Cryptocurrency: Investing vs Trading
Trading or investing in cryptocurrency is not for the faint-hearted. Being a relatively new market and having suffered a great deal of negative attention has provoked particularly volatile market movements, leading to sudden excessive peaks and harrowing dips.
In its infancy, cryptocurrency was doubted by the masses. However, traders and investors are now in no doubt of the real-world use of established cryptocurrencies, and the market is thriving with scalpers, day-traders and genuine investors alike looking to find the next big thing.
When using the CryptoParrot trading simulator, you will join a community of like-minded crypto enthusiasts looking to test their theories in risk-free conditions. When coming up with your own strategies and finding out which users to follow, it is essential to know whether they are traders or investors.
Investors will look to open positions or acquire cryptocurrencies with a mid to long-term goal. They will look to buy as the market price dips or at a price lower than the predicted outcome.
An ideal way to find which cryptocurrency to invest in is by reading through the whitepaper and discovering a real-world use for the coin. Locate their website and find out what stage of the product roadmap they are currently at and if any big names are backing it. Diving deeper into social media and crypto forums is another good way to uncover a buzz for a new coin, as well as reviewing if any fellow CryptoParrot members have mentioned your coin as the best cryptocurrency to invest in!
In the investment world, you will hear the term HODLing, or Holding on for Dear Life. A playful way to describe investing due to the nature of an asset’s timeline and the price fluctuations that can occur. If you are planning on investing, nerves of steel may be required, as well as plenty of patience!
Traders, on the other hand, will look to profit off of the short-term price movement of a cryptocurrency. Traders will review the short-term trends and use charting tools to better predict price movement and place buy or sell orders accordingly. Simply put, traders are interested in what is the best cryptocurrency to invest in now, not the long-term.
Those looking to trade will decide which cryptocurrency to buy based off of technical analysis (discussed in greater detail below), a technique that requires a solid cryptocurrency understanding. Thankfully, our CryptoParrot trading simulator gives you a safe space to attempt new methods and put your TA to the test in a risk-free live market setting.
Of course, many crypto enthusiasts will use both strategies to try and profit from the market, aiming to discover the best cryptocurrency to invest in long-term and the best crypto to buy at this moment.
How to invest in cryptocurrency – Key considerations to enhance your cryptocurrency investment experience.
Understanding the differences between investing and trading allows you to confirm the approach best suited to your needs, ambitions and time. For those of you who believe investing is the most suitable approach for your lifestyle, be sure to read below, as we offer our top five tips on how best to invest in cryptocurrency.
Research – How to find the best cryptocurrency to buy
Your first step to investment success is research. Below, we look to discuss in greater detail the three main ways to analyse cryptocurrencies – fundamental, sentimental and technical.
Fundamental analysis looks to confirm whether the current value of a coin reflects the price it should be. This is done by reviewing numerous factors, including the team behind the project, the whitepaper itself, the roadmap and, in particular, the current stage of the road map the company is at.
Our top tip is to find a coin you believe in and a coin that makes a difference to the way we live our day-to-day lives. The need for this particular coin should be profitable in itself, but having a genuine belief in the coin will make the waiting game that much easier and the returns that much sweeter.
Sentimental analysis relies on the demand of investors, paying particularly close attention to any big-name backers or promoters of a coin and how this can affect the long-term price movement. One of the best ways to start your sentimental analysis is to sign-up, follow and view relevant content across all social media platforms. We would also advise joining forums that discuss up-and-coming, as well as established cryptocurrencies and any other communication channels that are available to you.
Technical analysis focuses on historical market movement to discover trends. Generally used to assist day traders, this method can also be used alongside sentimental or fundamental analysis to better predict a coin’s long-term investment potential.
Where CryptoParrot comes in
When you become a member of CryptoParrot, you will become part of the community. Home to plenty of like-minded investors waiting to discuss opportunities, predictions and strategies to help find the next big thing.
Whether you are a beginner looking to understand trend lines and Elliott waves or a trading veteran looking to trial a new strategy, the CryptoParrot trading simulator offers its users a safe environment to test your latest predictions.
Practice makes Perfect – Put your methods to the test in a risk-free setting.
We appreciate investors do not wish to “miss the boat”; however, it is also important to understand that investing is a long-term approach to trading, and asset safety should always be your priority.
With this in mind, we at CryptoParrot have devised a trading simulator that mimics the real-world markets, allowing users to put their strategies and predictions to the test risk-free.
Theoretical paper trading is so 2017; here at CryptoParrot, you can access the latest price movements, breaking news stories, and earn rewards whilst following your latest crypto investment, all from one convenient hub.
Our demo trading platform
When you are signed up to CryptoParrot, we fill your account with $100,000, which you can instantly use and begin to place market, limit or stop orders, utilise leverage, stop losses and take advantage of profit stops. You can let others know about your trading history by sharing your details on your timeline, or you can go incognito and review other top-ranked investors’ market positions instead.
Once your first order has been executed, you can access all details relating to your crypto investment in the My Trades tab. This will show you exactly when your investment was placed, fees incurred, as well as current profit/loss. As your investment starts to increase, you may wish to amend your stop loss and profit points, just as you would when using real funds. This can easily be done by looking at the Action column and selecting the edit my trade icon (depicted by a pencil and paper).
We ensure your trading experience is simple to understand but supports the advanced features needed to make your transition to the real trading world as fluid and positive as possible.
Select your platform – Find yourself a simple and supportive broker
Once your tried and tested method has come to fruition, it is time to consider transferring that strategy across to the real trading world. Your next challenge will be selecting a platform that boasts plentiful features whilst still maintaining a simple trading experience much like the CryptoParrot simulator.
