Why must i schedule my Luno cryptocurrency

The cryptocurrency industry is such a great industry but that does not mean that it is risk free and mostly the risks of trading cryptocurrencies are mainly related to its volatility. As a cryptocurrency trader, you must come up with ways to minimize the risks that are associated with trading. One of the most useful ways of minimizing trade related risks is scheduling your cryptocurrency purchases.

Scheduling your cryptocurrency is a long-term strategy, where an investor regularly buys smaller amounts of an asset over a period of time, no matter the price. Scheduling can be an effective way to own crypto without the notoriously difficult work of timing the market or the risk of unwittingly using all of your funds to invest “a lump sum” at a peak. 

The key is choosing an amount that’s affordable and investing regularly, no matter the price of an asset. This has the potential to “average” out the cost of purchases over time and reduce the overall impact of a sudden drop in prices on any given purchase. And if prices do fall, investors can continue to buy, as scheduled, with the potential to earn returns as prices recover.

It is important for you to schedule your cryptocurrency purchases at regular intervals because by doing this, you mitigate risk and earn profits over time, eliminating the stress of trying to buy crypto at its highest or lowest price. This is an investment strategy more commonly known as ‘dollar-cost averaging’. Dollar-cost averaging has gained popularity in recent years, as more and more people make use of its simplicity and relative security.

Trading crypto

The cryptocurrency market sees significant price movements remain consistently. There are people who are not affected by the price changes that much because they will be holding crypto because of a belief that cryptocurrencies will one day be the world’s main medium of exchange. Other traders can actually make cryptocurrency a very attractive asset to trade for profit.

Trading crypto is by no means a perfect science. You can invest huge amounts of time and research trying to predict the best time to buy and sell to make a profit and still get it wrong. It can be extremely stressful too. If you’re not willing to spend the time to develop a strategy that works for you and research market movements, or you just generally have a low tolerance for risk, then there are easier ways to make a living.

To hold and to hodl

Hodling is when you buy a lump sum of cryptocurrency and store it securely for potential long-term growth. Hodling was a name coined by the misspelling of “hold”, made by a member on the Bitcoin Talks online forum in 2013, and has been commonly used since. Hodling is based on the principle that the best time to HODL is now, always, and forever. A true believer would always hold on to their tokens, even if markets crash or become extremely volatile. Hodling becomes an ideological belief about the long-term prospects of blockchain technology, cryptocurrencies, and the communities that have formed around them.

The hodling strategy requires less of your time than trading strategies which take a more short-term approach. It’s also proven effective for many when you consider Bitcoin’s meteoric rise in value since its inception.

Scheduling investments with dollar-cost averaging

While hodling doesn’t require any technical finesse, you can still get savvy with the way you do it. By scheduling routine purchases of cryptocurrency regardless of price, you reduce the impact of price movements, remove the stress of watching and waiting, and eliminate the emotional element from your decision making. This is also known as dollar-cost averaging.

The word ‘dollar’ in dollar-cost averaging is purely semantic, and can be replaced by any currency around the world. The thinking is that by investing small amounts in regular instalments over a long period of time, you hedge against major price movements and more easily avoid mistiming the market and buying at the highest price. Timing the market with 100% accuracy all the time is impossible. Dollar-cost averaging therefore reduces your losses when the market drops to help maximise your returns, and it has the added advantage of removing some of the biases from your decision-making. Once you set up dollar-cost averaging, the strategy will make the decisions for you.

To get an idea of dollar-cost averaging, you can use a nifty tool provided by dcaBTC, which helps you calculate how much you would have earned over a given period of time. For example, if you put away $10 every month for three years between 22 September 2019 to 22 September 2021, you’d have appreciated a $360 investment into $2026. That’s a 462% growth rate.

Sounds perfect, right? Not quite. There are those that believe dollar-cost averaging doesn’t give you the profits that can be gained from day trading or hodling. When the price is going up, those who invest earlier will get better results. This means dollar-cost averaging would have a dampening effect on gains in an uptrend. In this case, lump-sum investing may outperform dollar-cost averaging. Dollar-cost averaging also doesn’t entirely mitigate against all the risks and absolutely won’t guarantee a successful investment – other factors must be taken into account too. Rather, it’s simply the safest option. If you’ve got aspirations to be the next great trader, it’s probably not for you. If you’re after a more level-headed, measured approach to cryptocurrency investing, scheduling your cryptocurrency purchases is a great place to start.

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