Cryptocurrencies have been in the public eye for a little over a decade. Since then, they’ve exploded into the market and allowed some individuals to make a fortune.
Trading cryptocurrencies is a modern way to play the market and make a small fortune in the process. Any investment comes with risks, though, and it’s important to play it smart when you’re choosing cryptocurrencies to trade.
We’re going to take a look at options for cryptocurrencies today, giving you some insight into how you might format your approach. Hopefully, the ideas below give you some good food for thought on where to start.
Let’s get started.
Where Did It All Begin?
Bitcoin is a beautiful example of a currency that took the market by storm. In fact, it’s the first cryptocurrency that grabbed the public’s attention and skyrocketed.
There are stories about early Bitcoin miners spending ten thousand BTC for two pizzas. In fact, that’s one of the first instances of Bitcoin ever getting used to trading for actual goods.
The value of that interaction would equate to hundreds of millions of dollars today. The value of one Bitcoin fluctuates between 30 and 60 thousand dollars today. At one point, no more than 10 years ago, a single BTC was almost worthless.
That explosion is why Bitcoin is ever-present in modern culture. There are Bitcoin ATMs at gas stations in small towns, stores that take it almost exclusively, and you can even purchase a cryptocurrency VISA card now.
Ideas on Choosing Cryptocurrencies to Trade
So, our goal is to invest in something similar and have a hefty chunk of cash after a few years, right? There are dozens of exciting options on the market, and it’s difficult to choose which one is right for the future.
There are somewhere around 2,500 cryptocurrencies available to invest in. We can imagine that two or three of them will explode and become industry titans. That gives us around a one-in-one-thousand chance of making the right choice.
Sure, there are indicators and different factors that offer clues, but it’s still a risky game at this point. As a result, the best thing for the beginner to do is to play the market like any other investor would play the stock market.
Creating a Portfolio
A main principle of portfolios is purchasing shares in accordance with your preferred level of risk. You purchase a number of different stocks, or cryptocurrencies in this case, and piece those investments into your portfolio in different measures.
So, let’s say that you’re not a very risky person. You might dedicate 80 percent of your portfolio to low-risk investments. In this case, you might invest in Bitcoin because you’re sure it will grow marginally but it’s unlikely to tank any time soon. The same is true for Etherium or any of the other massive currencies.
Fifteen percent of that portfolio gets dedicated to medium-risk stocks. Finally, five percent goes toward potential up-and-comers that could make you a fortune.
The thing about that last category, though, is that they’re far more likely to tank. That’s why you don’t invest all of your money in them if you’re a conservative investor.
What are Your Goals for Investing?
A difficult thing about cryptocurrency, though, is that it’s a very new market. It’s difficult to say how things will go in the future because there’s hardly a past to look at and base your judgments on.
So, look at your goals and see what you’re trying to get out of cryptocurrencies. Long-term investing for retirement might be better off in the stock market where there are decades of trends and insights to follow.
Trading with cryptocurrencies could just be your little 10 percent that goes toward high-risk investments. If you want to make a lot of money in a short amount of time, the potential certainly exists in the crypto market.
It’s there, and there’s no denying that. People make small fortunes every day if they play their cards right, and they often do. At the same time, there’s always someone screaming with joy in the casino.
Take a look around the edges of that same casino, though, and you see people gambling away their mortgage payments, kids’ tuitions, and falling short thousands of times. It’s a grim image, but it’s true that investing is a game just like blackjack except you have more information at your disposal.
Evaluating your Crypto Trading Strategy
While crypto can make you money, you need to put the time and effort into researching your options.
A scan around YouTube channels and influencer pages of those who made a big score in crypto, and you might get the impression that there’s nothing to it. There’s a lot more to making a significant amount of money than they make it seem.
Sure, you might land on the right option, drop a significant amount of money, and wind up with hundreds of thousands of dollars. That said, the risk might be that nothing happens with that currency and you lose your life savings.
Do your research into the particular companies that you’re investing in. Where did they come from? Who runs their upper-level management and what kind of investors do have? What makes them different from the other cryptocurrencies?
Further, make sure you look at the economic contexts in which that company grows. Understand what factors would lead to that company’s demise and check to see if those factors are bubbling in the world economy as we speak.
There are, no doubt, dozens of cryptocurrencies that will spike to insane rates and provide great investment opportunities. Trading with cryptocurrencies requires that you reduce your risk by researching all you can about those companies before you submit your payment.
Want to Learn More About Cryptocurrencies?
There are a lot of things to think about when choosing cryptocurrencies to trade. We’re here to help, though. The more insight you have into this exciting new market, the more money you’ll make.
Explore our site for more ideas on trading with crypto, financial management, investing, and more.