When selecting your chosen platform, it is imperative you do your own due diligence, paying particular focus on the security and legitimacy of your site. Often, licenses and regulating bodies will be highlighted at the bottom of your platform’s homepage, or details may be disclosed in their about me section.
Alongside checking your sites licensing and regulating body, we advise checking for SSL encryption and that your site uses reputable payment methods that suit your needs. If ever you get stuck, ensure your site is home to a dedicated FAQs page and plenty of channels to communicate with their customer service agents, preferably including a 24/7 live chat.
Understanding what crypto offerings your platform holds is also an essential check before signing up – you don’t want to go through the sign-up process, completing KYC, only to find your platform doesn’t support the latest coin you are looking to support!
With that in mind, it could be worth noting that all major exchanges will support the fiat purchase of well-known coins such as Bitcoin, Ethereum and Cardano, making these coins much easier to invest in. Lesser-known coins tend to feature on platforms that cater for crypto-to-crypto purchases, meaning you may have to sign up to two or three platforms in order to secure your lesser-known investment.
Once you have secured your cryptocurrency, it is then important to know where, why and how to store it.
Wallet Types – How best to store your cryptocurrency investment(s)
You may be fortunate enough to find a secure and reliable platform that boasts its own wallet – perfect for investing, storing and trading your acquired crypto at ease. However, for those of you selecting a platform that doesn’t hold this facility or those of you looking to keep your funds in your own separate wallet, read on as we dissect each wallet type offering the pros and cons for each.
A desktop or mobile wallet does exactly as it says on the tin. Described as a hot wallet due to the accessibility and direct link to the internet, these types of wallets are free and easy to set up, allowing for quick deposits and withdrawals ensuring you don’t miss out on those investment opportunities.
A desktop or mobile wallet will be best utilised by a day trader, although it can be used by an investor who is looking for quick, efficient movement in and out of the crypto market. Due to the potential threats from hackers, we would always advise using some form of anti-virus and ensure you do not store all of your funds in your desktop wallet.
Hardware wallets are designed with your asset security as the number one priority. Also referred to as cold storage, your hardware wallet is stored offline and makes for the perfect long-term storage device. Similar in appearance to a USB, hardware wallets are designed to protect your private keys from malware and viruses and are compatible with most Windows, Linux and Mac products.
In the world of blockchain, there are no refunds. If someone is able to access your account due to poor security, sharing of passwords, or leaving your device connected to the internet, unfortunately, there is little out there to see these funds returned. Be sensible and safe with who has access to your private keys, and when you are finished investing, remove your hardware wallet and store it in a secure spot.
The last consideration is the paper wallet, a wallet that is stored entirely offline. As you may expect, this is a printed piece of paper that contains your private and public keys. Public to send and receive funds, private to access your funds, deposit and withdraw. This could prove to be a popular choice for investors as your funds are kept offline, keeping hackers at bay. However, the potential to lose, damage or throw away your account details are far greater.
We would recommend laminating your paper wallet, storing it in a safe, a locked drawer or somewhere completely out of view.
Reflection – there is no such thing as a perfect investment
Our final piece of the investing puzzle is reflection. Reviewing your own wins and losses is a great way to expand your knowledge and better prepare yourself for the next investment opportunity.
It’s time to leave your ego at the door, and remember you don’t always need to lose to learn. No investment will run perfectly; that’s why there is such an interest in cryptocurrency day trading and is also why there is still plenty to learn from a winning investment.
Whilst using our CryptoParrot trading simulator, you can keep up to date with your investment’s performance, showcasing a running profit and loss. The same can be said for most trading platforms and wallets, allowing you to review when certain dips occurred, why your investment surpassed or didn’t reach predicted targets and how best to combat issues happening again.
All investments must come to an end, and when the time is right, you can sell your asset for fiat or invest crypto-to-crypto via dedicated platforms or wallets. However, before you go jumping from one coin to the next, be sure to go full circle and get researching, simulating and testing strategies on our trading simulator.
Conclusion – Enjoy the process and continue to sharpen your skill set
Investing is a risky business, particularly when considering the exciting and volatile world of cryptocurrency investments. However, when understood fully, the crypto investing world can be highly rewarding, offering plenty of opportunities to invest and support the latest coins that hold genuine real-world use.
Knowledge is power, and by using the CryptoParrot trading simulator, you are opening yourself up to a huge hub of resources, education and understanding. The community aspect of CryptoParrot is a great way to learn from your fellow investors, providing a dynamic and unique way of enhancing your knowledge by allowing you to follow, comment, like and share your best cryptocurrency strategies online.
We at CryptoParrot ensure users are better prepared for the world of cryptocurrency investing. Allowing you to invest within a live market, access $100,000 risk-free capital, boost your industry knowledge, attempt new strategies and cement yourself as an investment pro before taking your techniques to the main stage.
Investing in cryptocurrency FAQs
🚀 How do I know which cryptocurrencies will be profitable?
Understanding the difference between fundamental, sentimental and technical analysis is your first step to becoming profitable within the cryptocurrency investment world. Here at CryptoParrot, we offer users a risk-free platform that allows you to put all analysis types to the test and discover which approach works best for you.
❓ Where can I trade cryptocurrencies?
We at CryptoParrot have created a trading simulator that allows users to feel safe and confident enough to try new investment strategies without the risk of losing capital. Earn real rewards and industry knowledge by utilising our research material and showcasing your winning trades with fellow CryptoParrot investors.
💸 How do I store my cryptocurrency?
In the world of blockchain, there are no refunds. If someone is able to access your account due to sharing of passwords or leaving your device connected to the internet, there is little out there to see these funds returned. Ensure you know exactly who has access to your private keys, and when you are finished investing online, remove your wallet and store it in a secure spot.