How to Make a Profit Trading Crypto: Risk Management and the “Millionaire Mindset”

There are as many ways to make a profit trading crypto as there are investors on the exchanges, and the route you pick will depend on the type of crypto trader you want to be. Are you happy with slow and steady returns or are you willing to expose your capital to greater risk in the hope of earning more significant profits?

Even if your profit goals are quite modest, adopting a millionaire mindset can be particularly advantageous. This involves focusing on your capital and taking the time to plan your finances. You won’t necessarily become a cryptocurrency millionaire, but this is how wealthy, successful investors function. The end result is improved decision making, a better return on investment and a greater chance of achieving the ultimate goal of financial independence.

Moreover, the millionaire mindset requires you to always be prepared. Every successful crypto investor understands that knowledge is power and that you should never invest your capital without being very familiar with the market, the technology and the company with which you are investing.

Profitable Trading Techniques

profitable trading techniques in crypto 2021

Now we’ve seen what it takes to enter a millionaire mindset, let’s now look at some of the more popular strategies that a crypto trader can implement in either a bear or bull market to maximize revenues. As part of our evaluation, we will look at the level of risk involved, the market requirements and the degree to which you can make a profit trading crypto with each strategy.

Leveraged Trading

With leveraged trading, also known as margin trading, the process involves borrowing capital to multiply your trading power to ten times or even as much as a hundred times the size of your original investment. While it means that you can enlarge the size of the position you are opening, you are also increasing your risk to the point where all your capital could end up being liquidated.

Short Trading

Short trading involves trading on the belief that the market price of an asset will fall. This type of investing attempts to make a profit trading crypto by going against the market cycle. For example, a crypto trader may be likely to implement this strategy when they believe a Bitcoin bear market is on the horizon.

It should be noted that when you buy the coin, your losses are limited to the amount you initially invested, but short trading holds the added risk that losses can be infinite.

DCA Trading

Dollar Cost Averaging (DCA) on the other hand is generally perceived to be a relatively low-risk long-term investment strategy. It entails trading on the belief that over an extended period, the price of the asset will rise. It requires patience and involves buying your digital asset on a recurring basis, at the same time each day, week, or month, irrespective of the short-term price, banking on a long-term uptrend.

Buying the Dip

With this strategy, the trader will make a profit trading crypto by buying low and then selling high. Buying the dip involves purchasing the cryptocurrency once the price has dropped, assuming that the decline will be followed by a rise in value.

It is used in a variety of scenarios, such as when an analysis of the company behind the token, its utility or other factors lend credibility to the idea that despite a dip, it will experience a rise in value in the future, or when there is a price drop for a digital asset, which over the long-term has shown itself to be on a clear upward trajectory.

Risks can be incurred when this technique is employed over an extended period in which there is a bear market and the fortunes of the asset do not improve.

Crypto Arbitrage

profitable crypto arbitrage

If you are wondering how to buy and sell cryptocurrency for profit, with the minimum of risk, but without compromising on returns, your best option is crypto arbitrage. This strategy involves taking advantage of price inefficiencies across crypto exchanges and allows you to avoid the dangers associated with crypto market volatility.

For a brief stretch, a cryptocurrency can be available at different prices at the same time, so a crypto arbitrage trader can buy the currency on the exchange where the price is lowest and then sell it on the exchange where the price is highest to make a profit on the spread before the temporary price discrepancy resolves itself.

For example, here at ArbiSmart, our EU licensed, fully automated crypto arbitrage platform is connected to 35 different exchanges, which it will scan on your behalf to find and exploit crypto arbitrage opportunities, for guaranteed annual passive profits ranging from 10.8% to 45%. The amount you can earn depends on the amount you deposit and by looking at our account levels you can know in advance exactly how much you can expect to make per month and per year. In addition, using our cryptocurrency profit calculator, you can work out how much you need to invest to reach your profit target, within a chosen time frame, or how much you will earn, in a given period, by depositing a specific amount.

Mitigating Your Risk

mitigating the risks in crypto arbitrage

A millionaire mindset requires careful planning and groundwork before you place your crypto capital in the hands of any company or use any crypto trading technology. You need to either have the requisite time and knowledge to enter the market independently and fully manage your own investments or utilize a reliable, trusted financial services provider to do so on your behalf. If you are using automated software, the logic of profitably trading crypto with a reputable, licensed and regulated company with a proven track record cannot be denied. The world of digital currency investing is the Wild West of finance and a company that offers external auditing, capital insurance coverage, strict data security protocols and AML/KYC procedures in line with tough EU regulatory standards is a necessity.

So, if you are wondering how to make a profit trading crypto, the answer is to adopt a millionaire mindset. While it may not make you an actual millionaire overnight, it will allow you to steadily grow your crypto portfolio smartly, safely and profitably.