Short-Term Cryptocurrency Investment
Short-term investments are made over shorter time periods in the hope of making quick profits. So, just how short is a short-term investment?
Short-term investments can take seconds, minutes, days, or even a few months.
How Do Short-Term Investments Work?
Just like long-term investing, you need to have clear goals for your investment. You need to be asking yourself:
- What profit are you expecting to make from this investment? This will give you an idea of the price at which you should buy/sell the cryptocurrency.
- How much of a loss will you accept? This will help you control your losses if the price of cryptocurrency suddenly drops.
- Do you have time to study and follow the crypto market and the news?
- Can you make technical analyses of the crypto market? If not, then you should learn before investing.
- Will your short-term strategy give you higher returns than a long-term strategy?
You need to find out which is the best cryptocurrency to invest in 2021 for the short-term. Cryptocurrencies that have the following are good options for short-term investments:
- Low market cap;
- High trading volume — lots of people are buying and selling it every minute;
- Are currently trending on the news and on social media;
- Have an ICO or have just finished their ICO — try to get them at a low price.
While cryptocurrencies like Bitcoin and Ethereum can also be traded in the short-term, you should think about investing in the newer cryptocurrencies. Investors have made huge profits in the past with short-term investments – including some of the major, but newest cryptocurrency investments like NEO, Stellar, IOTA, and NEM.
The main advantage of short-term investments is that you can make a lot of money in a short amount of time — they have made a lot of people rich quickly. However, they still have their disadvantages.
So, what are they?
- They take up a lot of time and effort as you need to watch the market prices constantly;
- It is a riskier investment and can result in greater losses because of how much the price changes in a short time;
- It can be very stressful and emotional.
It’s difficult to say which is the better option of the two investment strategies. It all depends on your goals and experience in the cryptocurrency market.
If you really believe in a project, then I recommend that you invest in the long term. However, if a project is new and is generating a lot of attention, then short-term trading could be the better option.
