Investing in financial assets involves a fair share of strategic planning to ensure good returns. Diversification is the first rule to reduce the risk element in any form of trading. It is by investing in different financial assets and tracking them a portfolio is created. So, what exactly is a crypto portfolio, and how does it differ from an investment portfolio?
The answer is simple.
While your investment portfolio covers various financial assets, a crypto portfolio tracks your investments solely related to cryptocurrencies and crypto financial products. You can stay ahead of the volatile markets using a reliable cryptocurrency tracker attached to your portfolio.
A well-planned and balanced portfolio can help you make the most of your investments. Here are five simple steps that you can use to build your crypto portfolio:
Step 1: Assess your risk appetite.
The first step is to assess how much you are willing to invest in crypto, the returns from crypto assets that you expect, and the risk you are willing to take. Create a good balance by opting for high-risk investments and some medium and low-risk investments to counter the risk.
It helps to set up stop-loss orders. By setting up a price at which your asset will be automatically sold, you are setting a limit of loss that you will incur in the event of a price drop. However, consider the volatility of the asset before setting up a stop-loss order as sometimes, the value of an asset can increase just as rapidly as it falls.
Also, ensure to identify the tenure of your investment and plan your next steps accordingly. Maintaining a good tenure balance can also help you maintain liquidity.
Step 2: Do an extensive research.
Before you buy Ether (ETH) or buy Bitcoin (BTC) or any other crypto asset, doing a substantial amount of research will help you understand the basics of your potential investments. Having clarity on what you are investing in is an essential step in creating a profitable crypto portfolio. Doing thorough research on how a currency is trading or the ongoing trends will help you in the long run.
Moreover, learn to analyse the community that is the driving force behind the rise or fall of any cryptocurrency. Hundreds of currencies are being traded on cryptocurrency exchanges in India, like ZebPay. Assessing the discussion around assets could give you a fair idea of their performance and future potential.
Step 3: Diversify and invest.
Now that you are clear with your objectives, you will have a list of assets you can invest to achieve your financial goals. At this stage, it becomes imperative to diversify, such as by:
- Investing in crypto assets from different industries to balance your portfolio
- Countering your investment in small market cap assets with investments in mid-cap and large-cap assets to balance the volatility
- Considering an investment in stablecoins. This will help negate the volatility of crypto markets.
Step 4: Review your portfolio regularly.
Once you’ve built your preliminary crypto portfolio, you must track any changes in your assets that affect your objectives. Rebalance your portfolio regularly to help you stay on track with your financial goals.
Step 5: Watch out for new updates.
The final step is to watch out for new cryptocurrencies or crypto assets. You will also have to watch out for any upgrades of cryptocurrencies that could potentially impact your portfolio. Repeat the steps above and keep your crypto portfolio up to date.
The start of a successful journey with cryptocurrency investments starts with a safe cryptocurrency exchange and basic research. Use these steps to create your crypto portfolio today and for a hassle-free crypto experience, start trading with ZebPay.
