Trading is one of the best ways to make money in today’s economy. To become a good trader, though, you’ll need some help along the way. Fortunately, this expert guide has gathered together five beginner-friendly trading tips that will help get you off to a good start. Before long, you’ll be a pro.
1. Use price indexes
Before investing in any asset, whether it’s stocks or cryptocurrency, you should check the price indexes first. This will allow you to understand the current market performance of whatever you’re deciding to invest in.
If you look at the Bitcoin current prices at OKX, you’ll be able to see Bitcoin’s market performance on a daily, weekly, monthly, and yearly basis. For example, if you switch to the “year” option, the graph illustrates how Bitcoin’s value has changed over the past 365 days.
Usually, price indexes are an excellent indicator of whether an asset—such as a cryptocurrency—is worth investing in. If the trajectory has been on an upward rise for several months (or even years), it’s a pretty safe bet. If an asset has been declining for a while, then this is often a bad sign—especially if the drop-off is quite severe.
2. Don’t always be tempted by low prices
Sometimes, stocks and cryptocurrencies can be available at very low prices, making them tempting for beginners. Often, people will think that they’re a good investment due to the fact that they’re going to increase in value (opening up a nice profit)—but this isn’t always the case.
If a high-value asset suddenly drops to a record-low price, be wary. Some people will jump at the opportunity to invest, whilst others will be conscious that the price may remain this way for a long time.
Pro tip: check out the user rates. If users are abandoning cryptocurrencies in mass numbers, this is a huge red flag.
3. Stay in your budget
Every trader has a budget—fact. Budgets help you to remain responsible without making crazy investments and trades. Your budget should take into account your income and available passive income.
For example, if you want to trade as a hobby, your budget might be around $500 as a starting point. Then, if you start to make money, you can boost it to $1000.
4. Diversify your portfolio
One of the best pieces of advice this guide can give you is to diversify your portfolio.
Diversifying your portfolio is a great way to protect your assets due to the fact you don’t have “all your eggs in one basket.”
For example, if you funnel lots of money into one specific cryptocurrency (and that crypto crashes beyond recovery), then this will put you into financial jeopardy; forcing you to sell your coins at an ultra-low price.
5. Try trading bots
Finally, if you’re someone with limited time, then you can use a trading bot to take care of some of the work for you.
Typically, trading bots won’t make you a millionaire (as they can be quite limited). However, they can monitor market activity for you and make trades based on that, which can then make you a decent profit in the long term.
Some trading bots are available for free, whilst others are expensive to buy.