How investors choose which coins to trade
There are some important matters to be taken into consideration that will help to make the proper decision on which coins to trade.
Surprisingly or not, cryptocurrencies have become one of the most influential tools to gain profits in the financial market. Even though there were a lot of rumors and skepticism towards it, time has shown its advantages and how it can be used for our own good. We can also say that it reached its popularity peak during the Covid-19 pandemic, as a lot of people had enough time to become aware of the new industries, and discussions regarding them were very active. Secondly, many people lost their jobs during the global economic crisis due to the coronavirus and they started finding a new source of income that would help them to generate their profits.
However, it is not that easy to start the process and the profits will come on their own, the trader should be aware of many aspects and first and foremost, which coin to start with, because it depends on what is your trading plan and expectations and what is the purpose. So when it comes to the decision to start the trading process, the most difficult question to answer is which coin to start with.
The first thing to do in this regard is to search for the market capitalization of the coin, which means It’s the total value of the asset/company that’s being bought and sold in the market. You will learn a lot about how your favorite cryptocurrency can compete in the market by keeping an eye on its market capitalization. For example, once a cryptocurrency has a huge market capitalization, it would be more volatile and heavily exchanged, allowing you to stockpile it and exchange it more often and in greater quantities. The power to verify an asset’s market capitalization isn’t limited to cryptos. To find an appropriate currency pair for your needs in Forex, for example, you must conduct essentially the same market analysis. So, if you’re searching for your favorite cryptocurrency, start by looking at its market capitalization; it’ll help you learn a lot about the commodity. As of right now, Bitcoin, Ethereum, XRP, and Litecoin have the largest market capitalizations, but trading in one of these currencies may be a pretty sound choice.
Analyzing the statistics of its volatility
Going on, the next thing you can look at is the normal volatility rate of your cryptocurrency. The bulk of crypto coins are reasonably unpredictable, but there is a handful who go way overboard when it comes to market swings. There are two sides of the coin to think of now: On the one hand, high volatility will increase the odds of making greater gains even more quickly than in any other market. Everyone wants faster and larger profits. There are also many side aspects that affect the decision, which coins to start with, and for the beginner it is always a good idea to reach out to the brokerage company in order to have valid information regarding the following procedure. Sometimes finding a reliable company is not that easy and the trader should be careful while reading the reviews.
There are even some cases of Forex brokers offering bonuses which means that they are long-operated on the market and have the opportunity to offer the clients such additional bonuses. This sometimes works as a good marketing tool, but this should not be the main factor for entering the market. There are many other important matters to be taken into consideration and free bonuses come after that.
But it just comes down to juggling these two sides of the coin and selecting a cryptocurrency that meets the requirements. You can exchange Okschain or every other risky cryptocurrency if you can tolerate the wild price fluctuations and subsequent losses; but, if you want a more secure cryptocurrency, you can start looking at stablecoins.
The same degree of frantic uncertainty, on the other hand, will quickly wipe out your whole trading portfolio. In the blink of an eye, your chances could be improving, and in the next, the price could plummet well below previous levels, wiping out your budget.
To better understand what is a stablecoin, despite the fact that it is only a cryptocurrency that is normally embedded in the blockchain, it has distinct characteristics that eventually determine its price. A stablecoin is linked to a different commodity and its market characteristics rather than its own supply and demand characteristics. The USDT stablecoin, also known as Tether, is, for instance, tethered (pun intended) to the US dollar, with a USDT/USD exchange rate of exactly.
This ensures that investing in a stablecoin allows you to get the best of both worlds. It’s also a blockchain-based cryptocurrency with improved encryption and consistency, but it still has the price stability and predictability of a fiat currency. If the trader prioritizes things like consistency and predictability in your trading, a stablecoin could be a safer choice.
Which coins to trade: summing it up
Finally, to sum up, the trading process is not only about having strong hardware and software in your computer, but it’s also more about having special and thorough knowledge about the coins and their characteristics. In the preceding guide, it was explicitly mentioned that your crypto of choice should respond to the unique needs and desires of the trader. The exact viability of any trading commodity, not just a cryptocurrency, is calculated by the personal expertise of the trader and experience in the sector.
For example, if the trader is a risk-taker who likes to trade at a frenetic speed, unpredictable crypto is the way to go if you want to make as much money as possible. If he/she wants more flexibility in investing, a non-volatile cryptocurrency or a stablecoin might be a better option. The trader should make an advantage work for himself/herself, not the other way around, in any case.