There’s a fact we can’t deny – cryptocurrency remains one of the most complex businesses today. On the one hand, there’s the blockchain, the forks, Initial Coin Offerings and the ever-changing prices. On the other hand, there are mining technologies, government policies, exchanges, and traders. It’s a very dynamic world, and something happens almost every day. Cryptocurrency trading can be highly profitable but also involved – it has seen several novices fall through its cracks. Inexperienced traders are actually more unlikely to miss these pitfalls, especially when it comes to altcoins. For this reason, experts have called on new investors to do their due diligence before making an investment decision. “Despite the strong interest in the budding blockchain and cryptocurrency ecosystem, ICOs still carry a lot of risks. When looking for a project to support, it is important to do your homework,” warns Andrew J Hacker– Founder and CEO of Thought Blockchain. Consequently, I’ll share a few tips from industry experts that should help you navigate through successfully.
If you want to enter these murky waters, you’ll need to be on top of things to keep your head above the water. Before committing your savings to cryptocurrency trading, you have to answer the following set of questions: What’s your trading target? Where will you sell your digital assets? What is the position size? Are you committing funds to short-term or long-term investment? And so forth.
Trading cryptocurrencies can be exhilarating, exciting or even terrifying. To avoid ending your cryptocurrency trading before you start, be sure to take conservative risks until you’ve garnered enough experience. A Price drop is among the most worrying things in cryptocurrency trading, and amplified chart oscillation can trigger massive sell-offs. In most cases, however, price slumps do not signify the end of a coin, but rather the perfect moment to jump on the bandwagon – experts suggest. According to David Drake, a crypto advisor, investor, and Chairman of LDJ Capital, the claims about the dead of cryptocurrency have often been highly exaggerated. David says a price drop does not necessarily spell the end of digital currency. He advises traders to avoid panicking even amid huge drops while stressing the need to hold on crypto assets even when there’s 20 or 30 percent decrease in value. However, David warned investors against buying extremely volatile cryptocurrencies when prices soar, terming it as “dangerous and capable of wiping out a lifetime of savings in no time.”
It is also critical to decide how much money you’re going to trade with. Remember that it’s a rule of thumb to wet your fingers before diving into the pool; so you have to start small. Bill Davis– Managing Director of Technology at LDJ Capital- recommends that traders should risk less than 5 percent of their assets owing to cryptocurrency’s massive volatility.
Similar sentiments were echoed by GN Compass’ Founder and CEO Michael Collins who insisted that investors should only invest what they can afford to lose. “Please don’t remortgage your house to buy bitcoins or other altcoins; don’t use your life savings to invest. Because the truth is that the cryptocurrency market is very volatile especially if you are investing in ICO’s. Many projects will never complete as the team quickly realize how difficult execution actually is. Some will complete but fail a short time after. The truth is, not every project can survive.”
