Trading cryptocurrency can be a seriously lucrative venture. Wise traders can get big payoffs from small investments, and the space is highly accessible with relatively low barriers to entry compared to traditional trading.
It’s becoming more and more popular, too, no longer confined to a small community of experts and hardcore enthusiasts.
Today, cryptocurrencies have a place in many people’s portfolios, and rightly so. For many shrewd investors, crypto has proven to be a golden ticket.
But still, successfully trading crypto isn’t without its problems. While it might be easy to get on board and startup costs are low, there are still numerous challenges facing crypto traders.
The good news is that it’s very possible to work around those issues. First, though, let’s cover what those problems are.
The problems with trading crypto
One of the biggest issues with cryptocurrency is its volatility. Here’s a graph of how Bitcoin has performed historically. In the last year alone, there’s been an enormous amount of change, much of it rapid and unexpected.
Cryptocurrency is still in its infancy, and unlike established fiat currencies it can be almost impossible to predict changes with a lot of time to spare. That makes it very important to react quickly when things change and be prepared for losses.
Another problem facing crypto traders is the fact that markets operate for 24 hours a day. Unlike, for example, the New York Stock Exchange, where trading hours are Monday to Friday, 9:30am – 4:00pm.
This means that crypto trading isn’t just a full-time job, it’s a 24/7 job. If you want to seriously stay up to date with the markets, you better wave goodbye to that whole ‘sleeping’ thing. Because crypto is so volatile, big changes can happen literally overnight, and it’s easy to miss them.
Another big issue is human error, something which applies to pretty much every type of trading. Basically, people just can’t be trusted to consistently make rational decisions. We let our emotions get in the way, do things impulsively, and sometimes make huge mistakes when tired or distracted.
Even the most experienced and cool trader can make enormously expensive blunders at times, and in a market as volatile as crypto a simple error can mean disaster.
So there’s a lot that can go wrong, without even mentioning the other risks. But that shouldn’t deter those who are keen to get into crypto trading, because there’s a lot that can be done to overcome these obstacles.
How to trade crypto more effectively
One of the big things any new crypto trader should do is research. This is one area where doing homework really pays off. Find out which currencies you want to buy, which ones are best avoided, and spend your money accordingly.
Don’t just believe the hype. It helps to read the news, look at results of token sales, find out which advisors ICOs and currencies are working with. Some currencies are doomed to failure from the start, whereas others could hit the big time.
Another important step is to diversify your portfolio. There are well over 1,000 cryptocurrencies out there, many of them highly promising. Bitcoin and Ethereum aren’t the only opportunities to make money, and some of the up-and-coming coins could provide more rapid gains.
In fact, between January 2016 and January 2018 Corgicoin increased by 60,000 times, when Bitcoin only grew by a puny 34 times. Diversification also helps mitigate the risk if one coin happens to fall through or plummet in value, leaving you with plenty of margin for error.
One of the best ways to ensure crypto trading success — one which might even outweigh all the others — is wise use of trading algorithms. These are already highly popular in fiat trading, as they greatly reduce the risk of human error and essentially do our trading for us.
They work around crypto’s 24/7 market by being constantly switched on (AI doesn’t need time off) and can quickly respond to any changes in price.
The only drawback is the cost, which can be prohibitively high for those who lack the programming skill to make their own algorithms. But even that could soon be solved by some exciting new projects that are emerging.
Capitalise is a SaaS platform that wants to make it easier for users to trade crypto. It allows users to build their own algorithms by typing instructions in plain English, without any knowledge of coding whatsoever.
They can set stop losses, automate trades, and add all kinds of conditions.
Capitalise is built on the premise that crypto trading shouldn’t be exclusive, and anyone with a basic level of trading knowledge should be able to take part. They even allow users to share their more successful algorithms with others in the network, promoting community and inclusion.
Another similar company is Gekko, which is also keen to change the way crypto trading works by making it more accessible to the average person.
These companies present a new approach to crypto trading, where the focus is on inclusivity, equality, and accessibility. It’s a move towards lowering the barriers to entry and bringing opportunities to everyone involved.
The publisher of bitcoiner.today is not responsible for the opinion or recommendations expressed by its publishers. Investments in financial assets are high risk investments, you may lose all or part of your investment. Consult with an investment specialist before you act.
The difficult thing is not to learn, the difficult thing is to know how to teach.
Editor and coordinator of the free book “La era de las BLOCK punto COM”
CEO of bitcoiner.today