Engaging in the trading of cryptocurrencies has become a lot more accessible over the past few years. So much even that one can easily develop their own approach and strategy. The following 4 options are all worth looking into, depending on personal preferences.
Cryptocurrency Trading as an Investment
On paper, it may seem like trading and long-term investing are mutually exclusive. In reality, that is not necessarily the case, Many people engage in trading to build their investment portfolio. Increasing one’s position when prices are low, and rebalancing when prices near a high point are two common practices.
Before one can begin to trade or invest it is crucial to follow the basic guidelines first. Gaining an understanding of the market is essential at all times. The method of trading as an investment is also less stressful. It all comes down to adding to one’s portfolio while cost-averaging down – or at least, attempt to – in the process.
Cryptocurrency assets can be found across a plethora of exchanges and trading platforms. Not all platforms have the same price for an asset at the same time, though. Timing these arbitrage opportunities well can yield significant profits over time, but also require a fair bit of effort. Exploring the smallest price gaps between platforms is challenging, especially if it takes a while to move funds from one platform to the next.
While there is instant profit to be achieved, the arbitrage gaps often remain very small. Moreover, the volatile nature of crypto assets might make this option far less appealing. It is an option worth exploring, but it is certainly not for everyone.
Converting Airdrops Into Trading Capital
One often overlooked option is to sign up for the dozens of weekly airdrops in the crypto space and use those tokens to acquire other cryptocurrencies. While some ICO tokens may eventually explode in value, those searching quick riches without starting capital can always explore this option.
Engaging in airdrops requires some effort, though. Most projects require social tasks to be completed, which may tarnish one’s online reputation. In some cases, it may even take weeks to get the airdrop, so that’s something else to keep in mind.
Day Trading is a Risky Option
After acquiring initial capital and getting a feel for the markets, there is one other option to explore. Day trading with crypto assets is perfectly legal in most countries. Buying and selling assets multiple times per day can yield decent profits, especially when making the right decisions.
Again, the high volatility of assets can make traders regret this option. It is often better to take quick and smaller profits, rather than waiting for more. Conducting this type of activity is almost a full-time job, though, which may not be ideal for everyone either. Using a practice account and paper trading remains viable before committing any money.