Using the Dollar-Cost Averaging, meaning, buying Bitcoin there're less risk for big changes in Bitcoin price. This means buying Bitcoin piece by piece. For example, instead of buying $20 000 worth of Bitcoin with one purchase, the buyer has 10 x 2000$ orders in different times. This can be every other day, twice a week, once a week, once a month and so on, depending on the trader. By increasing the investments of buying the Bitcoin. There are different ways to invest and Dollar-Cost Averaging Bitcoin is just one way of investing. One helpful factor in planning the investment is knowing thyself – the skillset and the knowledge base. Because of this fact, different investors are more comfortable with different startegies in order to realize the profits.
Investors can see that at the moment the Bitcoin has an upward trend even with big percentage gains, it went through corrections. This doesn’t mean that other Coins and Tokens should be ignored, because there are other cryptocurrencies, like Litecoin and Ethereum that have raised more in percentage than Bitcoin in 2017. More precisely, at the beginning of 2017, the Litecoin price was $4.51USD and Ethereum was $8.24USD. On the December of 18, 2017 (at the time of writing this post), Litecoin is around $313USD and Ethereum is $719USD, which gives ~6840% increase in Litecoin value and ~8626% to Ethereum value, while Bitcoin has raised ~1884%.
The market volatilty is big, which allows for big wins and also big losses. It also needs to be noted that the market is young and it’s moving in the unknown direction, which is why the risk is bigger than in traditional stock markets.
How often is it planned to buy and sell? Some people want to be daytraders, but in most cases the results have shown that taking long positions are more profitable, since a lot of traders are lacking the experience for daytrading. In general it’s possible to see that by making long time investments on a value-based, analyised token, which brings it’s benefits rather to larger group of people than just for coin creators. Before choosing the strategy the trader should choose targets – when to buy and when to sell, and make his/her moves according to the strategy. Despite this, especially in crypto markets, there are times when the profits should be taken out earlier and the market being left alone. There also are very rare cases, in which the buyer/seller has a very good reason beside his/her own greed to change his/her position, taking into consideration the market’s movement or the new overview/ analysis of the coin. Great majority of his/her time, the trader needs to be strict with his/her rules and dicipline. Every trader should use stop-loss taking into consideration the market fluctuation possibility.
Alternative coins, also known as altcoins, are all coins besides Bitcoin. Still, it’s important to keep an eye on them, since they have lower marketcap than Bitcoin has, those usually are signs for price making in the short and long perspective. This is also how Pump and Dump schemes started (closer overview of Pump and Dump schemes can be found on the Scams/Schemes section).
Altcoins usually have their goal and purpose, supporting different niches. When investing into altcoins, there may be more risks risks, which also may refer higher ROI. This is mainly because the projects create their own problems that don’t need solving and the project aren’t always developed as planned, hence there is no certainty when investing into altcoins. Some, but not most of the projects have progress, but there are projects that sell their tokens which have no value because of the token either doesn't have a function or the project isn't progressing.
We'll take an example on how to invest into the altcoins by diversifying the portfolio. When investing the altcoin fluctation needs to be taken into consideration, since there are ones that are more stable than Bitcoin and there are ones that are less stable than Bitcoin. Example of portfolio split: 50% Bitcoin 25% Ethereum 20% Dash and 5% Zcash. This portfolio doesn’t have too much cryptocurrencies, but most are widely known to the people taking part in cryptocurrency trading. A smart investor doesn’t take this example to invest in with the exact same way, but instead, creates his/her own portfolio based on his/her analysis and concusion.
In general, Bitcoin looks for an all time high (ATH) after falling, which is developed on the trending line and which a lot of traders have been using in order to trade. It’s important to stay up to date with both cryptocurrency and news all around. It’s also beneficial to read crypto chats about developments, reading blogs, comments and so on, but not to make buying decisions upon them.
Besides taking longer positions, a lot of markets allow shorting. There are platforms, which allow to do both with margin trade, according to the Bitcoin price change. For example, if the investor was to take 90% long position on normal trading and do 10% shorting on different transaction, according to the market, then the trade presumes that the investor is sure of Bitcoin’s price growth, while also trying to use the market for it’s drops.
People are different and one startegy doesn’t work for everybody. In order to be successful in trading, the trader needs to understand and justly value cryptocurrencies and the market around it.
NB! The trader needs to have an idea on where, which team and which project he/she is investing.