The cryptocurrency market is one of the most volatile markets in the world. With so many options and predictions, it can be difficult to know what coins to invest in and which ones to avoid. Speculation is risky, but with some research and patience, you can make money by investing in new coins as they are released onto exchanges. Here are some tips on how to speculate on this volatile market:
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Plan to Be In for the Long Haul
The cryptocurrency marketplace is a volatile one. It would help if you were prepared for that. It’s not like the stock market, where you can make your money back in a few days or weeks if you’ve made bad decisions; it takes time and patience. So, before investing in crypto, please plan on being in it for at least six months, maybe even longer.
Investing in cryptocurrencies is like investing in anything else: you want to pick what’s going to do well over time—and then watch it go up steadily as they’re developed further by their creators’ teams. If something doesn’t look promising within six months of buying into it (or if you think it might drop), sell out! Think carefully about where your money will be invested—and have an exit strategy ready just in case things don’t go according to plan.
Study the Market
Studying price history can be an invaluable resource if you’re looking to buy a cryptocurrency to hold it for the long term. The first step is looking at the charts of that coin and seeing if there are any patterns in its price movements. If there are, you should use this knowledge to your advantage when deciding on when to buy or sell.
If there isn’t much of an established pattern, look for other factors, such as news or developments within the community that might affect prices, as these can also help provide some insight into where prices may be heading next.
Do Your Own Research
Before you invest in any cryptocurrency, make sure you do your research. Don’t blindly follow others, and don’t invest money you can’t afford to lose. Be careful of scams and fraudulent schemes in the cryptocurrency market — many are out there!
The fear of missing out (FOMO) is a common psychological phenomenon that usually causes people to make irrational decisions. It can lead investors to buy high, sell low, and make decisions based on emotion rather than logic.
In the crypto marketplace, FOMO often manifests itself in people buying a coin or token because they think it will increase in value quickly. If you are going to speculate in the market, make sure your decision has been thoroughly researched and understood instead of being driven only by fear.
Always Read the Whitepaper
While it’s tempting to skip the white paper and focus solely on the coin, don’t do that. Most good tokens have a detailed whitepaper describing their technology and how they plan to implement it.
A white paper can seem long and complicated, but it’s an excellent way to understand how tokens are implemented across various platforms. The whitepaper of a token lays out all of the motivations and goals behind the creation of that token. These insights can help you determine the sustainability of the token, as well as the viability of the underlying blockchain project. From the whitepaper, you can learn about the plan for circulation of the token, including the market cap, and calculate the fully diluted market cap based on how many of those tokens will ever be minted. This number can offer insight into a token’s sustainability in the long run. A high, fully diluted market cap could be a good sign if it means wide adoption of that token, but it could also be a bad thing if it puts too much selling pressure on the coin when a large percentage o these coins are locked up initially.
Join the Online Community
Another good place to start is the token’s online community. The community can be a great source of information, such as news about upcoming releases or updates from the team. It can also be an excellent place to learn about other investors’ strategies and get inspiration for your own investment plans.
If you’re unsure what to do with your cryptocurrency after buying it, joining a crypto forum could help you find like-minded people willing to share their ideas. These forums allow users from all over the world interested in cryptocurrency to talk about their experiences and share tips on how best to make money from trading.
Minimize Your Risk
As a crypto investor, it’s essential to safeguard your money from any possible threats. There are many ways of doing this, but the most important thing is not putting all your eggs in one basket. It’s also crucial to not invest more than you can afford to lose and do not invest money that you need for other things (like paying bills and rent). The last thing you want is your investment portfolio to be wiped out by some event outside your control!
Look for High Liquidity
In cryptocurrency, liquidity is how easy it is to buy and sell a coin. The lower the price spread between buying and selling a coin, the higher its liquidity. If you can buy or sell quickly at any time with little effort, your money will be more liquid than if it’s challenging.
In addition to limiting your ability to trade an investment quickly when needed, high spreads between buying and selling prices also mean that you’ll have less control over when (or if) you get out of an investment.
To help protect yourself from these issues as much as possible, we recommend purchasing coins with high levels of liquidity whenever possible and utilizing exchanges like FTX, which have a large liquidity pool behind them, to minimize socialized losses.
Create a Plan
A plan is the most important thing you can do when speculating in the crypto marketplace. The chances of losing your money are high if you don’t have one.
A basic plan should include:
- What kind of coins you want to invest in (e.g., privacy coins)
- How much time and money are you willing to invest into your investments, and what percentage of your overall portfolio will be invested into crypto assets
- What exchanges will you use for trading and storing your funds
Hedge Your Portfolio
No matter how careful you are, no one can predict the future. You can, however, mitigate risk by hedging against volatility with a stop-loss order. There are three types of stop-loss orders:
- Stop loss: This order automatically triggers when your cryptocurrency’s value drops below a specific price point.
- Stop limit: This type of order triggers when a cryptocurrency reaches or exceeds a specific price point and then becomes inactive until another price change causes it to become active again. At this point, it will be triggered at its original activation price (which might be higher or lower).
- Trailing stop loss: A trailing stop loss follows the current market trends so that it always stays at least n percent behind the market trend and keeps up with any fluctuations in prices; however, as soon as your chosen currency hits its maximum allowable profit amount (the profit level), then this stops working until profits start dropping back down below this level again.”
It’s Not Easy to Speculate
The first thing to realize is that there is no easy way to make money in the crypto market. You will have to do much research and analysis, be patient and cautious, and be flexible. If you want to speculate on cryptocurrency investments, there’s no shortcut.
It takes time and effort to learn how the crypto market works. There are many coins out there; they all have different features and values. Some coins are designed to solve specific problems, while others are more speculative than others (more about this later).
You need a basic understanding of what makes each coin unique before deciding whether or not it’s worth buying into at any given moment in time—and how much money should go into each coin, as well as what type of long-term strategy might work best for you!
The cryptocurrency market is volatile, and it’s difficult to predict what will happen next. However, some basic principles will help you make the most of your investment: do your research before investing in any coin; do not FOMO; create a plan and stick to it; protect yourself in every possible way. Join an online crypto community such as FTX to start learning your best investment practices.