What should you know before investing in Cryptocurrency?
Making investments in Crypto Currencies is seen as one of the most profitable earning strategies by some of the best Forex brokers in the world. In 2021, the hype of becoming a trader in people is just increasing day by day. But if you are not familiar with the sudden changes in the market, you should definitely learn.
It is said by the best Forex brokers for beginners that investing in crypto can either bring you a lot of money or take all the money away from you. It is a complete truth that trading requires a considerable amount of luck and if one doesn’t have this, he is more likely to make other traders happy by losing himself.
But is trading all about luck? Definitely not, to perform better in your trading career, you need to learn the basics of the market, the ups and downs of the market, and will have to understand what is the right time to make an investment.
But these are not complete, we have a full list for you. Just keep reading the article and you will understand the main things you will require to know before making your first investment in cryptocurrency are.
Understand the market capitalization of each coin
The very first step towards getting good results from your crypto investment is to understand the market capitalization of each coin. This learning is also known as the market cap of each coin. Now a question arises, what is the market cap?
If we refer to the top 10 UK Forex brokers, the market cap is simply the total net worth of every single coin that has been out stood in circulation. Market cap is calculated by simply multiplying the number of coins outstanding in circulation by the live price of the coin in the market.
The importance of the market cap is the variation in the prices of coins in the market. The introduction of new coins in the market has created an illustration in the minds of newbies that it can catch up to the rate of cryptocurrency after a certain time. If it has to be possible then the market cap of that new coin must surpass the market cap of cryptocurrency because they have about unlimited coin circulation in the market.
To get an estimated idea of the future rate of a coin, you need to know about its market circulation.
Do you know the use case of the coin you are investing in?
As we have seen the hype and distribution of crypto coins in the year 2021 increasing significantly, new coins are also introduced but they have not been able to create any significant difference in the market. These coins are just introduced in the market to maintain the hype of the market and coin circulation.
This brings us to our next point that you will have to keep a keen eye on i.e. the use case of the coin you are going to invest in. As an example, Bitcoin is used to replace gold as the best store of value.
It is also used to prevent inflation due to the scarcity of gold in the market. The most important use case of Bitcoin is that it is becoming the next web 3.0 that will have all the internet facilities built around the ecosystem.
Because of having so many use cases, Bitcoin is overshadowing all other cryptocurrencies and is the highest price-valued cryptocurrency in the world.
While other cryptocurrencies such as Cardano have the use case to resolve the economic gap issue by banking the unbanked. It provides a super-fast transaction rate, a low cost of building new blocks, and good value.
If you research similarly on the coins you are investing in, you will get a proper idea of how, when, and what amount to invest.
Are you using the stop limit feature to lower your loss?
If you are a new trader and have been investing in crypto without having the proper learning, you will often find your decisions going wrong. Not only freshers but experienced traders also make this mistake. According to a survey, more than 90% of traders lose more than what they earn. The main reason behind this problem is their incomplete research and study.
However, we understand that even the top 10 Forex brokers in the world sometimes face this upset. All the credit goes to the unpredictable trading market that keeps changing every in a while.
In these situations, you want to lose as little as you can. The stop-limit feature is specially built for this. Using this feature, you will be able to exit the market automatically once the price drops down to the price you set.
We all are aware of the high volatility of the market and no one will want to enter the market when it is volatile. To avoid the effect of the volatility of the market, you need to enter the market periodically.
You can use the dollar-cost averaging strategy to invest in the trade market. In this, you calculate the total investment amount by dividing your budget according to different periodic time frames.
Based on the dollar-cost averaging strategy, Unocoin has launched a financial concept, SBP that stands for Systematic Buying Plan. It has already been tailored in the market of crypto trades.
In this system, the investors are provided with systematic payment options of small amounts over a regular period, a convenient payment system through different automated bank transfers, and quick transactions.
These features make this system a favorable one in the crypto market. Using the SBP concept, you can invest in Bitcoin or ether at periodic intervals just to beat its volatility by dividing the costs to its budget.
If you have been inspired by traders and are looking to earn money by making trades in the crypto market, you need to be aware of some points. In this article, we have mentioned all those important points that will keep you a step ahead of your competitor as well as will minimize the losses you will be facing.