Five recommendations to start investing in cryptocurrencies

Cryptocurrencies have become very popular in recent years for being a digital asset that ensures the integrity of transactions. That is why more and more people venture to become “traders” hoping to achieve a great return on investment.

However, what every new investor should know is that developing a strategy is essential to optimize your investments in the short, medium and long term. Therefore, Golden Capital FX, a leading financial broker in Latin America, gives five recommendations to take into account when putting together a cryptocurrency trading strategy.

Training

To become a trader In cryptocurrencies, prior knowledge of financial markets is not necessary, but advice is required to take the first steps, which will help you develop a strategy according to your objectives, time, needs and goals.

Allocate the necessary time to learn about cryptocurrencies, blockchain technology and financial markets; once you have made the decision to invest.

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First step

To get started, you must first know how much capital you are going to enter, where you are going to operate (at which broker), determine the time horizon of your investment and then see which cryptocurrencies are the most attractive at the time of your purchase.

In addition to knowing how to buy and/or sell cryptocurrency, you must know where to store it safely (wallet). At this point, it is important to have your guide or advisor so as not to fall for scams.

Types of strategies

The strategies differ mainly by time. There are traders who open ‘intraday’ operations, that is, they buy and sell assets on the same trading day, before the market closes.

On the contrary, other investors decide to take the ‘buy and hold’ strategy that consists of buying cryptocurrencies and keeping them in a relatively stable portfolio over time, regardless of short-term fluctuations.

The first strategy is riskier and is not recommended for beginners in this market until they develop better risk management skills.

Measure profitability

To know if a strategy is being effective, profitability must be measured and this is achieved through technical analysis, which studies the behavior of the cryptocurrency over time, and fundamental analysis, which studies the situation around the crypto.

Based on both analyses, it can be determined if a strategy is being profitable and if it is time to change or improve it.

Advantages and disadvantages

You should know that by investing in cryptocurrencies, you will be entering a market with great potential, high profitability and volatility that generates investment opportunities. However, you should be aware that this is an unregulated market, which could mean high risks.

It should be noted that the factors that can affect speculation in the cryptocurrency market are different from those of traditional markets. Generally, cryptos move when opinion leaders speak for or against them, on issues of regulation, acceptance, transactionability, security, among others.