Crypto traders – According to the experts at SoFi, trader need a full strategy before starting to trade. Making money as a crypto trader isn’t unheard of these days. Millionaire stories, like that of Cooper Turley, show modest kids earning millions from small bitcoin investments. The right strategy is what gives you an edge and a reasonable rate of consistency. Here’s what you need to know.
Bitcoin Versus Alt Coins
Before getting carried away with the bitcoin hype, consider if alternative coins are more appealing. Bitcoin, being a medium of exchange, is used in purchases and for powering a few blockchains. Alternative coins, however, have a larger scope than what the companies behind them achieve. From enabling international businesses to encrypting launch codes, some coins are simply on the cutting edge of society’s tech. Build a strategy around those new assets that exist.
Wallet Type and Why
Storing your crypto is the most important strategy you have. Unlike your stock brokers, like those working with government banks and insurance, your crypto is solely in your hands. How safe your coins are and where you store them are entirely your responsibility. For these reasons, decide on the type of wallet you need. Online wallets are useful and fast, but they’re subject to being hacked. Cold wallets, which are held offline, are often USB devices that fit in a home safe.
Investing Only in Liquidity
Liquidity is a challenging subject in crypto because of timing. Essentially, you don’t want to enter or exit trades if no one else is entering and exiting trades. Liquidity is how easy transactions are honored regardless of where prices sit. If no one will buy or sell at your price mark, then you don’t have a liquid market. Finding liquidity simply reduces your chances of holding a trade that you don’t want. Liquidity, being an active trader, allows you to get rid of positions very quickly.
Set Your Risk Tolerance for Volatility
Volatility is often confused with liquidity, but it never should be. Volatility measures the actual increments of price moves. Sometimes, a specific market is moving at increments of $1,000 at a time while the same market later moves at $250 at a time. Though the $1,000 price move is enticing, that range applies to price moves both up and down. High volatility is dangerous for new traders. It’s often better to find low to medium volatility where markets are stable.
Use Diversity for a Better Edge
Even if you only want crypto trading with SoFi, diverse how you do so. You can place in both buy and sell orders for example. Diversifying with altcoins allows you to invest in different industries and grow your income-generating assets. One industry that faces difficulties might enable another in your portfolio to thrive.
Diversity enables investors to find success by not relying solely on one asset. Should an asset plummet or delay, a collection of others help to weather such uncertainty.
