What Is a Cryptocurrency Portfolio?
Cryptocurrency portfolio is a simple yet powerful tool that automates the management of your investments in cryptocurrencies. It enables you to track your cryptocurrency investments and monitor the performance of each coin, including real-time price updates. In addition, good software allows you to automate some of your trades.
There are thousands of cryptocurrencies available on the market and investing in them has been made easier with passive income methods, such as creating a portfolio of the top performing tokens to decrease risk and increase diversification.
There are now over 3,000 cryptocurrencies available on the market — and with so many to choose from, it can be hard to know where to begin with your own cryptocurrency portfolio. Bitcoin has long been the most popular of these digital currencies, in part due to the fact that it’s the oldest and best-known — but investors who want a diverse portfolio should look beyond Bitcoin as well.
5 Essential Tips for Managing Your Portfolio
The cryptocurrency market is volatile by nature and the risks are ever-present. You are exposed to a lot of risk if you want to invest in the cryptocurrency space. To help manage risk and mitigate losses, you need to understand how to build a balanced crypto portfolio. There’s a lot of complexity in the topic, but let’s get started.
Dollar-Cost Averaging
Dollar cost averaging helps you maximize your chances of lowering your average price and mitigating risk. By dividing up your investments instead of buying large sums all at once can protect you from market volatility. If you buy an asset in larger amounts at one time, you take on the risk that the price may drop before you can sell it. Buying in smaller amounts over a longer period of time is called dollar cost averaging. This way, you’re more likely to pay a consistent price for the investment.
Use a crypto portfolio management app
Track your crypto investments with ease with Simple Crypto Tracker! Simple Crypto Tracker is a great way to track all of your cryptocurrency investments in one place. With Simple Crypto Tracker, you can view your holdings, losses and profits — whether you’re simply curious about the value of your current portfolio or interested in tracking the performance of your individual holdings.
Be Rational
Don’t let the hype and excitement of cryptocurrency markets put your emotions into overdrive. While the concept of digital currency is new and cutting edge, this type of investment is still volatile. Thousands of investors have already been burned by buying in at the wrong time. Before investing in any new asset class, make sure to do your research and wait until there is a clear plan for success.
In trading, the fear of missing out (FOMO) is a major reason why people fail to make money through asset management. Fear often leads a person to buy an asset at high prices, only to see a large correction take hold and force that person out of the market with further losses.
In the world of cryptocurrency, success comes directly from having a solid investment strategy in place. A good technical analyst doesn’t just look at current trends — they also have a strong understanding of historical patterns, currency and commodity responses to similar situations, and the ability to study market patterns for extended periods of time. Applying all of that information to their trading strategies helps them make informed decisions that can put them in a position to grow their total portfolio balance.
Build a Strategic Exit Strategy
Exit strategy: Every successful plan must include a strategy for when it’s time to make a move. This is typically called a ‘stop-loss’ or an ‘exit strategy’, and it helps you prevent yourself from being in denial when the trade has turned against you, thereby helping you make the right decision and choosing profit over ego.
A good trader will define their exit plan for every single trade before they even enter it. This way, it’s clear at what price your position will be closed for a profit and at what price you will close out for a loss. Hence, sticking to your plan is crucial to ensure that you don’t run into any issues with over-trading or being unable to close out a position in which the stock has moved against you.
Diversifying Your Crypto Portfolio
A good portfolio management strategy includes investing in multiple asset classes at the same time. Diversification is an individual’s act of balancing risk by distributing investments. If one asset class experiences a loss, another asset may be doing well and thus “covering” for the loss.
As an investor, the first step is to identify strong cryptocurrencies with large market capitalizations which will likely see significant growth in the future. After thoroughly researching these assets, you can set aside a small portion of your portfolio to act as a high-yield savings account — essentially an account that yields a higher-than-average return on investment and one that you can use to withdraw funds if necessary.
Finally, consider investing in smaller projects with high growth potential.
Conclusion
If you are looking to create a portfolio, then you will need to understand how crypto assets perform. You can learn more about this topic by reading our crypto portfolio management blog post.
