Cryptocurrency was never a financially safe and secure investment and is popularly known for its complex nature. According to a study, about 80% of investors around the globe are liable to suffer a loss on crypto investments. It occurs when the market gives in to the pressure when the best crypto exchange in India collapses.
Therefore, investors should not put their money if they are not ready to take the risk of losing. Individuals planning to invest in crypto must gain adequate guidance. This blog features crucial strategies and tips to help you build a solid portfolio despite a massive loss.
Tried And Tested Strategies For Building a Successful Portfolio
A BIS study revealed that in October 2022, over 73% of users downloaded crypto applications when Bitcoin prices were soaring higher than $20,000. Provided that these users invested on the same day, they would have suffered a significant loss on their first investment. Hence, investors may experience unfulfilled losses eventually.
Market volatility makes predicting eventualities challenging. Countless factors, like geopolitical issues, project relevance, utility, etc., impact the cryptocurrency landscape. Nonetheless, investments form a crucial component of financial planning.
To successfully buy crypto in India to fulfill your investment goals, follow the following strategies:
1. Rupee Cost Averaging (RCA)
Discovering the ideal point of exit and entry in the cryptocurrency market can be challenging as market timing can be nearly impossible. An efficient method for crypto investment is RCA, or Rupee Cost Averaging, which compels investors to save money.
This strategy involves investing an exact amount into crypto at predefined intervals. It helps investors build a routine similar to investing in traditional investment forms, such as fixed plans or SIPs.
This regularity enables investors to steady their portfolios and regulate the market’s ups and downs. It helps customize and revise the previous strategy for financial planning.
2. Day Trading
Day trading is gaining immense popularity among cryptocurrency investors. This strategy involves investors paying attention to intricate market movements and tuning their actions to make faster returns. During this transient strategy, an investor can buy crypto in India and sell it in the same day’s trading session.
The intraday trading strategy aims to gain profits while the intraday prices fluctuate in any favorable cryptocurrency. Investors trust technical indicators to find the crypto exit and entry points to ensure a profitable trade.
You must pick a broker with the best qualities for successful intraday trading. Some of these include:
| Broker | Brokerage |
| Zerodha | 0.03% or ₹20 on every order, whichever is smaller |
| Groww | 0.05% or ₹20 on every executed order, whichever is smaller |
| Upstox | 0.05% or ₹20 for every purchase, whichever is less
|
| Angel One | ₹20 for every fulfilled order |
| Sharekhan | 0.03% brokerage on the market rate or at least one paisa for every share |
Note that you will be paying tax on crypto in India when trading with fiat currencies and exchanging crypto for crypto.
3. Buy And Hold
The opposite of day trading is the famous strategy of buying and holding that every crypto investor is familiar with. You can choose the best crypto exchange in India and hold your investments for an extended period.
All the investors who use this strategy as a crucial component of financial supervision continue focusing on crypto’s long-term payout and potential. This strategy has another name, “Hold on Dear Life,” or HODL, as it tests an investor’s patience, resilience, and belief.
4. Buy Low, Sell High
Another growing strategy that is catching the attention of many crypto investors is to buy low and sell high strategies. In simple language, you may purchase crypto at its lowest price range and hold the crypto assets or tokens until the price rises considerably. It will ensure you get the best profit.
However, this task is not as easy as it may seem. For executing this strategy, crypto investors depend on multiple algorithms and tools that help monitor and assess a cryptocurrency’s portfolio. The most common indicators include the weekly or monthly moving average for observing trends over a certain period.
5. Arbitrage
Instead of choosing the best crypto exchange in India, the arbitrage trading strategy involves crypto investors trading on several platforms. It involves buying a crypto from an exchange that offers lower prices compared to others. These traders can then sell their assets at a desirable time on any other exchange offering a higher price.
