Cryptocurrency trading and investment is a very lucrative business and at the same time very risky. It is risky because of the volatile nature of most cryptocurrencies, especially Bitcoin. If you really want to make money in crypto trading, there are strategies and tips you need to know and put to practice. I revealed these smart bitcoin and other cryptocurrencies trading and investment tips in this article. Pay special attention to these trading strategies if you are a beginner. So let’s get started!
Always have it at the back of your mind that crypto trading is no a get-rich-quick business. Many new crypto traders who had this mindset ended up losing their capital. Crypto trading requires time and patience before you can make money in the crypto market. You need to learn how the crypto market works, how to recognize cryptocurrencies that have good potential and then the best time to enter and exit any trade.
Strategies for Making Money in Crypto Trading & Investment
Choose a Trusted and Secure Crypto Trading Platform
There are many exchange platforms where you can trade different crypto pairs for profit. But there are few secure and trusted exchange platforms that have been available for many years now.
Due to the high value of Bitcoins there are plenty of thieves and scammers out there who want to steal yours from you. Only use a reputable cryptocurrency exchanges to buy and sell your Bitcoins and other cryptocurrencies.
Always check out a cryptocurrency exchange thoroughly. Do they have a track record? Are there user reviews? If you can’t find these things then look for another exchange. If an exchange is making promises of Bitcoin deals that seem too good to be true, then run away from such exchange.
When choosing an exchange platform, there are things you need to consider. Some of them include: insurance, supported trading pairs, supported locations, daily trading volume, trading fees, etc. Here are some recommended crypto trading exchange platforms.
As a Beginner, Start with Little Capital
There is a saying that, “you should not test the depth of a river with your two feet”. This also applies when investing in cryptocurrencies. Always start with little capital, then when you have gained some experience with time, you can increase your portfolio.
This is because there are some knowledge you can only gain from experience. No matter how good your tutor is in crypto trading, he cannot impart the knowledge to you. In most cases, your first set of trades might not go as you speculated, and you end up losing a percentage of your capital.
For example, assuming you started trading with $500 and you incurred a 5% loss on your first trade. That would be 5% of $500, which is $25. You can easily bear such loss. But if you started with $5000, 5% loss would be $250 – somehow huge! You might even get angry and quit crypto trading!
Always start little, then when you have gained more experience, you can increase your capital.
Invest What you Can Afford to Lose
No matter how long you have been in the cryptosphere, always invest what you can afford to lose. Even if you are a smart trader, there are some inevitable losses in crypto world. Some of these losses might come as a result of a fraudulent activity on your account or a hack on the entire exchange platform, or even bugs.
In order to avoid starting to build yourself from scratch during such situations, avoid investing all your funds in cryptocurrencies.
Don’t Invest Only in a Single Coin
Warren Buffet once advised, “don’t put your eggs in one basket”. No matter how promising a particular coin is, never invest all your capital in that coin. What if things don’t play out as speculated and the coin fails to deliver? Always invest in many coins with high potentials.
As personal advice for bitcoin pair traders and any other trader – Always leave a percentage of your portfolio in BTC. For example, if your total capital is $1,000 BTC, don’t use the entire fund to trade altcoins. Leave a little percentage in BTC. This is because Bitcoin is the king and still has a high potential. Even though the price fluctuates, but on the long run, the price movement is positive.
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Always Keep an Eye on Bitcoin Price and Trends
As a said earlier, bitcoin remains the king of other cryptocurrencies and determines their price movement to a large extent. When making trading decisions, consider bitcoin trend, especially if you are day trading.
It is always a good idea to keep an eye on the price fluctuations of Bitcoin. Use tools like Bitcoin Wisdom and Cryptowatch to stay in the loop. This is especially important if you are thinking about investing a lump sum into Bitcoin. You want to buy at the lowest price and sell at the highest price.
Here is how bitcoin affects other cryptocurrencies:
When the price of Bitcoin pumps suddenly, prices of altcoins fall because many traders sell off their altcoins to enjoy BTC ride. Also, when the price of Bitcoin drops drastically, the prices of altcoins also fall because many traders convert their altcoins to fiat out of fear of loss. Altcoins only perform well when the price of Bitcoin rises or falls gradually or is fairly stable.
