When you start to research the crypto market, it’s easy to get overwhelmed by the number of coins out there. You see this term all over the place, but what does it mean? ICO stands for Initial Coin Offering and refers to when a new coin is first sold to investors before its public release.
Basically, an ICO investor buys the coin at a reduced price in hopes that it will grow in value as it becomes more popular, like buying shares in a company.
Crypto is an umbrella term
There are many types of cryptocurrency out there, but it’s important not to confuse them. Bitcoin is one example and Ethereum is another, but there are hundreds of options, with different pros and cons.
Some might be better suited for trading, while others are better suited for long-term holding. Some use proof-of-work; others use proof-of-stake. It all depends on what you’re looking for in a coin.
Before deciding which crypto coin you want to trade or hold (or both!), it’s important that you get familiar with these categories
Study your target market
Since you’re taking steps towards a career in trading, chances are good that you want to trade cryptocurrency. But which currency should you start with? With over 700 available today, it can be hard to know where to begin.
Before jumping into any market head first, it’s important that you understand what makes each currency unique and how they differ from one another. By studying your target market and doing some research, you can make sure that your picks aren’t just random; they were chosen for a reason.
Beware of ICO scams
It’s probably not a surprise that many scam artists are attracted to cryptocurrencies, but it is surprising just how much of a problem it is. Some fraudulent parties have devised elaborate schemes designed to deceive investors and steal money from them.
Make sure you do your research before you start trading in Bitcoin or other cryptocurrencies so that you don’t lose all your hard-earned money. Here are some ways you can protect yourself from falling victim to an ICO scam.
Look at price histories
Before you buy any coin, it’s a good idea to have an understanding of its market history. Check out CoinMarketCap for price histories on all active coins and pick one with a strong track record.
When looking at a particular coin’s price history, be sure to pay attention to how much volatility there was and look for low spots that might be great points in which to take profit in case your trade doesn’t go as planned. The same goes for trading Bitcoin or any other cryptocurrency: knowing when and where you should buy and sell is vital when it comes down to turning a profit.
Identify Quality Coins
In traditional investing, diversification is a strategy that ensures that if one of your stocks declines in value, you’ll still have others performing well. Because cryptocurrencies are still very new and fragile, they don’t offer much opportunity for diversification.
Only invest money you can afford to lose on crypto. Don’t put all your eggs in one basket! Even if they succeed, it may not matter if you only own a small portion of them.
Don’t put all your eggs in one basket!
When first venturing into trading cryptocurrency, it can be tempting to put all your money into one coin. When that happens, you’re much more exposed if something goes wrong than if you’d spread your investment over several coins.
Each asset has its own idiosyncrasies and strengths and will react differently in a bull or bear market. Try being diversified don’t risk everything on one currency!
Last but not least — do your own research
Always do your own research before trading. There are so many resources out there that can help you learn what it takes to trade professionally.
Here at Trading Strategy Guides, we have live trade rooms, daily publications of trading education articles, and a very active community of traders who are ready to answer any question you may have.
In addition, get yourself a good crypto broker and make sure you’re comfortable with their platform, deposit/withdrawal options, and fees before you start trading.
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