Cryptocurrency is one of the best investments that you can make. Not only is the digital currency market on an uptrend, more and more people have begun to try out cryptocurrency trading to earn an income. So why shouldn’t you?
But wait, how profitable is cryptocurrency trading? If you will be investing your hard-earned money in this market, could you possibly make a profit immediately? These are important questions that need to be answered, especially for people who are just beginning to trade cryptocurrency.
Profitability Of The Cryptocurrency Market
The cryptocurrency market is said to be highly profitable even for beginners, as long as you apply the right techniques to your trading strategies. The market constantly fluctuates up and down, meaning the values of Bitcoin and altcoins can change each day.
Traders in this market take advantage of these price fluctuations or movements to be able to earn a profit. Beginners can usually earn a profit of 2% to 3%, while more experienced traders can earn up to 10%, 20%, or even more.
These percentages of profit are very attractive to investors and traders. If you play your cards right, investing a starting capital of $1,000 can earn you up to $100 in just one day.
However, cryptocurrency trading is NOT a get rich quick scheme, or a pyramid scheme. Trading, especially active or day trading, will require a lot of dedication to the craft. This means taking the time to study up on the market, learn the strategies, build up your starting capital, and muster the discipline to trade wisely.
The goal of a lot of cryptocurrency traders is to make a profit. Some traders want to expand their cryptocurrency portfolio, investing in different coins to slowly build their assets. Others prefer to make a profit much faster, employing day trading strategies to reach a certain target.
Whatever your goal is when trying out cryptocurrency trading, you must be ready for the learning that must be done so you can make a profit at the end of your investment. Cryptocurrency trading is certainly not a walk in the park, and it is not advised to enter blindly and just hope that your trades will earn a profit.
But with the use of solid strategies, and the discipline to execute these strategies correctly, it is possible to earn a profit ranging anywhere from 2% to 10% after just a few months of trading.
How to Earn Profits
The amount of profit you will make is dependent on the amount of money that you put in. Although investing in and trading cryptocurrency is a risk due to the volatile market, it will be beneficial for you in the long run, as the market is continuing to grow.
This market growth, accompanied by the fact that more digital platforms and businesses are beginning to adopt cryptocurrencies, can lead to a sizable profit after a few years.
Choosing a Coin to Invest In
Always be wise in choosing where to put your money. Yes, the cryptocurrency market is on the rise, but not all coins will make the cut. You can opt to invest in more stable coins such as Bitcoin, Litecoin, XRP, Ethereum, and so on. These coins have been in the market for a longer time and have a higher market capitalization compared to other coins.
Diversify your Crypto Asset Portfolio
Another way that will help you earn a profit when cryptocurrency trading is to diversify your portfolio. Yes, it is wise to invest in a more stable coin that has one of the top market caps in 2020. Do you want to know what is wiser? Investing in two or three more!
The more coins you have, the greater the possibility of earning a profit. This will also help you realign your assets just in case a certain coin that you own suddenly suffers a slippage that may lead to a loss.
Buy and Hold Strategy
You can also earn a profit when you use the buy and hold strategy. This involves buying a coin and holding on to it for a long time. It is a passive strategy for people who are interested in cryptocurrency as a long-term investment. After a couple of years, you can then check the market and see if you are ready to sell.
After selling, you can keep the profits and use the remaining money to buy another coin. Some people who first invested in Bitcoin when it came out had employed this strategy and held on to their coins for almost 10 years. As a result, starting from a value of less than $1 in 2010, these investors and traders can sell their Bitcoin for almost $10,000 in 2020!
Day trading is one of the most well-known strategies in cryptocurrency trading. It involves opening and closing trades within 24 hours. A lot of people have gotten into day trading because of the opportunity to earn a higher profit when compared to passive trading.
Day traders experience a higher stress level than passive traders because there is added pressure to close trades within 24 hours. This also requires traders to constantly watch the market and observe technical indicators that will signal when the right time is to buy or sell a coin.
Additionally, day trading requires a lot of discipline. When a coin is on an uptrend, you can easily be tempted to wait for the price to keep on increasing before selling, so you can make a higher profit. However, if you keep on waiting and the price suddenly slips, you can suffer a loss.
Before beginning day trading, you need to understand how the market works and how to use technical indicators that will help you earn a profit. Discover more about cryptocurrency trading here!
How profitable is cryptocurrency trading? Trading these digital currencies can be very profitable, if you apply the right strategies that will help you meet your goal. Just remember to invest money in more stable coins with a higher market cap, and to limit the amount of your investment to a number that you are willing to lose.