Learn Crypto Market Analysis & Tools
Always try to understand the market trend of any crypto coin before you invest in it. A proper market analysis will help you know when to buy a coin and the best time to sell it off. Although there is no 100% guarantee when predicting the price movement of any cryptocurrency, proper market analysis will help you know the signs that indicates a change in price movement, using some market analysis tools. The two main types of market analysis in stock market are Fundamental Analysis (FA) and Technical Analysis (TA).
Fundamental Analysis helps you to estimate the intrinsic value of an asset, by looking at a number of internal and external factor. While in Technical Analysis, you use statistical trends of an asset to predict its potential. Both FA and TA work hand in hand. Once you use FA to spot a coin with a good potential, you use TA to predict the best entry price and exit price for profit maximization. You can learn more about crypto market analysis and tools from Binance Academy.
Watch Out for Crypto News Updates
News update can also affect the price of a crypto coin because it has been confirmed that media is one of the effective ways to influence the public. This was also confirmed in the third tenet of Dow theory that:
The stock market incorporates new information as soon as it becomes available. Once this news is released, the price of the asset changes to reflect this new information. The price reflects the sum of all the hopes, fears, and expectations of all the market participants. Factors such as interest rate movements, earning expectations, revenue projections, major elections, product initiatives, etc. are all integrated into the market price.
For example, a news update that a particular coin will be listed in any popular exchange platform pumps the price of the coin. Smart crypto traders usually look for such opportunities to make more money.
When you invest in any crypto coin, follow the social media channels of that project, especially on Twitter and Telegram. This will help you get notification when the drop any news update relating to the coin.
One of the biggest mistakes that new crypto traders make is that they follow the news without making their own research. Always know that any unconfirmed news is a rumor, which might do more harm than good to you. Confirm any news update before taking actions.
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Always “Pay Yourself” when You Make Profit
After each bull run session, when you must have made a lot of profit, always convert part of your profit to fiat and invest it somewhere else. It is always good to plan ahead of time, what you will use your bull run profit to do. You can use the profit to invest in real estate, buy land, buy a car or even build house. If you leave everything in BTC, when the next bear market sets in, your bag will reduce as the price of Bitcoin dips. It will be as if you never made any profit.
“Paying yourself” after bull run motivates your spirit to put more effort, especially when you make good of the profit.
FOMO is a popular term in crypto trading, which means, “Fear Of Missing Out”. It is a situation where a trader is tempted to buy a coin whose price pumped suddenly. FOMO has made a lot of young crypto traders to lose almost all their capitals because the moment they buy the coin at that high price, the price of the coin retraces, then they are forced to sell it off at a loss.
Avoid FOMO as much as you can. Once you miss a good entry point for a particular coin, let it go. Or you look for another good entry point. Never buy a coin because the price pumped so suddenly. It always ends in regret and losses.
If you Day Trade, Use Stop Loss
Day traders buy low cap coins that have good short term potential. Once the price goes up by a little percentage, they sell off the coin immediately. But since the price movement of any coin can never be predicted with certainty, they use stop loss. Stop loss is the maximum loss you can permit, above which you sell off the coin at a small loss and take the remaining capital. To use stop loss, you set an OCO sell order in your exchange app.
OCO means One Cancels the Other. It is a pair conditional orders telling the exchange app that if one order executes, then the other order should be cancelled automatically. You can set an OCO sell order to consider both positive and negative price movement. For example, say 20% positive price movement and 10% negative price movement. Anyone that executes first, the other order will be cancelled automatically.
To ensure you don’t experience much loss in any trade, set the sell order once you buy the coin. Here is a free crypto trading profit/loss calculator app to help you calculate your profit and loss. The calculator will also help you calculate the price of the coin in Satoshi or USDT at the specified stop loss percentage. All you do is to copy the Satoshi or USDT values to your exchange app. Then use them to set the OCO sell order.
Secure your Cryptocurrencies Against Fraudsters
Have it at the back of your mind that once you lose your cryptocurrencies to cyber-criminals, there is no way to trace them. To recover the lost is almost impossible. That is why you need to apply all security measures to secure your crypto wallets.
