Where to start as a beginner?
Investing in cryptocurrencies can be a very complicated task, especially for those who are not professional traders. However, there are ways to make money with cryptocurrency trading without being a pro. In fact, simplicity is often the key to success in investing. The best performing investment accounts are often the ones where the owner is not actively trading. This is because the research and investments were made and left alone to ride the larger trend. As long as the larger trend is favorable, there is no need to sell.
What strategies should be used?
- Dollar Cost Averaging
In the cryptocurrency market prices can fluctuate wildly from day to day. That is why it’s easy to get caught up in the emotions of the market. One successful low-risk strategy for investing in cryptocurrencies is called Dollar Cost Averaging (DCA). With DCA, a certain amount is purchased through a longer period of time, regardless of the asset’s price and at regular intervals. This strategy lowers the volatility of your investment and also eliminates the emotions from the equation. For example, if you set aside 100€ per month to invest in Bitcoin, you would continue to do so even if the price of Bitcoin increases or decreases. This way, you avoid the temptation to make emotional decisions based on short-term price movements.
Another advantage of DCA is that it helps to lower the average buy-in price of your investment. For instance, rather than buying all your Bitcoin at once when the price is high, you would buy smaller amounts regularly over time. When the price of Bitcoin drops, you would continue to purchase at the regular intervals, which would lower your average buy-in price.
- Market Cycles
Understanding market cycles is crucial in cryptocurrency trading or any type of trading. The price of assets tends to follow a cyclical pattern, and recognizing these patterns can help investors make better decisions about when to buy and sell. By recognizing and understanding the price cycles, you can DCA a little more aggressively during relative low prices and hold back or even sell some at relative highs. For example, historically, the best buying opportunities for Bitcoin have been after a 75-80% drop from the preceding all-time highs. This knowledge can help investors make more informed decisions about when to invest and when to hold back, leading to better long-term results.
In conclusion, making money with cryptocurrency trading does not necessarily require you to be a professional trader. By following simple yet effective strategies such as dollar cost averaging, focusing on long-term investments, and learning about market cycles, you can make profitable trades in the crypto market without spending hours analyzing charts and indicators. The key is to remain disciplined, patient, and focused on your goals.
In our Intermediate level academy series, we discuss these strategies further and provide a more in-depth analysis of market cycles and other trading strategies. The key to success is to keep learning and developing yourself as an investor. While it may seem difficult at first, investing in cryptocurrencies can be profitable with the right strategy and a little bit of patience.