Every investor wants to maximise profits and cut losses. These starter-friendly methods will help you build a strong portfolio and minimise risk along the way.
Many trading and investing strategies used in the traditional stock market can be applied to cryptocurrency trading and investing as well. While both have their risks, it is widely agreed that cryptocurrency trading is more risky, given the younger history and volatility it bears.
So, choosing a cryptocurrency investment or trading strategy should not be taken lightly. Before diving straight into a crypto exchange in Singapore, it is worth setting a few ground rules and understanding what type of investor you are. For example, how much will you set aside to invest in cryptocurrency? How much risk are you comfortable with? Will you be investing in the long-term, or do you have a short-term goal you want to reach? Having answers to these questions will help you decide the best cryptocurrency investment method to choose.
Below, we discuss four common cryptocurrency investing strategies for beginner and novice investors today.
1. Dollar-cost averaging (DCA)
Every investor knows the principle of ‘buy low, sell high’, but how low is low enough, and how high is high enough? Rather than take that risk of buying at the wrong time, dollar-cost averaging is a strategy that evens out the risk by buying a cryptocurrency at regular intervals over time.
For example, if you put $1,000 every month over ten months into a cryptocurrency versus putting $10,000 at once, you will most likely get a better price if you use the dollar-cost averaging method. Performing your trades with a cryptocurrency exchange platform will allow you to set this up, so it is done for you automatically.
2. Moving average crossovers
Here’s a slightly more advanced strategy for those who are willing to study the graphs. The moving average of a cryptocurrency’s value is an averaged-out trendline, essentially smoothening out the random, small fluctuations to give a big-picture view of the trend over time.
This general trendline can be extrapolated to give an expected price of the asset at any time – but if the actual value deviates above or below this trendline, it is an indicator that the direction is possibly about to change. This point is called a ‘crossover’.
The crossover method involves basing your buying or selling decisions based on these crossover points. Another cross that some traders look out for is the intersection between a short-term moving average and a long-term moving average.
3. Growth investing
Growth investing sounds very simple, but the difficulty lies in identifying the right crypto projects to choose from. It is basically investing in worthy cryptocurrency projects that have the potential for massive growth. For growth to occur, most investors taking this approach will look for projects in their early stages.
While there can be huge returns for this method of investing, it takes patience for the rewards to come in. During the growth phase, there will also be a lot of volatility in the crypto market. Investors who take this approach are usually in it for the long run. To avoid making the wrong choices, in-depth research is especially crucial here.
4. Value investing
Another long-term investing method is value investing. You can think of value investors like an antique collector scouring the bargain stores for something of value. Their main aim is to identify items that are valuable but underpriced.
Similarly, value investors pick out cryptocurrencies that they believe are undervalued and invest in them while the price is low. They then hope that, over time, as the market realises the value of that product, the price will increase, and they can make a profit. Like growth investing, value investing is a long-term method that requires a keen eye and thorough research.
There are many more cryptocurrency strategies to learn and choose from, but not all are suitable for beginners or casual traders. However, you can still make a profit if you are patient and play your cards right.
Want to get started with cryptocurrency trading? Make Coinut your preferred cryptocurrency exchange in Singapore to try out some of these investment techniques! Trusted by over 1 million users across the world, we place a huge emphasis on providing low fees as well as speedy and secure cryptocurrency trading. Stay up to date with Litecoin prices in Singapore, or make a trade in Bitcoin on our platform today!
RISK DISCLOSURE: ⚠️
Digital payment token investments, such as cryptocurrencies, are not guaranteed by service providers or cryptocurrency exchanges and the government. It is crucial to exercise caution in investing, including the awareness that a part or all of the capital may be lost and may not be recovered especially in cases of high price volatility or down market, bankruptcy, seizures and other factors. Hence, the user’s risk tolerance, investment appetite or capacity for loss should be set firstly and they should observe safe and knowledgeable investment practices accordingly. For more information, please visit MAS' website.
IMPORTANT NOTE: 📢
Coinut.com is a financial entity regulated as a Money Services Business in Canada and an exempt entity under the Payment Services Act in Singapore. Please be reminded that cryptocurrency trading is highly risky and is not suitable for the general public. For more information please refer to Risk Warnings and Risk Statements.