Another special advice is this: Don’t leave all your cryptocurrencies in exchange platforms. You can leave some funds for day trading or short term trades. This is because the wallets that exchange platforms create for you are online wallets and are prone to hacking. Also, you do not have access to the private key. Move all your long term traded coins like Bitcoin and Ethereum to a more secure wallet, preferably a cold wallets like bitcoin paper wallets and hardware wallets; or non-custodial wallets like Trust wallet, ImToken wallets, etc. Blockchain.com also issues a non-custodial online wallet. Cold wallets and online non-custodial wallets give you access to the private keys of your wallets.
There are other security measures you need to put in place to secure your crypto funds in your exchange wallets. Make sure you activate all the security features available in the exchange apps (especially 2FA) and in your mobile phone. These will help secure your mobile phones, web browsers and email addresses from hacking and phishing. You can learn more cryptocurrency security tips here.
Always Invest More in Crypto Coins that Have Long Term Good Potentials
You may have heard a lot of stories about traders who made money from Bitcoin day trading. Some of these may be true. To be successful in day trading, you must be well grounded in Technical Analysis (TA) and also possess a high degree of self-discipline, objectivity and risk management skills.
Invest more in coins that have long term potentials. Buy and hodl them, instead of battling against the volatility of Bitcoin. You can invest about 60% of your crypto capital for long term and then use the remaining 40% for short term trading. But make sure you have the required skills for short term crypto trading.
Do you wish to learn the in and out of crypto trading and investing?
Check out this kindle book: How to Make Money from Crypto Trading & Investing for Beginners. All the crypto trading tips discussed in this article was covered in detail in this book.
Best Practices with Bitcoin Investment
Although nothing is ever guaranteed when investing in cryptocurrencies there are certain practices that you can follow that will maximize your chances of success.
Understand how Bitcoin Works
We have given you all the information that you need in this guide to understand how Bitcoin really works. You need to know the principles of blockchain and how Bitcoin trades are made. Don’t get caught up in the technicalities but make sure that you have a firm understanding of Bitcoin before you make any trades.
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Always Choose a Secure Wallet
A full section of this book was used to explain the different types of wallets for Bitcoin and their security issues. Online wallets are the least secure and hardware wallets are the most secure. For convenience it works the other way around with online or “hot” wallets being the most convenient and offline or “cold” wallets being the least convenient.
Bitcoins are very valuable so you need to have the right wallets to protect them. If you are going to trade regularly, then just keep enough Bitcoins in an online wallet for this and then move the rest to your cold wallet. If thieves get hold of your private keys, then you can say goodbye to your Bitcoins.
Don’t Start with Bitcoin Trading
Start as a Bitcoin investor. Once you get more experience as a Bitcoin investor then you can try your hand at Bitcoin trading. We do not recommend that you start trading straight away. You need to learn a great deal about Bitcoin pricing and be able to effectively control your emotions to trade successfully. There are demo accounts available that you can use to practice Bitcoin trading. Use these to the full and learn from any mistakes that you make before you start using real money to trade Bitcoins.
Don’t Start with Bitcoin Mining
Do not get involved in Bitcoin mining when you are starting out. You will need to make a significant investment in high end computer equipment to have any chance of success and it just makes more sense to use this money to purchase Bitcoins instead.
Always remember that Bitcoin is Volatile and High Risk
Bitcoin is a highly volatile digital currency. This means that there are opportunities to make significant gains and the risk of losing a lot of money too. You need to accept this and always bear it in mind to be a successful Bitcoin investor.
Investment Advice about Announcement on Upcoming Mainnet for a Project
A mainnet is simply an independent blockchain running on its own protocol and technology, where its own cryptocurrencies or native tokens are used, unlike testnet, where the blockchain or project runs on top of other popular blockchain networks like Ethereum.
If there is announcement of an upcoming mainnet for a particular crypto project, as a smart trader, you should buy the token before the mainnet day or on the mainnet announcement day, and then sell off the token for good profit few days to the mainnet day. This is because the price of the token is bound to dump after the mainnet. You can now buy back the token after the price has dumped. This is how smart traders make money.
Investment Advice about Token Burn
When a crypto project announces that they will burn some part of their token from their total token supply, do not expect much price uptrend in the short term. This is because what usually affects the price of a token is the circulating supply, not the total supply of the token.
