As the world is becoming a global village with the advent of technology similarly, the global economy is also becoming a digital world where most day-to-day transactions are carried digitally using the internet as a tool.
Currencies are being traded online with a means called forex.
In the recent decade, the use of digital currencies is also come into being with the lead of bitcoin as the first cryptocurrency.
There can be many misapprehensions concerning investing in crypto and forex, so it’s important to fully understand the key principles behind trading.
It’s easy to get the wrong impression of the crypto and forex market, probably not helped by certain racy films and dramatic accounts from those who made a killing playing the markets with high stakes.
The reality is somewhat different, and it’s very much a case of taking the long view and keeping emotions in check to trade effectively.
Some aspects to consider before taking the plunge into trading:
5 Tips to become a successful crypto and forex trader
1. Determine who you are:
There’s a not-so-subtle difference between being a ‘trader’ and an ‘investor.’ If you’re a trader, your strategy is mainly to buy and sell frequently to make shorter-term profits, a steep learning curve for the beginner as well you are relying more on gut instinct.
As a beginner, taking an investment approach is likely safer. You build a portfolio steadily and take a longer-term view based on the strategy you’ve planned and your investment goals.
A coherent strategy keeps you on track and ensures you’re less likely to be seduced by headline market news.
For example, if you saw that the Bitcoin market had climbed several percentage points, you might impulsively decide to invest.
This may not be the best idea as the market could have peaked, which is the opposite of basic trading advice; buy when low markets.
3. Manage expectations:
Trading crypto and forex is not a get-rich-quick scheme.
You’ll have heard of traders who made spectacular gains, but the reasons these make news headlines are because they’re just that; news and, therefore, not an everyday occurrence.
Also, if you hear people talking glowingly of big gains they’ve made, then be aware that people mostly talk only of their gains, not necessarily their losses.
The old maxim’ slow and steady wins the race’ very much applies when building a crypto and forex investment portfolio.
4. Build a varied portfolio:
Diversifying with various investments such as crypto, currencies, and commodities widens your investment options.
Different types of investment products are worth considering.
Your attitude to risk and reward will reflect whether you, for example, are more inclined to invest in a Nasdaq such as a unit trust or a higher risk yet highly flexible CFD (Contracts for Difference) provided by forex market experts such as IG.
As part of your diversification strategy, it’s advisable to have a mix of different types of business within your crypto and forex portfolio, including steady household names and other stalwarts
A good base to start is perhaps investing in Nigeria’s top 20 companies as you’re likely to be familiar with them but do some basic market research first directly or by subscribing to newsletters and consulting other information sources.
By contrast, there’s no harm in having some stock in growing companies in fast-developing industries such as technology, but be aware some of these may make for a bumpy ride in the short term as they grow.
Newer companies are often very much investments for the long term and should not be abandoned at the first sign of a mild dip.
5. The long game:
The key takeaway is to remember that trading the markets is very much for the long term, and losses and gains are part and parcel of this investing.
Don’t panic when you experience a few losses, and don’t get carried away when some of your tradings show larger gains.
I hope this article helps you understand the opportunities in trading cryptocurrency and the forex market.
Feel free to ask using the comment box below if you have any questions.