The internet has been instrumental in revolutionizing online investment and bringing more opportunities to trading for a wide range of day trading cryptocurrencies allowing larger participation in financial markets with greater speed and reduction in fees.
Crypto trading platforms have popularised crypto day trading, bringing better crypto value and crypto trading strategy through technical analysis, which has dramatically improved the chances of making profitable trades through margin trading and online investing for more people around the globe.
Investors increasingly look for better ways to add cryptocurrency to their diversified investment portfolios and utilize swing trading to increase the potential earnings. However, cryptocurrencies are an esoteric asset class, and often people do not understand how to avoid or get out of a losing streak before it’s too late.
Therefore, crypto-asset risk management solutions have become an important technical function with a crypto trading strategy.
What are the Different Risk Management Techniques used in Trading?
Stock market traders use historical data to make long-term trading strategy decisions. However, cryptocurrency assets often only have a limited amount of available data. Therefore, long-term cryptocurrency strategy will be reliant on current or most recent activity, and will, be more inclined toward hopeful rather than reliable information and is more suited to cryptocurrencies such as Bitcoin and others that have been trading for a few years.
Short-term traders make use of the volatile cryptocurrency market using swing trading to profit when the price varies in short bursts of movement.
Cryptocurrency Technical Analysis requires research into factors that affect the market based on price and volume data available through analytical technology. Based on the premise that what happened in the past will essentially affect the future performance of the cryptocurrency given the same market situations.
This is one of the most challenging analyses to use with cryptocurrency because cryptos are not corporations and therefore have few project fundamentals to analyze; there are no public financial statements, and their value and viability are dependent on network and consumer acceptance and approval.
To start a fundamental analysis, traders will often look to blogs and information sites and study the cryptocurrency whitepaper or cryptocurrency community forums.
Cryptocurrency strategy development will not guarantee success. The crypto market is volatile and requires constant risk management to avoid a losing streak and to make informed trading decisions for long-term gain.
The Next Big Thing in Cryptocurrency is Crypto Asset Management
Crypto trading faces multiple challenges and continues to be extremely unappealing for the majority of the world’s investor public. Although the reasons are still sketchy, they are mainly due to the degrees of centralized execution on the blockchain.
However, with the evident need, crypto asset management tools are fast becoming part of the package offered to would be retail crypto asset investors. The incentive for companies providing these platforms is not just purely financial: the capitalisation of the cryptocurrency market is around $400 billion, and clear signals of stabilising and maturing are evident.
What this means is that more people who have heretofore been hesitant about investing in cryptocurrencies are more likely to show an interest in those platforms where clearly define trading structure delivers better performance than the currently fragmented ecosystem.
What Will a Simplified Crypto Management Platform Provide?
Buying cryptocurrency is still more difficult than regular assets and equities. With the gaining popularity of crypto as a means of investment, however, more users are attracted which in turn brings more people with different trading skill levels, and thereby opening up a new market for a better, simplified crypto management system.
The current system whereby new crypto traders are taken through a lengthy verification process and have to find a wallet that accepts multiple cryptocurrencies means that they not only have to be knowledgeable, they also have to be extremely skilled at diversifying their holdings through the multifaceted wallets.
Although this is doable, managing many crypto assets remains firmly, the domain of experienced traders, leaving the average person out in the cold. To pick up these “vanilla” investors, many companies have introduced asset management platforms, providing tools, which simplify the process and allow traders to consolidate their holdings through a single management portfolio.
The number of crypto investment funds has continued to increase over the last two or three years, with several fund management services offering to invest on behalf of their clients. One such model, Bitwise Asset Management reported a 51% return on investment in less than four months.
However, there are still many traders who still prefer to manage their own portfolios and take advantage of the go-to tools provided by the ever-increasing number of crypto exchange platforms.
Finding the Best Crypto Exchange Platform in an Emerging Market
The challenge for investors is finding an exchange that offers a complete combination of cryptocurrencies that is compatible with multiple wallets. In this regard, the cryptocurrency asset management platforms have sought to streamline the process through the exclusion of third party or middle management handling of investments. This gives everyone a better and safer method of getting into cryptocurrency trading, not just professional, knowledgeable traders who have a thorough understanding of the trading market or ecosystem.
The several platforms that have shown a straightforward approach to manage multiple wallets in a single or central location which allow traders to diversify their assets and keep tighter control of risk management through automatic syncing, to keep all trades updated in a single account.
Risk Management Tips for Cryptocurrency Investment
- Do not use money you cannot afford to lose
This is a misnomer with cryptocurrency because, once you have converted from fiat currency to cryptocurrency, there is no guarantee that you will be able to get it back and this is not merely due to the exchange rates or coin devaluation, often, hacking or government regulation, even outright coin theft, and computer bugs will simply “disappear” the crypto.
- Watch the Bitcoin Exchange Market
Altcoin prices (all cryptos except BTC) work off the Bitcoin market: if the BTC price goes up rapidly, altcoin prices often take a downward slide. Although this is not always the case, the BTC market pumps have been known to turn the altcoin cryptocurrency ecosystem on its head especially when people scurry around trying to exchange their coins back to fiat.
- Diversify Your Portfolio and Use Proper Investment Strategy
Most professional crypto traders take a stance of never having all their eggs in one basket and invest in multiple altcoins. When you investigate the crypto ecosystem, take advantage of long and medium-term investment options and even if there is a panic sale or dump on the market, don’t be drawn in to change your long-term goal.
- FOMO – Fear of Missing Out
Greed is often the biggest problem when things are going well. Coupled with this is the fear of missing out if you don’t invest when everyone else is making a ton of money. If you weren’t in the trade, chances are you will invest blindly and make a speculative investment which might or might not pay off, but with the pump n dump of the crypto market, if you hadn’t planned on getting into a trade, it’s best to stay out until the market stabilizes.
- Use Cryptocurrencies for Investment and Not Trading
One of the most innovative methods of using crypto coins in the form of a “STABLECOIN” would be BIDERATION. Stable coins backed by a fiat currency or gold, which gives them an extended shelf life because they do not immediately become “ether” and their worth value is directly linked to secure fiat money.
While there is much to be said for making active trading investments that will take up a great deal of time, especially if you are not a professional crypto trader, much can also be done with better long term investment strategy and risk management in the form of proper analysis and budget control.
However, there are alternatives to trading, and using cryptocurrencies to buy into the commercial property market, like for example REITs.
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