cryptocurrency investment strategy

7 Tips For Creating the Ultimate Cryptocurrency Investment Strategy

Crypto is eating the world. The average price of funded cryptos has beaten the stock market every year for the past five. If you don’t hate money, it’s time to throw your hat in the ring and get your own cryptocurrency investment strategy!

Cryptos present a unique opportunity but also come with a lot of associated risks. Nobody knows the best strategies yet in these emerging environments, but we’ve put together a quick guide to get you winning fast.

Keep reading for your cryptocurrency guide to success!

Cryptocurrency Investment Strategy

Any guide to cryptocurrency must begin by addressing some of the conceptual differences between trading cryptos, and trading other digital assets like fiat currency or stock equities. After all, there is a real similarity between trading these vastly different things.

Whether you’re trading stock IPOs, fiats on FOREX, or selling Bitcoins in a Craigslist classified, you’re still making digital trades.

Trading cryptocurrencies is essentially the same activity as trading other digital assets. The same skill and techniques are used, although the tools are very different. Crypto trading tools are quite varied and usually proprietary.

1. Bots

Because of the varied and mixed nature of cryptocurrency trading, specialty bots are a really hot thing these days. In normal stock trading, trading bots are super common. If you have a trading bot for a particular crypto, you might be amongst the very first people to have such a tool.

This can give you a near first mover advantage in trading. While other traders are trying to make their moves at human speed, your bot can move at electronic speeds. Eventually, cryptocurrency trading will be as permeated with automatic operations just like stock and other security trades are.

For now, it’s the Wild West. Caveat emptor when it comes to purchasing a cryptocurrency bot. There is next to zero regulation when it comes to these software packages.

2. Stop Loss Trading

A stop loss is a basic investment strategy where the trader decides there is a value of an investment where it automatically becomes a good idea to sell it. You can tell a traditional brokerage to “sell the stock at a certain price”. This basic idea can also be applied to cryptocurrencies

The issue with stop loss issues on cryptos is that you need to find an exchange or software package that lets you put these types of trades into their system. The market has to be liquid enough to take your coins as well, or you’ll just be stuck with a devalued asset.

3. ICOs

When new cryptocurrencies come online, they often start out with an Initial Coin Offering [ICO]. An ICO as a concept is related to the traditional stock Initial Public Offering [IPO]. An IPO is when an investment bank puts out a batch of stock.

Similarly, an ICO is when the cryptocurrencies first offer itself for public consumption. Like an IPO, and ICO may be a great investment, especially if the currency is going to rise or survive. Imagine getting 10k Satoshi Bitcoins for the price of a pizza, which is exactly what happened to someone during the first rounds of Bitcoin trading.

4. No Do-Overs

One of the features of cryptocurrencies is their decentralized nature. This means that no one controls the situation. Security is provided by the cryptography itself.

This situation can be a double-edged sword. On the one hand, this is an advantage, because no one entity can control the currency. On the other hand, that means there is no one to fix things if there is a screw-up or mistake.

This means you have to be aware that investing in cryptocurrency has some inherent risks that aren’t present in traditional investment vehicles. With great risk, may come great reward, and it’s not even clear that this makes cryptos riskier.

What is clear is that the decentralized nature of cryptocurrencies represent a different kind of risk that you need to be aware of.

5. Hacking

When you think of a bank robber, you might imagine a guy with a bandana over his face. Maybe there is a getaway driver. In the modern world, it’s a hacker on a computer terminal, reaching out to steal your money from anywhere that is connected to the internet.

The best cryptocurrency investment is one that no one steals from you. As in the issue of irreconcilable mistakes, in the world of cryptocurrencies, there is usually no recourse if someone steals your coins. Law enforcement might not even be willing to recognize the issue as theft.

Be aware that hacking can, and does happen.

6. Is Cryptocurrency a Good Investment?

The fact is, that in the past five years cryptocurrencies have outperformed all major Blue Chip indexes in every country in the world. Of course, past performance is not indicative of future profits. By the price plots, cryptocurrencies are trending up.

Many people have lost huge sums of money in cryptocurrencies. It’s also true that real money is pouring into these digital assets, and if you place your bets with care, you can make money too.

7. Faucets and Casinos

Faucets are software endpoints that drip small amounts of cryptocurrency out to users, often in exchange for some trivial thing like an email address. Faucets are a great way to get some crypto, although they are usually very, very small amounts of money.

Most faucets drip only fractions of a cent worth of crypto, but at least you then have some.

There are also cryptographic casinos where you can bet your coins against other players who have them.

While betting money is a casino is generally a terrible investment strategy, it can be a fun way to try and double up your coins. If your whole bankroll amounts to a few pennies worth of faucet drip, at least in a casino there is the possibility of making money.

Figuring out how to buy cryptocurrency is one of the biggest issues related to the subject. Sometimes, faucets are the best place to get ahold of some actual numbers. This allows you to become familiar with handling them without actually having to invest a lot of money.

The Future is Here

You’re already living in the future, but is your investment portfolio stuck in the past? By using new technologies like bots, and old-fashioned business acumen, make the world your oyster with some great crypto success!

This cryptocurrency investment strategy is just the beginning. Check out our blog for the hottest news and tips on the ever-expanding digital money world.

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