Investment Strategy: Let’s Be Clear
How do investors make the decisions they want to invest in real estate or stocks? they have investment strategies. Do they start investing as soon as they think about it? My guess is that the answer to that question is – no!
Before you invest in anything, you need a clear understanding of what your investment goals are and how you will achieve them. You want to know how long you are prepared to keep your investments open, and how much profit you will be happy to make.
You need to be in the same mindset as cryptocurrency investing. Before you decide what the next cryptocurrency to invest in 2021, let’s discuss the two main types of investment strategies for cryptocurrencies.
Long-term Cryptocurrency Investments
Long-term investing is where you expect the cryptocurrency to perform better over a longer period of time. Simple! Typically, the minimum time for long-term investment is 6 months to 1 year. Although, some people plan to keep their investment for 5-10+ years. It is up to you how you choose to invest; You can make the full investment at once, or invest at different times.
Long Term Investment Strategy
Again, before investing any amount, you need to have a clear picture of what your investment goals are.
• Will you sell cryptocurrency after a certain amount of time or will you sell it when it reaches a certain price?
• Are you going to sell your investment soon or will you sell some of it at a different time?
• On what occasions would you sell your long-term investment in the short term? For example, if a new law is enacted that could affect the long-term price of your investment, you might consider selling early.
Next, you will have to do some research to decide which cryptocurrency is best for a long-term investment. I recommend that you check the following:
• Is the technology better than their competitors?
• Do they have a strong team of founders and developers?
• How good is their roadmap / plan?
• Do they solve real world problems?
If you truly believe in the cryptocurrency you are investing in, you must learn to hold on to your investment even when the price drops. If you ‘panic selling’, you could lose money and regret selling.
Reasons for Long-Term Investments
• Long term investing makes your life easier because you don’t have to keep an eye on the market all the time
• You believe that some cryptocurrencies will give you better returns in the long run
• You really believe in the future of cryptocurrency
Short-Term Cryptocurrency Investments
Short-term investments are made over a shorter period of time in the hope of making quick returns. So, how short is the short term investment?
Short-term investing can take seconds, minutes, days or even months.
How Do Short Term Investments Work?
Just like long-term investing, you need to have clear goals for your investment. You need to ask yourself:
• What returns do you expect from this investment? This will give you an idea of the price at which you should buy / sell cryptocurrency.
• How much loss will you accept? This will help you control your losses if the cryptocurrency price suddenly drops.
• Do you have time to learn and keep up with crypto markets and news?
• Can you make a technical analysis of the crypto market? If not, then you have to learn before investing.
• Will your short-term strategy give you a higher return than the long-term strategy?
You need to find out which cryptocurrency is best to invest in 2021 in the short term. Cryptocurrencies that have the following are great choices for short-term investments:
• Low market capitalization
• High trading volume – lots of people buy and sell it every minute
• Currently trending on news and social media
• Have an ICO or have just finished their ICO – try to get one cheap.
Although cryptocurrencies like Bitcoin and Ethereum can also be traded in the short term, you should think about investing in newer cryptocurrencies. Investors have made big profits in the past with short-term investments – including some of the major but most recent cryptocurrency investments such as NEO, Stellar, IOTA, and NEM.
The main advantage of short-term investing is that you can make a lot of money in a short period of time – it has made a lot of people rich fast. However, they still have their drawbacks.
Even though cryptocurrency can bring you huge profits, you have to be prepared for one more thing – losing money. Remember, your predictions are not always right! Nobody really knows what will happen to the price of cryptocurrencies, or any other investment.
Do you know what most of the expert cryptocurrency investors say? You should only invest money that is not afraid to lose. That’s good advice, so always remember!