How to find your edge in crypto trading
Considering entering the crypto trading market? Here’s how to find your edge in it.
Trading in cryptocurrencies has been, for the most part, a male-dominated investment market ever since Bitcoin launched in 2008. But that is changing, slowly but surely, and as the number of women trading climbs it becomes all the more important to know what you’re potentially getting into.
There is definite potential for profit when you invest in these markets – and why leave that all to the guys? – but there is also risk involved.
The most important thing about trading in these ‘coins’, then, is ensuring yourself as much of an edge as possible. “Edge” is something that is found in all trading, and either you have it, or the broker does.
In this article, we will look at ways you can increase your edge and give yourself the best possible chance of making profits from your trading experience. Whether you’re a more active trader, or someone who waits and accrues additional gains (a HODLer, to use the slang), the following tips should be of use to you.
Focus on the markets with liquidity
There are several different cryptocurrencies in which you can invest right now, but there is one that we’ve all heard of. That one is, of course, Bitcoin. After that, there is a substantial fall-off in saliency before we get to Etherium.
With that said, there are plenty of good reasons to trade Ethereum online; at between 10-15% of all crypto trades it’s still an active coin with lots of liquidity. That means you will see movement in the market, and can make profits quickly.
It also tends to follow the movements of Bitcoin, so if you can spot trends in the more popular coin, you can expect them to be replicated with Ethereum.
Follow social signals
Cryptocurrencies are not subject to the same slings and arrows as fiat currencies, which has its positive and negative sides. With government-backed currencies, the conventional wisdom does tend to be reliable, even if the currency itself is recession-prone.
It’s harder to get a handle on the way crypto markets are moving: is a recent price rise a sign that the currency is strengthening, or a very short-term “pump and dump”?
Initially, there’s no way of knowing, but if you follow some respected accounts on Twitter and Reddit, you’ll soon get a feel for who tends to be “in the know” and who’s mostly hot air. This knowledge can be beneficial.
Test any strategy in a demo account
The internet is full of cryptocurrency trading strategies, but let’s be entirely clear here – you can trust a bare minority of what you read about crypto trading online. Much of the advice given by veteran traders is – at best – guesswork, and in some cases it is disinformation designed to make novice traders react in a certain way (thus inflating the profits of the vets).
So if you find a strategy online that sounds good, there’s no harm in trying it with a demo account first. If your results tally with what you expected, then you can give it a try on real-money accounts, a little at a time. When you see the principles backed up by profit, you can be more confident with future trading.
Crypto trading can be a noisy, impenetrable field for beginners, and you need to recognize that there are underhand tricks played by some traders. Learn from your experiences and maximize your edge, and you’ll do well.