Ask any newbie to the cryptocurrency space what his or her biggest challenge is, and you’ll almost certainly hear, I don’t know where to start!
In this beginner guide, we’ll help you answer that question by walking you through five quick steps to building your own crypto portfolio. You’ll also learn about some of the most important considerations when building your portfolio and how to track your performance over time with real-time updates from the market.
Step 1: Determine what you want to achieve
There are many different types of crypto portfolios, including ones which focus on short term and long term profits, growth and risk reduction, defensive funds and more. Before you can create your own, you’ll need to determine what kind of portfolio will work best for your investment goals. A good place to start is figuring out how much risk you’re willing to take; make sure that risk is accounted for when building your portfolio. For example, if you want short-term gains that could be worth thousands of dollars at any moment but only have money available to invest once every three months, then your portfolio should include high-risk investments that might not pay off right away but are easier for you to buy.
Most investors create portfolios with risk levels ranging from high (which has fast gains but also high losses) to low (which has slower gains and smaller losses). These are often referred to as aggressive, conservative, moderate and balanced portfolios. The level of risk will determine which type of crypto you buy. For example, if you want a balanced portfolio that includes investments for long-term profits and for safekeeping your money for when you need it (such as during an emergency), then you’ll need low-risk investments that pay off steadily over time as well as higher-risk investments with huge potential for growth, such as Bitcoin and Ethereum. This can also be done using index funds or ETFs instead of just relying on individual cryptocurrencies.
Your investment strategy might look something like that: Conservative portfolios – 50% safekeeping, 30% moderate risk and 20% high-risk Aggressive portfolios – 10% safekeeping, 70% moderate risk and 20% high risk. It’s all about your goals for your crypto. Remember, even if you have decided on which strategy is best for you, never invest more than you can afford to lose. Once you know what kind of portfolio will work best for your investment goals, it’s time to build it.
Step 2: Decide on your strategy and coins
The best way to approach building your crypto portfolio is by deciding on your strategy first and then choosing which coins fit into that strategy. If you’re only investing in Bitcoin, then it’s not too important what other cryptocurrencies you invest in. However, if you want diversification and exposure to other altcoins then read on. This post will give an overview of five different investment strategies and go into detail about how each strategy can be implemented using examples from recent charts. The figure below shows some examples of how technical analysis can be used for finding patterns with cryptocurrencies. These patterns include head-and-shoulders, double bottoms/tops (called an Adam & Eve pattern), triangle tops/bottoms, channels, pennants, and many others.
A popular strategy for cryptocurrency investors is trading top-ranked coins. The idea is that you buy into a coin when it dips, and then sell it as soon as it starts to recover. This is called day trading and with many altcoins available on exchanges such as Poloniex and Bittrex, you can easily set up an account by providing your email address. You can then start depositing money from your bank account or credit card and begin buying cryptocurrencies at any time of day. However, if you’re planning on investing for more than just a few days, make sure that you have enough funds available in case one of your trades goes wrong. If not, then be prepared to lose some cash in order to continue investing without interruption.
There are also many other strategies available. If you’re interested in investing long-term, then you could buy top coins and hold them until their value increases over time. Another option is to invest in an ICO (Initial Coin Offering), which happens when companies launch new cryptocurrencies for public sale, much like crowdfunding. However, many people have lost money during ICOs so it’s important that you do your research first and double-check everything before depositing any funds.
Step 3: Create an account on Binance
Once you’ve signed up for each of these exchanges, create an account on Binance. Binance is like a digital bank because it allows you to securely store cryptocurrency (digital currency). It’s also easy to use. So once you have an account, it’s time to get started. On your dashboard, click buy/sell and then deposit funds. You’ll be able to add USD through your bank account or credit card. Once that’s complete, navigate back and look for your BTC wallet address under accounts. Click that and copy/paste it into Coinmarketcap. Once that’s done you’re ready!
Binance supports all of your favourite cryptocurrencies including Litecoin, Ethereum, and Bitcoin. When you’re ready to purchase, simply select which currency you want. Then choose how much of that currency you’d like to buy, fill out your credit card information or bank account information, and click buy! You’ll see it show up on your dashboard once your order has been completed.
Step 4: Transfer your fiat into crypto
If you don’t own any crypto yet, you need to buy some so that you can diversify your portfolio. The best way is through Coinbase (for US customers), Gemini (for US customers) or GDAX (if you live outside of America). Once your exchange account is set up, then you can transfer your fiat currency over and buy your first coins.
- 1: Open an Exchange AccountStep
- 2: Transfer Fiat Into CryptoStep
- 3: Buy Bitcoin On An ExchangeStep
- 4: Select an AltcoinTo to create a well-balanced portfolio, it’s important to choose cryptocurrencies that have both long-term potential and short-term viability. According to our research team, here are the best altcoins for 2018, not counting Bitcoin or Ethereum.
There are hundreds of cryptocurrencies on sale today, but very few offer long-term viability. You should ignore these coins and focus on finding a balanced portfolio that includes only high-quality, long-term investment opportunities. On our list above, we have selected five altcoins that meet all three criteria:
- Solid Fundamentals,
- Quality Team, and
- Long-Term Viability.
The best way to build your portfolio is by combining some of these coins with Bitcoin or Ethereum. In fact, by doing so you will create an agile cryptocurrency portfolio that can adapt as needed while also growing in value over time.
Step 5: Buy your first altcoins
In order to buy your first altcoins, you’ll need to sign up for an account on an exchange. If you’re only getting started and want to build your portfolio quickly, we recommend using Binance for its low fees (0.1%) and variety of coins supported. Alternatively, you can use Coinbase if you already have cash on hand or just want it simple for now. If you are going all-in on crypto, be sure that you have cold storage – meaning do not leave any digital currency funds on exchanges (or any other online accounts) since they can be hacked and taken at any time! Transfer all coins off of your exchanges as soon as possible! HODLing also works.
Once you’ve transferred funds from your bank account, you will need to log into Binance (or Coinbase) and purchase some type of cryptocurrency. In order to do so, you’ll need two pieces of information: The exchange will ask for a small amount of crypto as collateral in case something goes wrong with your transaction. Make sure that it is 0.1% or less of your total cryptocurrency portfolio! After providing your info and confirming your account, you’ll be asked how much money you want to buy at the current market value (this can be set by yourself). Be sure not to overpay by setting a price per coin X or else you could lose money on transactions fees when using multiple coins!
For example, if you have $5,000 USD, and you want 2.5 BTC of bitcoin, and 2.5 ETH of Ethereum: 3 * 1000 = 3000 USD. 3000 / 3500 = 0.87 (~87%). If market cap is $350 million and price per coin is $3000: 350 000 000 / 3500 = 1063 (1063 coins). 87% of your total portfolio in one coin doesn’t seem right!
Are you confused about what cryptocurrencies you should own? Are you unsure about how to buy them? Do you want your money to be working for you, but are not sure where or how to invest it? Whether it’s that spare $100 or $100,000, here’s how every crypto investor can build their own portfolio and see results.
The first thing you need to do is make sure you have an account with at least one of these three exchanges – Coinbase, Binance and KuCoin. The reason for having multiple exchanges is that some coins are only listed on certain ones, so it’s important to have different options. Once you have your accounts set up, take some time and research what coins will be best for your portfolio and how much you want of each one. Also remember to transfer them into your exchange account as soon as possible, rather than holding them on another service like CoinBase because they won’t be safe there if there’s a hack or other attack.
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