One of the major reasons why many conventional, as well as amateur investors, hold a skeptical position about cryptocurrency trading is its volatility. Five to twenty percent dips and surges are unusually common and if you are not cautious, a single trade can wipe off a substantial amount of your wealth. It’s high risk and high reward trading which tempts many to join in only to lose a major portion of their investment.
Why is Crypto Trading So Challenging?
Prices of cryptocurrencies are tied to a multitude of variables including evolving regulations, market sentiment, political stability, demand versus supply dynamics and more. This makes it very difficult for people to actually predict the future price of digital currency with consistency and reliable accuracy. Apart from that, here’s what is also required for successful trading:
- Complete understanding of the crypto market, trading platform and its inner workings for informed decision making.
- Ability to analyze and read into different types of statistical charts and patterns to evaluate performance and deduce a trading strategy.
- Staying updated with the latest news and developments related to the cryptocurrency industry.
- Identifying narrow windows of opportunity to maximize return on investment.
- Executing trade orders strategically to maintain a high success rate.
All of these things have a steep learning curve which makes traders prone to mistakes, miscalculations, and poor judgment. This ultimately leads to financial losses and an extremely poor return on investment. That being said, there is a way to generate consistent returns on your investment through crypto trading.
How to Circumvent Volatility & Other Challenges
Despite all the challenges, millionaires and high net worth individuals seem to be earning more than decent returns through crypto trading. That’s because instead of trying to be an expert, they actually let the real experts take all the important decisions. They delegate the analytical and execution tasks to mutual funds, trust management companies, and dedicated crypto trading platforms where users can imitate or copy different styles of the most successful traders.
Most of these services and platforms hire trading experts from all over the globe who have in-depth understanding of blockchain, tokens, digital assets, and everything related to cryptocurrencies. The blend of human experience and technological innovation works in tandem to identify narrow window opportunities and capitalize on them through a smart bot. For instance, Catalyst is a platform that everyone can use for crypto trading.
Cryptocurrency trading firms like Catalyst deploy a multi-dimensional investment strategy for risk mitigation and management. They don’t only invest your funds in cryptocurrency markets but conventional sectors as well which include stocks, commodities, and forex markets. This helps in diversification of the portfolio as your risk is distributed across a wide range of different asset classes featuring varying volatility potential.
A poll conducted by CFA institute highlights that the majority of investors believe fixed income to be the least volatile while commodities are considered to be the most volatile of them all. On the other hand, foreign exchange and stocks sit in the middle. However, when it comes to volatility, cryptocurrencies can have a major downside with 20 to 40 percent value being wiped off within a few hours. With investment distributed across less volatility prone assets, those risks are substantially balanced out.
Catalyst – a Cryptocurrency Trading Platform
Catalyst is primarily an asset management and stock and commodities trading firm which was established in 1994. Being a reliable and experienced player in capital markets, it’s helped thousands of clients in terms of money management and short and long term investments. With 25 years of legacy which involves working with major enterprises as well as individual clients, Catalyst can be trusted for crypto trading.
In recent years, Catalyst has repositioned itself as a business-to-consumer entity with a special focus on cryptocurrency trading due to its rising popularity. The firm has more than 100 experienced and skillful traders and is always looking to hire more. The team of crypto traders at Catalyst firmly believes that, so far, only 5 percent of blockchain technology possibilities have been practically realized and 95 percent of its potential hasn’t be utilized yet. And with the pandemic of Covid-19, the growth of blockchain will only accelerate.
Due to a large pool of experienced traders, they have access to vast knowledge and talent which can be translated into highly successful trading strategies. Moreover, they have modern tools and more resources to invest in cryptocurrency trading research to yield better and consistent results as compared to an individual. This allows them to conduct in-depth studies of statistical data and contextual information to identify patterns for making considerably accurate predictions for the price movement of a wide range of digital and conventional assets.
Cryptocurrency trading can be a risky venture for individuals due to its volatile nature. That’s why it’s a good idea to rely on trustworthy trading firms that have long term experience in managing money and making big investment decisions.