Burning of token from the total supply will reduce the total supply of the token, not the circulating supply. Therefore, in future, when the demand for the token increases, there will be limited total supply of the token. This will now make the price of the token to go up. This is because from the basic principle of economics, increase in demand of a product that has a limited (reduced) supply will cause the price per unit of the product to increase.
So as a smart trader, you can buy the token before or on the token burn announcement day, hold for some time, but make sure you sell off the token before the token burn day. Between the day the token burn announcement was made and the day the actual token burn occurs, there is always a hype for the project, which will make the price of the project to go up. But on the actual token burn day, the price of the token usually dumps.
Investment Advice about IDO of a New Project Taking Place on Launchpads
Launchpads (also called Crypto Incubators) are platforms that help new blockchain-based projects to raise capital while giving early-stage token sales opportunity to interested investors, which usually happens before the public market launch. Getting access to early-stage sales of the token of a new project with good potentials or hyped potentials can give you as an investor some massive returns. Also note that nothing is 100% guaranteed in the crypto space. You can read more about Crypto Launchpads and how they work here.
Most IDO platforms (Launchpads) require that you hold or stake the native token of the IDO platform before you can participate in the IDO of new projects in their launchpads.
As a smart trader who has no intention to participate in the IDO of the new projects, you can make cool money by buying the native token of the IDO platform on or before the IDO announcement day, hold for some time, and then sell off before the IDO day for the new project, probably a day before the IDO day.
Between the IDO announcement and the actual IDO date, the price of the Launchpad’s native token will increase because more people are buying and holding the token in order to participate in the new project IDO taking place in the Launchpad. Therefore, since the buy pressure surpasses the sell pressure for the Launchpad’s token, the price of the token is bound to go up. But after the new projects IDO on the Launchpad, the sell pressure for the Launchpad’s token will surpass its buy pressure. Therefore, the price of the Launchpad token will fall. This is because people who bought the Launchpad’s token solely because of the IDO of the new project, will sell off the Launchpad’s token immediately after the new project’s IDO, or after they have gotten an allocation for the new project’s token.
The same concept applies to airdrops that require you to hold a particular token in your wallet before you can qualify for the airdrop. The price of that token you are holding in order to qualify for the airdrop will drop after the snapshot for the airdrop distribution has been taken. This is because most people holding the token bought it with the sole aim of qualifying for the airdrop. So immediately the snapshot for the airdrop distribution has been taken, they will sell off the token. This will increase the sell pressure for the token. Therefore, the price of the token will fall.
Other Helpful Crypto Trading & Investing Tips
There are other crypto trading and investment strategies you need to apply in order to be successful. They include:
- Apply the Cost Averaging Investment Strategy. Here you buy a coin at different prices to reduce your average unit cost price.
- Keeping your Emotions in Check. Don’t let your emotions affect your trading decision. One way to put your emotions to check is to always remind yourself that bitcoin trading is very risky and that Bitcoin price is very volatile. Having such mindset will help keep your emotions in check. Also, avoid taking any quick decision after a huge loss from any trade.
Another way to keep your emotions in check is to learn risk management.
- Practicing with Demo Accounts First. To give yourself a good start with Bitcoin trading, sign up with a cryptocurrency exchange that offer demo account. Use this Demo account to experience how things work in the real world. You will see real time prices for Bitcoin and it will help you to get used to the Bitcoin trading interface.
- Taking Trading Signals from the Right People. If you need cool trading signals, contact me through our contact page. I can help you join our community: 15% Trade Crew Community. The admins don’t just share random crypto trade signals. They trade all the trade-call they drop.
- Avoiding Bitcoin Scammers who Promise to Double your Coin for you. You will see many people claiming to be Bitcoin experts that can help you double your capital. They are all scammers. In fact, any platform that promises to double your crypto coin is fake. Stay away from them!
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You have learnt a the necessary tips to help you make money from crypto trading and investment. Apply these tips and be a successful crypto trader. Note that nobody can give you all the crypto trading tips. There are some you learn from experience. Do you know you can transfer cryptocurrencies between exchanges for free? Check it out!
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