed lately as Bitcoin investors switched to holdling anticipating inflation. People who do this are called Hodlers. It means that you hold on to your coins no matter how impressive the market looks.
3. Crypto Trading Security Is Not Impenetrable
As earlier mentioned, the high level of encryption and transactional security are among the reasons cryptocurrency has become so popular. However, this doesn’t necessarily mean that it is not prone to security threats when trading on a public platform. When buying Bitcoin, a lot of people fall victim to crypto exchange fraud, and this results purely from a lack of knowledge. This is why before you start trading using a specific platform; you should take the time to do a background search on their history. If you’re a crypto trading company, you should strive to zero in on the loopholes that fraudsters might use to scam your clients.
4. Invest What You Are Willing to Lose
Trading can be tempting, but do not put all your eggs in one basket, and don’t invest to a point where it will impact your financial state adversely. Simply put, do not take up a loan, max out your credit card, or exhaust all your savings to trade. In crypto trading, no matter how well you have researched the coin, always be prepared for anything. “Hoping for the best but expecting the worst” should be your guiding light after trading. It will help lower your anxiety.
5. Spread Your Trading Wings
As mentioned, do your best to avoid any unnecessary risks when trading. You are likely to make it when you decide to deal with two or more coins than when you only depend on one. While at it, however, do not spread your risks too thinly! Ethereum, Ripple, and Bitcoin are among the common choices in the market, but you can dig deeper and see which coins can favor your situation. It is better to mitigate your losses rather than to put all your money in one trade that may end up bursting your wallet into flames.
6. Overcome Fear, Uncertainty, and Doubt (FUD)
Most successful people, no matter the field, have a zeal that is out of this world. That is the same zeal that should be applied when one is in the trading industry. It is a determinant of whether a crypto trader is successful or not. Unfortunately, overcoming inhibitions is all upon an individual. With fear, uncertainty, and doubt waving from one side to the other in this market, you have to trust your gut and work with it.
Finally, you may also want to avoid consultations as they may not be as fulfilling and certain. As earlier mentioned, do your research before trading and HODL when you should, and spread your risks wisely. Hopefully, you will find the few tips above helpful when starting out with cryptocurrency trading.