How to Make Money Trading Cryptocurrency

Interested in generating some money from cryptocurrency trading? Here are a few things to be aware. To make money with cryptocurrency trading is quite challenging so you must be very careful to avoid huge losses. Below are some of the things one need to know for a profitable cryptocurrency trading, you’ll probably find these principles to generally hold true with trading in general.

1. Don’t put all your eggs in one basket: The first thing you will learn about penny stocks is that you should spread your capital out among as many different shares as possible to reduce the chances that you will lose everything. The majority of new business will fail in their first few years, meaning that their shares will drop in value to zero. This is the same with cryptocurrency trading, many new coins will completely fail or rise within the first year of trading. Although there’s a lot you can do to make sure you pick the winners, there are also so many unknowns that there is no such thing as a certainty. When trading, exciting opportunities may lead you believe that you could make 1000% returns can make you want to invest heavily into it but this new trend. But without taking care and diversifying you can easily end your career as an altcoin trader before it has even begun if care is not taken in your trading strategy.

2. Don’t believe the hype - Fear, Uncertainty and Doubt (FUD): The smaller a market is, the easier it is to be manipulated. In the same way penny stocks have always been subject to a large amount of professional hype, the similar techniques and influences apply to the cryptocurrency market. Altcoins can be hyped through newsletters and tip services, social media, blogs and even through advertising by professional promoters.

They may be paid by the coin’s developers who wish to increase the value of their holdings, or they may wish to increase the value of their own holdings. Usually this type of artificial price pump driven by this kind of hype is often followed by a price crash which leads the people behind it to cash out at the higher price is sometimes called a ‘Pump and Dump’ or just ‘P&D’. Similarly, FUD can be deliberately spread in the news and in the market to artificially drive down the price so that the people behind it can pick up cheap coins. When researching altcoins for trading, have some skepticism about the content. It’s always best to DYOR (do your own research), before you trade. There are always cases of over hyped altcoins.

3. Be Quick to Take Losses, Slow to Take Profits: One of the biggest mistakes that penny stock traders make is to take profits on winners too soon, but keep hold of the losers until they are worthless. I have seen this a lot in cryptocurrency trading as well. In both of these niches it is common for the majority of your picks to lose money. A profits of 50%, 100% or even higher in a relatively short space of time can get ones emotions to kick in and overtake any reasoned assessment. This may feel like a great profit, you may fear losing it and want to lock in the profit, or you may just get excited and impatient and fail to see the gain growth even though the price is still trending upwards. At the same time, many traders become emotionally invested in what they buy, and find it hard to give up hope and sell even when it is clear that the price or value is dropping, this can make one lose most or all of the value of an investment when they could have cut their losses much earlier if they had taken a more rational approach.