As with all things new, the crypto market may raise some doubts in people. If you are reading this, the chances are you are already acquainted with the basics of cryptocurrencies and the ongoing market trends. However, it always comes down to one question: how to avoid mistakes in trading with cryptos? Everyone prefers safety. Especially when their assets are concerned. Therefore, we have prepared a short guide for people who are relatively new in this.
Keep Learning
First and foremost – get informed. You can always hire someone to do your job and keep track of your transactions. This would be the easy way. However, we strongly believe that there is no messing around with money. So, why not do it yourself? In order to really go into the depths of the crypto world, inform yourself about what blockchain is, how your account is secured by public and private keys, and what is the mechanism behind the exchange platforms. Pay special attention to the transaction fees and the taxes applied.
The detailed regulation is underway. However, there are already rules that apply to the crypto market and it is fair to say that taxes are applicable to every crypto transaction. Search the net. There are a lot of educational tutorials that can provide reliable information.
Be Pro-Active and Invest Wisely
Doing any kind of trade demands your attention and proactivity. And as we have stated before, only practice can make you skillful. Therefore, do not be afraid to dive in.
The professionals say that if a person is a beginner, they advise investing in one of the top three cryptocurrencies: BTC, ETC, LTC. The reasons are usually related to their high liquidity, relative stability and low inflation rates.
Differentiate Cryptocurrencies and Security Tokens
There is a long way to pass from investing in leading cryptos to exploring security tokens. Just a quick note to bear in mind: security tokens can grant ownership to its investors, while cryptocurrencies cannot. By investing in cryptos, a person does not own a fractional share in a company, and it does not receive dividends.
Expensive Vs. Cheap Coins
Let us not kid ourselves: we go for the bargain. Things that are less expensive attract our attention. This is probably because we think that we will get more for less. Regardless of the unwritten rules in everyday life, the situation is a bit different with digital currencies. Going for the more expensive coins is usually considered a better decision. Why? Well, because according to the market trends, there are higher chances for a coin to go up from $3,000 to $10,000 than from fraction of a dollar to $2.00. One of the reasons for this is the circulating supply. If the volume of coins circulating the market, being held or spent, is high, the price per unit is less.
Furthermore, the so-called “market capitalization” is an important factor when researching the matter. This is also the point where you should consult a professional before making your decision. The market cap indicates how investors value a certain coin. It represents its price times circulating supply. We have come across some experts advising us that we should look for coins which have low market cap. On the other hand, these usually bear more risk due to illiquidity. Obviously, finding a proper balance is a trick and a skill.
Do you think there are enough resources about cryptos online to keep you well informed?