Best Strategies for Investing In Cryptocurrencies
The following are some of the popular strategies for investing in cryptocurrencies:
1. Unbalanced Portfolio
If you know details of which coin will perform well, you may use the unbalanced portfolio approach. It comprises allocating investments based on how well every currency will work. For instance, you can allocate 60% to Bitcoin, 25% to Monero, up to 10% to XRP, and only 5% to Dash.
You may allocate your additional investments based on the predefined percentages.
2. Balanced Portfolio
This strategy involves buying the same amount for every crypto you wish to invest in. For instance, if you plan to invest in Bitcoin, Monero, Dash, and XRP and have an investment budget of ₹1000 to buy crypto in India, you can distribute ₹250 to every currency.
Any additional investment will be divided equally between each currency. Wait for the price to create a “Baseball Cap” before purchasing every crypto.
3. Profit Reinvesting
Investors with an impressive crypto portfolio with considerable profit can begin branching out to other coins with better potential. As you may know, the digital currency landscape is considerably uncertain, and you will notice new players joining the market.
For instance, you purchased three coins of Ether for $50, and its current rate is $300. Then your total profit is $750. You can invest half of this profit in another potential currency like Bitcoin or Monero.
This strategy enables investors to capitalize on their gains to generate maximum returns and broaden their portfolios. You should seek for signs when the crypto prices become parabolic. Ensure you cash out some profits before the prices drop.
4. Range Trading
Many players depend on seasoned analysts to offer daily resistance levels and support. Resistance can be the peak the price may reach up to. Hence, a resistance level value will be higher than the existing cost.
Conversely, the support level determines a point that a crypto price should not drop any further. Thus, the support level is the crypto price below the present market price.
5. Scalping
It involves employing higher trading volumes to earn returns on investments. While there are risks, an intelligent trader will look for margin requirements and additional critical rules to prevent unfortunate trading experiences. As a scalper, you must assess the prior trends, crypto assets, and volume and pick an exit and entry point.
6. High-Frequency Trading (HFT)
Quant traders use HFT, or high-frequency trading, which is an algorithmic strategy for trading. You can develop trading bots and algorithms to move crypto assets in and out promptly. To build these bots, you must have a comprehensive knowledge of complicated market concepts and a strong understanding of computer science and mathematics. It is a better choice for advanced traders than novices.
7. Primary Research
You do not have to be a trading expert to perform early research on the value when you plan to buy crypto in India. Ensure you know the circulating information surrounding the crypto landscape.
Do not forget to measure your finances and establish an investment goal before picking a suitable volatile asset like crypto. Also, research on tax on crypto in India, as the government clarified their official stance concerning cryptocurrencies in the 2022 Budget.
Invest Only What You Can Afford
Cryptocurrencies are still nascent and highly volatile, losing and gaining substantial value percentage in a day. While the long-term approach shows optimistic results, the markets still surround exploitation and skepticism.
Therefore, you must only invest enough capital that you’re ready to lose in case the market faces a slump. Generally, you must limit your crypto investments to below 5% of the total portfolio. Ensure to save emergency money before dedicating funds to buying crypto.
You can learn this from the experience of Ethan Nguonly, a 22-year-old software engineer who started investing as a teenager. Currently, his portfolio stands at around $135K in brokerage and retirement accounts with two residences.
However, he suffered a significant loss of $80K by margin trading cryptocurrency. The losses encompass approximately $50K in unrealized capital gains and $30K from the primary stake.
Nguonly states that his serious mistake was investing excess money and money he could not access. While not buying on the margin may have lost him a good deal of cash, getting cash-strapped led to magnified losses.
Conclusion
The already stated strategies and tips have shown a considerable degree of effectiveness through many trials and tests and generated substantial profits. Most suggest that investors conduct extensive research before implementing an approach that fits their financial planning agenda.
Assess the risk of every strategy with detailed research before dedicating your time to one strategy. Moreover, these strategies demand immense patience, staying up to date, and keeping up a future perspective.