Top 5 Cryptocurrency Investment Approaches for Greater Profits

Succeeding as a cryptocurrency trader is closely related to the kind of strategy used. If you want to make it in this highly lucrative and profitable industry, it’s vital that you carefully select your strategy.

Make sure that you have a better grasp of this approach so that there are no regrets later on. Some traders are known to combine more than one strategy at a time. Doing so is also allowed as long as it works out for you.

The following are the top 5 strategies and approaches that can be implemented in your crypto efforts:

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1. Portfolio diversification

Diversification entails spreading out your investments in such a manner that you are dealing with more than one type of asset. The main purpose of this practice is to mitigate portfolio volatility over a period of time.

Every successful investor is aware that if you are looking into the future, you should never put all your eggs in one basket. It doesn’t matter if you’ll be operating on an exchange or trading on an investment platform like Bitcoin Loophole.

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Most people tend to associate crypto with only Bitcoin. The truth of the matter is that there are dozens of other cryptos that are doing pretty well. If this is an area you have invested, the best thing to do is to diversify with other assets.

As an initial part of your diversification process, you could get started with Bitcoin and Ethereum. That’s because they have a wide range of diversification options.

You cannot just wake up one day and say you’ve started diversifying. It is always a good idea to begin doing so when they hit $500-$1000 or more.

Not when you are still at $100. Each person has their own extent to which they can tolerate risks. Thus, the manner in which you split your portfolio is determined by how risk-averse you are.

2. Swing-trading

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Swing-trading is a crypto investment strategy that can make you immense returns if things go your way. However, one has to maintain real grit and discipline if they are to sustain the profits rather than going ‘all in’ with one or two bad trades.

It is worth knowing that you could lose even more than three trades in a row. It is during such times that you begin questioning why you are doing what you do.

My main aim is not to scare you but to be honest with you. After all, how would it benefit me if I lied to you then you give it a try and regret later on? But the good thing is that this strategy has been proven to work for many. You could be among them.

When doing swing-trading, be sure to invest only what you can comfortably lose. This is the Number One Rule when you choose this strategy and it is remarkably true. The last thing that you want is to trade with fear.

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If you know that losing whatever you have invested will not disrupt your normal life, there will be no emotional instability while swing-trading.

It is also important to keep off greedy actions throughout the trading experience. This is quite a tough concept to master because many investors are always trying to make it big all the time. It often begins with one winning most of their trades.

As greed sets in, they forget about swinging and concentrate only on the profits. Sooner or later, all the money vanishes and you have to go back to square one.

As a crypto trader, you have a wide range of tools at your disposal to practice swing-trading. When you use these tools, you will be able to do things like: mitigate the danger of losing all your trades, learn where to place the stop losses, determine reversal trend signals, and get the best buy.

3. Day-trading

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Day-trading is a concept closely related to swing-trading. Day-trading involves making sure that you buy and sell an asset within a single trading day. This is very short-term trading and may involve holding the asset for a short while like a few seconds or hours.

Your overall goal is that the closing of the day’s business should not happen while you still have the asset. This has become a very popular strategy when it comes to Bitcoin trading.

As you go about trading, you are always on the lookout for opportunities that can make you a quick profit. Chart analysis and speculation come in handy in this case. With regards to speculation, the trader gets the perception that a certain event will trigger prices to go either up or down.

For instance, if you see a positive story, you decide to buy Ripple. There would be no given guarantee that prices will change but your speculative nature lets you have a personal opinion.

On the other hand, chart analysis involves a trader studying price movements of a given cryptocurrency and attempting to guess the direction it will take. This prediction is supported by historical price movements.

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During chart analysis, you can put into consideration the manner in which charts move in seconds, minutes, or hours.

One thing you have to know is that day trading cryptocurrency assets is not equivalent to day trading real-world assets. That’s because cryptos face huge volatility. More often than not, prices will just move up or down, exposing you to either great success or great failure.

All in all, this is one strategy that is sure to make you great profits once mastered.

4. Peer-to-peer trading

Peer-to-peer trading involves buyers and selling trading with each other directly without the involvement of third parties for trade processing. This is an approach that gives you a greater advantage, especially if you are looking for ways to keep fees at bay.

To begin with, P2P exchanges charge reasonable fees. They typically range from 0%-0.7%. A transaction is triggered when either a buyer or seller posts an advert that they are looking for a trading partner and someone accepts that advert.

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Sellers have the option of pushing advertisements for free on these platforms. Once a buyer views this advert and develops interest, they select it.

Peer-to-peer exchanges have a high level of security. Immediately after accepting an advert, the platform locks the digital assets so that none of the parties can access funds. These assets are unlocked once the buyer sends fiat payment.

As the digital assets are released to the buyer, the fiat payment goes to the seller. This way, the chances of a fraudulent activity taking place is reduced.

5. Smart holding

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The term holding is pretty well-known in the crypto world. It is a buy-and-hold strategy until when prices are good enough to encourage a sell. As good as holding might serve you, it also has its own downsides.

This is determined by how long you expect to get a return on investment.

A smart holder keeps off challenges of holding by putting in place a core and satellite portfolio. For example, Bitcoin and major altcoins can be held in the core holding while smaller assets would be in satellite portfolios.

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The fact that you are holding does not mean you should act rationally. Make sure that each decision taken is backed by some data, especially from chart analysis.

In conclusion, use these five strategies to revamp your cryptocurrency investment approach. Some can be used individually while others would have to be merged.

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