3 tips to increase efficiency in cryptocurrency trading
There was a huge rush of capital investment in cryptocurrency in 2017, and a slightly similar pattern of investment is expected in this year as well. A recent study has shown that more than 25% people in the 18-to-34 age group claimed to invest in cryptocurrency over the government bonds and stocks. Another noticeable observation of this study is that more than 40% millennials are aware of the bitcoin as compared to 15% of the seniors (above 65).
This indicates that there will be a rise in the investment and that this is probably the best time to invest in cryptocurrency. Read along to find some tips on investing in cryptocurrency.
- Be aware of the bots
Cryptocurrency is very close to financial markets, trading, shares, and bonds. Therefore, you must be aware of the savvy players not taking help of bots to artificially inflate prices of their coin and tamper the markets. Trading bots are known to significantly hamper the investment and market prices, in 2017 an alternative for Ethereum by China went for around $34 to $3.74 within a couple of seconds and then went back to its original price at the same pace. The trading bots are the ones that cause an artificial drop in the price, and many investors gain from it. - Understand your risk tolerance
The first step, even before knowing the best time to invest in cryptocurrency, is to set a stop-loss level that helps you avoid bankruptcy. A stop-loss level is a level of loss that automatically closes your trade. The pro-tip is to build the potential of your coin with this stop-loss level in mind. Make a group of your coins and bifurcate them according to their volatility. The least volatile coins must be allocated a higher percentage, while the coins that are more stable must be allocated a lower percentage. However, you must note that among the stable ones, the one with a higher potential for returns must have a major chunk of the allocated percentage. - Don’t miss out or overtrade
This is one of the biggest fears of people in trading, no matter their years of experience in the field. Most traders indulge in either overtrading or have a fear of missing out. You must know the best time to invest in cryptocurrency as well as the right amount. The most common phenomenon is the urge of investing in a coin that is booming. Most investors not only invest in this but they invest a massive amount. Do not sell your coins if you see a small hike in the price, this is overtrading. The key is to be patient and wait for the best time to invest in cryptocurrency as well as sell it.
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