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Oftentimes, you may have heard: “cryptocurrency is the currency of the future.” The truth in that statement is so clear that many people find themselves interested in crypto every day. Although many think it is a money-making scheme; however, there is more to crypto than earning figures.
If you are interested in learning about crypto, there are two concepts you need to familiarize yourself with –investing and trading. Depending on how you find the process, you can either become a crypto investor or a crypto trader. That being said, let’s get into details about this future currency.
Cryptocurrency is a digital asset that is not attributed to any country or region, making it a currency usable by anyone worldwide. It operates on blockchain technology and comes in different types or forms. The recognized cryptocurrencies globally are Bitcoin, Ethereum, Litecoin, Dash, and Bitcoin Cash.
However, while different countries accept this digital currency as a mode of payment, others pose restrictions. In countries where they are accepted, they can be used to pay for goods and services.
Unfortunately, cryptocurrency is a lot different from fiat money because it is susceptible to price fluctuations. These price fluctuations can be to your advantage or, on the contrary, and some factors influence that happening. They include:
With that already said about cryptocurrencies, the next part is for you to know what to do when you lay hold of them.
If you haven’t bought cryptocurrencies yet, are planning to, or already have, you can either invest or trade.
When it comes to crypto investing for beginners, the first thing you learn is Risk Management. Depending on the type of currency you choose to invest in, i.e., Bitcoin, Ethereum, and so on, you need to understand the risks involved with investing. However, you could study the factors to mitigate the risk so you don’t lose your investment.
The other aspect of cryptocurrency is trading – the part where you buy and sell crypto for money. For beginners, you should know that there are different crypto trading strategies and what you choose determines your profits or losses in the end. Here are some of the trading strategies you could try out:
One of the most common trading strategies for buyers and sellers of cryptocurrency is the Day Trading. Here, traders make profits by taking advantage of the daily prices of cryptocurrencies. However, you can only do this if you notice a short-term price increase. Unfortunately, it isn’t always the best trading method for beginners because losses are inevitable, and the risk is high.
HODL was a typo for “HOLD,” but it has since been adopted as a means for you to trade effectively, whether you are a beginner or an expert. However, regardless of the typo, it is explained as “Holding on for Dear Life.” That means you can buy cryptos at a low or convenient price and hold until they are profits-worthy, and then you sell.
Another trading strategy you may seem to participate in is the Trend Trading. It is a bit complex and not beginner-friendly. It often involves selling or buying cryptocurrencies regardless of whether the price is high or low. However, you will have to identify or predict trends if you choose this approach.
Hedging is another strategy that requires some intense mental activity. It often involves you investing in different cryptocurrencies and ensuring that a fall in the price of one cancels out with the increase of another. With this approach, you may find yourself predicting the price of certain currencies in the future.
As you’ve seen the popular crypto trading strategies above, you can tell which approach is beginner-friendly or not.
Cryptocurrencies are great investments – often with high risks, and millions of people have become interested in them since their introduction. You too, can become an investor or a trader as long as you’ve understood the necessary things that need to be known to prevent crypto scams.
