There comes a stage in life when we start to think about the future and our investment options. When considering investment, the choices are many and varied and there's a lot to contemplate. Some assets are riskier than others and some offer better returns. The best investment combination should maximise profit potential while minimising risk.
In recent years, investors have shown vast interest in cryptocurrencies and with good reason. The cumulative market value of Cryptocurrencies in 2019 was $237.1 billion. Many a millionaire has been born from this new asset type. The truth is cryptocurrencies are volatile so while many people have made their fortunes on crypto, many have also made large financial losses.
If you're thinking of venturing into this new and exciting market, you'll need to understand how to invest in cryptocurrency before you start.
Why invest in crypto currency
As a trader in crypto currency your main aim is to find yourself on the right side of fluctuations in the price of cryptocurrency. While cryptocurrencies are volatile and, therefore, risky, their long-term prospects look good. This is because they offer businesses a viable, secure and relatively inexpensive way to pay for goods and services. Even your holiday apartment can be paid for with cryptocurrency. Cryptocurrencies are international. They have value wherever you go making it easier to transfer them from one person to another across the globe, thus avoiding exchange rate problems.
Every new business that sees the value in the ease of crypto payments and starts to use cryptocurrency will raise the value and the long-term viability of cryptocurrency as an asset for the future. Since the supply of many cryptocurrencies is fixed, the value of these assets increases when the demand increases.
Unlike other exchanges crypto trades 24/7 so crypto junkies can get their fix any time they choose.
How to invest in cryptocurrency
For many wanting to invest in cryptocurrencies, the process may seem like a mystery. Before you invest you really should do your homework or call on the help of an expert like the professionals employed by PrimeXBT.
You'll first have to decide which cryptocurrency to invest in and there are lots of them. Then you need to choose the exchange. There are two types of crypto exchanges fiat to crypto and crypto to crypto. A large number of exchanges will only accept bitcoin deposits.
You should choose an exchange from those that manage the highest trade volumes. It is also best to choose an exchange in your own country or in a country that has secure financial systems.
Transaction fees
Trade in cryptocurrency attracts fees. These include deposit, withdrawal, trading, escrow and transaction fees. Fees are typically charged as a percentage of the transaction. Cryptocurrency transaction costs are, however, considerably lower than credit card costs.
Every cryptocurrency trader must have a crypto wallet in which to store the currencies. Savvy investors never hold their assets on an exchange where they are open to hacks and the possibility of bankruptcy. Holding your investments in your own private wallet ensures the security of your investment.
Trading strategy
Every trader must start with a trading strategy. This is the only way to protect your investment. Your strategy should include the following guidelines:
- Don't borrow to invest
- Only trade as much as you can afford to lose
- Be realistic in your expectations. Greed has been the downfall of many an investor
- Be trade savvy. Do your research on the PrimeXBT site. Watch the news. Understand and follow the technical analysis of the various exchanges. Follow the trends.
- Use risk management tools to protect your investment. Stop loss and trade profit do cost but they offer invaluable protection for your assets.
- Don't put all your eggs in one basket. Volatile, smaller coins can increase your profits intraday but they should make up only a small portion of your portfolio - ideally no more than 20%. Larger more stable coins make the ideal choice for longer term investments.
It isn't wise to enter the markets when they're running on a high. Wait for the markets to flatten out or enter when they have been losing ground but not when they are experiencing a crash. What you're looking for is prices that are relatively low but stable. Once you've fully prepared it's time to start investing.
