Investors looking to make big profits from investing in stocks and cryptocurrency can be successful as long as they do it wisely.
For instance, investing in stocks and cryptocurrencies is time sensitive.
You have to make sure that the time is right. Besides investing at the right time, you will need exceptional investment strategies.
Only the most disciplined and skilled investors run away with the big profits. Although both stocks and cryptocurrencies have similar foundational investment principles, they are quite different. Here is how:
Stocks are shares issued by listed companies and sold to investors as equity. Usually, the stock market or exchange is responsible for the various activities of investing, buying, or selling stocks.
In most cases, investors buy stocks intending to hold them for the long-term. Long-term investment of assets tends to pay much bigger profits as compared to short-term investments.
And unlike cryptocurrencies, investors who buy stocks are often paid dividends for the shares they hold. At average, stocks generate about 7% ROI year on year.
Cryptocurrencies are digital currencies without any physical presentations. Cryptocurrencies operate under Blockchain technology, and anyone can buy, trade, or sell them. This makes the market very risky and highly volatile to invest in.
Unlike the stock market, cryptocurrencies trading lack regulation as they lie in decentralized non-governmental nature.
Anyone regardless of their nationality can trade in cryptocurrencies. In fact, trading in Bitcoin is quite fast. For instance, using the Bitcoin lightning Network, Bitcoin transactions are almost instant with deficient fees.
To invest in Bitcoin, you need to do thorough research about the crypto industry. Otherwise, you may invest and end up losing all your investments.
In fact, most investors who trade cryptos use them as a store of value to allow them to appreciate.
Here is a stock and crypto trading guide to use if you want to invest successfully.
Rule 1: Know the basics
If you are beginning, it’s highly likely that you are eager to trade but don’t rush it. It’s vital to educate yourself thoroughly before investing.
Research the basics of the cryptocurrency industry including the Blockchain technology to fully understand how Bitcoin works. The same applies to stocks.
You have to familiarize yourself with certain investment terms such as circulating versus total supply, trading exchanges, inflation, Bitcoin wallets, and public and private keys among others.
If you can’t answer any basics questions related to such terms, then it means you aren’t well prepared to trade. Learn the basics first or seek the help of an expert.
Rule 2: Buy and hold
The easiest and most profitable investment strategy for trading both stocks and cryptocurrency is to buy and hold. Like Bitcoin investment, it may require you to hold your funds for some time.
However, it’s necessary for you to set up a specific trading rule. Of course, you can’t hold your stocks or coins forever. For Bitcoin, it was a wise decision to sell it when it went up to $20,000.
Investors who didn’t sell at that price may have missed their opportunity while hoping that it would rise higher. So, set a target and stick by it.
Rule 3: The fundamental analysis strategy
Fundamental analysis is a method of evaluating an asset by examining related financial, economic, and other qualitative and quantitative factors in the attempt to measure its intrinsic value.
Warren Buffett, one of the richest men in the world claims that this strategy is one of the best investment tools in the stock market.
Besides analyzing the financial factors of a particular asset, this method also uses the price to calculate the price to earnings ratios, and trends among others.
With such information, the investor can compare different assets and cryptocurrencies including Bitcoin. Therefore, they can make an informed investment decision.
Rule 4: The dollar cost averaging strategy
This strategy requires you to buy a certain amount of stocks or cryptocurrencies like Bitcoin each week or month.
This reduces the chances of buying high which may lead to massive losses, especially in the cryptocurrency market.
Investing in small amounts over time will keep your investment accumulating as time goes by. And, when the prices begin to rise, it will attract more buyers which in return will increase volume.
On the other hand, investors who bought Bitcoin at $20,000 are still facing massive losses as it’s currently trading at approximately $5300.
According to experts, it’s now a great time to try and invest in Bitcoin before its value rises again.
Rule 5 :Don’t overtrade
Stock and cryptocurrency investments have made some investors millionaires, if not billionaires. That said, most people want to become millionaires within a fortnight which in most cases is not practical.
For instance, many beginners may want to make about 20 trades a day which is, of course, very dangerous. At the end of the day, most of such investors end up losing a lot from fees or bad trades.
Stock and cryptocurrency investment is very risky, and once you make a mistake, you may end up losing more while trying to recover.
So, unless you are for sure an expert, there aren’t 20 or more trading opportunities within a day. Trading too much only leads to poor decision making and further losses.
Rule 6 : Don’t invest your life saving
The rule number one of investing primarily in cryptocurrencies is that you should never invest more than you are willing to lose. This means that you can’t use a loan or your life savings to buy Bitcoin.
Although investing can make you rich, only place whatever amount of money you are ready to lose. This way, whether the prices of your assets or tokens keep on swinging up and down, you will remain calm.
Otherwise, if you place more than you are willing to lose, you may end up in a hospital bed.
For instance, investors who bought Bitcoin at $20,000 are already regretting their decision as Bitcoin value is far way less than what they purchased it at.
Rule 7: Diversify your portfolio
Diversifying your portfolio not only means holding several cryptocurrencies or stocks.
Given the high volatility of the cryptocurrency market, it could be a wise decision to invest in both stocks and bonds as well as cryptocurrencies.
On the other hand, if you choose to invest in either stocks or cryptocurrency, make sure you diversify further.For instance, if you are considering Bitcoin investing, invest in other coins too like Ethereum and Bitcoin Cash.
There is limitless room for opportunities in both the stock market and cryptocurrency investment. But, to succeed, you need to understand the market and yourself.
For instance, there some investors who like risky investments, others are conservative, while others prefer both high-risk and conservative trading.
Therefore, before investing in either Bitcoin or the stock market, be sure about your risk tolerance. It will dictate how successful you will be.
At the end of the day, it’s entirely you that decide the best route to take towards building an impressive investment portfolio. Talk to us today for more leads.