CryptocurrencyInvesting

How To Hone Your Crypto Investment Strategy

Investing, trading using mobile phone

Investing in cryptocurrency can be an exciting and exhilarating experience – as we’ve seen over recent months, the price of currencies such as Bitcoin is extremely volatile and can rise or fall by large amounts without much notice. This is definitely a big part of the appeal for many investors, as it means that you have the potential to make more money than traditional investments typically offer.

Cryptocurrency markets are certainly volatile, but that doesn’t mean that you have to simply follow their whims. A savvy investor can tweak their strategy to maximise potential gains.

‘Hodling’ vs trading

In the world of cryptocurrency, investing in a currency and then holding onto it is a strategy known as ‘hodling’. It effectively means buying low – or as low as you can – and then waiting it out while the prices rise. You may see the value of your investment fluctuate over time, but in the long-term you are likely to make a healthy profit. Hodling cryptocurrency is a basic, crypto 101 strategy that suits investors who don’t want to micromanage their money.

On the other hand, you might prefer to consider day trading. This involves making a large number of trades, taking advantage of the small day-to-day fluctuations in price to build your portfolio. It can be riskier than simply holding onto your currencies, however it can also result in better gains – particularly if you get lucky. For many, trading is seen as a hobby as much as an investment strategy, and many traders enjoy the thrill.

Day trading is just one of several types of trading, and those who are interested in leveraging their cryptocurrency portfolio but don’t have the time to be making short-term trades every day could also consider ‘swing trading’. This means buying and selling with multi-day intervals. Of course, the objective is always the same: buy low, sell high.

Take advantage of a crypto trading app

Apps such as immediate edge use algorithms to automatically detect the best trading opportunities. You can set it up so that it automatically makes trades on your behalf when it finds a good potential trade. This means that you can get the benefits of short-term trading without having to make the large time commitment that many day traders make. Crypto trading apps are a great option for those who have an interest in cryptocurrency trading, but aren’t quite sure where to start.

If one of these strategies sounds appealing to you, then there is a wealth of information online to help you get started. There’s no right or wrong option. The important thing is to be purposeful with your strategy and choose something that aligns with your objectives, whether that means minimising risk or maximising potential returns.

Another important strategy for crypto investors is diversification. This means investing in more than one different type of currency, rather than simply buying Bitcoin. There are now many different currencies on the market, with many established alternatives such as Ethereum and Litecoin. Diversifying your portfolio means that you are less likely to lose money if the price of one currency crashes.

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