January is a time to start afresh and make big plans for the year ahead – and provides the perfect opportunity to start learning a new skill you’ve been putting off mastering for a while. This is especially true when it comes to finance and business, and if you’ve got big plans for 2022 and hopes to make it your most prosperous year yet, then now is the time to take action.
Whatever your line of work or your current financial set-up, learning how to start trading cryptocurrency could be one of the best things you do for yourself this year. The likes of Bitcoin, Ethereum and other leading digital currencies have shown in recent times that they’re here to stay, and are one of the most potentially lucrative ways to invest your money in this 12-month period, and beyond. Making their way slowly but surely into the mainstream, these days you can book your luxury holiday, buy a new high-end sportscar and even purchase real estate using crypto, and as their usability – and thus, desirability – continues to grow, so too, will their value.
Granted, it has been a somewhat turbulent year for Bitcoin and co, and market volatility remains a key concern for many would-be investors – but when you consider how well many cryptocurrencies have managed to bounce back in the face of adversity, the overall picture looks quite impressive. If this evident staying power has piqued your interest, then there’s no time like the present to learn the ropes of trading – and if you’re not sure where to start, then we have just the tips you need.
Invest now, and give it time
Those who win at crypto trading are the investors who are prepared to play the long game – so don’t go into it expecting to make a quick profit. While sudden price surges can feel exciting, holding your nerve could see you stand to make a considerably larger profit in the long-run – so be prepared to leave your initial investment alone for a period of two years when starting out. You might want to add to it during this time, which is fine – but do all you can to avoid taking away from it.
In order to avoid finding yourself in a position where you need to recoup some of your investment for an expense coming up later in the year, only invest what you can afford to without missing it – so, if that means putting £10,000 into crypto and leaving it alone for two years – rather than putting in £20,000, but needing half of it back over the next year – then so be it.
It can be tempting to pour all of your capital into what you believe is a savvy investment at once, but this kind of 100 percent allocation is ill-advised – especially when you consider that, due to market volatility, you could find yourself at a loss when you need the money the most, forcing you to sell your remaining crypto at a less than favourable price.
Use the DCA strategy
Another common temptation for new investors is to build a position as quickly as possible – but don’t allow yourself to be swayed by this fear of missing out.
The dollar cost average strategy (DCA) is based on building slowly and consistently, buying the same amount of your chosen crypto every week or month over a set time period, regardless of market volatility at the time. Set yourself a fixed amount – for example, £250 – and invest that number every week, without fail for a year. Doing so means you won’t have to constantly be worrying about whether to go all in when the market is looking favourable.
Know when to step aside
Accept from the start that every trader gets it wrong sometimes, and you’ll go far. Misreading the market is a common mistake even amongst experienced investors, but in the early days, it is almost a given that it’ll happen at some point. Should you make a small loss, don’t be tempted to act in haste to recoup it – reactive behaviour rarely ends well, and could see you making a far bigger loss in the long-run.
Instead, be prepared to take a step back and look at the bigger picture. Giving yourself a few days to reassess the situation with a clear head is the best possible thing you can do at times like these, so know when to step aside, and have the discipline to do it.
Be prepared to tear up the rule book
There is no proven roadmap to success when it comes to cryptocurrency trading – if there was, then we’d all be multi million- and billionaires by now, and the returns would quickly fade. So, while it’s wise to take the time to learn the tricks of the trade and get to know the market inside out, once you’ve gained some confidence, breaking the rules from time to time could actually see you win.
Influencers and investment experts may be able to offer some sage advice to take note of when starting out, but everyone’s tolerance of risk – and their personal objectives, too – are different. Work out what those look like for you before you begin, and over time, you’ll be able to act instinctively and in alignment with these – but don’t try to do this too soon, as getting a feel for crypto trading takes time.
Disclaimer: Investing money carries risk, do so at your own risk and we advise people to never invest more money than they can afford to lose and to seek professional advice before doing so.
