The evaluation of the Cryptocurrency has been on the rise since the golden year of Bitcoin. In a study it has been found that the millennials are more interested in the Cryptocurrency trade market than the other people. Out of all the traders and investors in the Cryptocurrency trade market, the ratio of Millenial far surpasses that of other traders.
It is all thanks to the event in 2017 that made the evaluation price of the Bitcoin reach a peak market value of $20,000. This event attracted the attention of all the traders and investors all around the world. This event made it easier for new traders and investors to invest in Cryptocurrency.
However, even if the Cryptocurrency trade has become easier, there are still new investors who make mistakes in their first deal.
Here are the essential elements that an investor must consider before making a trade deal.
1. Market Capitalization
Currently, there are more than 4900 types of Cryptocurrencies listed on several exchange platforms. You must be thinking that how come there are so many Cryptocurrencies but you only know about a handful of them. It is because the media capture only the top performing cryptocurrency. And all the other crypto coins are considered to be as tokens.
Simply speaking, Market capitalization is the size of the company that holds influence in the trading market proportional to its market size. The market capitalization also provides you an insight of how well your shares are going to perform.
For instance, if you are buying a share, the value of the share will be defined by the company to whom the share belongs to. The same thing can be said for the Cryptocurrencies, but in this case the company is replaced by the Cryptocurrencies like Bitcoin, Altcoin and Ethereum.
2. Trading Volume
Before going with trade, the investors must look at the trading volume or the price of the Mining Commission (In case if you are investing in Cryptocurrency mining). If you are doing a long-term investment in the Cryptocurrency then trading volume does not matter, but if you are in for short-term investment, then it becomes very important to know how many coins are traded in a single day.
If there is a Higher trading volume, that means it will be easy to buy and sell Cryptocurrency assets. Where on the other hand, having lower trading volume shows that the trader may find themselves holding a double edged sword.
3. Stop losses and Taking profits
Well, this tip most of the traders use in their trading. However, new traders fall victim to this trading tip. It is very important to know your limits, even if you are making a profit. Experienced investors make individual plans for every trade. This helps them to accrue lesser loss.
A Stop Loss order allows the trader to sell off their asset at a predetermined price (Just below the purchasing price). This helps the trader reduce their losses. You can even say this as Marginal Trading.
We all know that the Cryptocurrencies are the most volatile asset. So having a Stop loss order is necessary for the traders.
4. Securing your Cryptocurrency
Now that you are through with the Cryptocurrency investment. The next important part is to have a secure place to safeguard them. You may consider the exchange platform to be secure, however, that is not at all true. It is advised by many traders that keeping your Crypto coin in an Exchange wallet for a longer period of time can cause security problems for your wallet.
Thus, there are many traders that rely on hardware wallets to safeguard their Crypto coins. Thes hardware wallets provide keys only to the owners, hence, making it more secure.
If you keep the above-mentioned points in your mind, it will not be hard for you to safely invest in the Cryptocurrencies. You just need to have a plan of action for the trade and the possible way out of the trade when the trade is not going well.