Easy-to-follow NFT trading strategy for beginners

Although the first NFT projects were created back in 2014, this market is still barely known. The first NFT appeared on May 3, 2014, when a digital artist Kevin McCoy minted Quantum, a pixelated octagon filled with different shapes that pulsate in a hypnotic way. Could you imagine that this non-fungible art piece was sold for more than $1.4 million seven years later?

Please remember that the success of some projects doesn’t guarantee you will earn a fortune. However, you can try to increase your chances of successful investments by learning NFT trading strategies. 

Basic questions

Before you learn some strategies, you may want to sum up basic knowledge you have already had — or learn something new about non-fungible tokens. 

A non-fungible token is an asset stored on the blockchain and represented by pictures, cards, videos, audio, you name it. The asset has a unique identification code and metadata. Therefore, it’s called non-fungible, meaning it can’t be exchanged at equivalency. 

1. How do NFTs appear?

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To create a token, you need to select an item, decide on which blockchain you want to launch an NFT, and create a digital wallet. After, you need to decide on what marketplace you want to sell your NFT, read the rules of the platform, and upload the asset. 

2. How do you trade an NFT?

The key steps are:

  • Buy a cryptocurrency used on the platform. Most non-fungible tokens are ETH-based.
  • Connect your wallet to an NFT platform.
  • Fund your account on the platform.  
  • Buy an NFT. Usually, NFTs are traded in auctions. Therefore, you will need to set a bid price and wait for a seller to accept it. 

3. Why are NFTs so expensive?

You may consider NFTs a scam just because their prices are enormous. Can you imagine that Pak’s NFT “The Merge” was sold for $91.8 million? 

However, the reason is that every NFT asset is unique. You don’t ask why the Mona Lisa costs millions of dollars. Of course, the Mona Lisa can’t be compared to the monkeys of the Bored Ape Yacht Club collection. Still, you should understand that the world changes, and values change, too. 

It’s time to move to strategies. 

1# Buy at lows

If you are familiar with investing or trading, you know that the best way to make the most out of the position is to buy an asset at the lowest possible price. The idea is simple. However, NFTs can’t be analyzed the same as trading assets, including crypto and stocks. 

To determine a promising NFT with the lowest price, follow these steps:

  • Find an NFT project before it’s released and minted.
  • Read information about the project on its official website.
  • Check what other NFT enthusiasts say about this NFT. You can search for information on social networks and blogs. 
  • Be sure you like the NFT and believe it will skyrocket. Of course, its price won’t depend on your hopes. However, you should always like the asset you put your funds into. 

Analyze the information you get and make a decision about whether the current price is adequate and whether it has a chance to surge.  

2# Underpriced NFTs

It doesn’t matter what market you consider; you will always look for an underpriced asset that has a chance to surge in value later. 

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You need to find an NFT that is being sold cheaper than it was bought for. However, it’s vital to be sure that the low price isn’t because the NFT’s value was reviewed. You should be sure it’s a temporary fall. To confirm this point, check the news on the overall NFT market, search for the latest events related to the project, and check social networks about the NFT you want to buy. Evaluate the factors and conclude whether this NFT has a future. 

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3# Diversify

Even if you are 100% sure the NFT you bought will cost millions soon, you shouldn’t invest all your funds in one asset. It’s important to diversify your portfolio. You never know how the market will behave in the future. Therefore, you should hedge the risks. 

You can buy several NFTs from the same collection. Also, you can purchase NFTs from different projects, which is better for diversification. Remember that every investment should be analyzed beforehand. 

4# Find NFT collectibles with few sellers

If you plan to buy an NFT and sell it later, you are recommended to consider collectibles with few sellers. Although a limited supply increases an asset’s price, this strategy is focused on the following sale of the NFT. 

If you buy a collectible NFT, you should be prepared to compete with these sellers in the future. It’s easier to sell an NFT if there are not many sellers. A limited supply always positively affects an asset’s value.  

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When selling your NFT, you should analyze the market. There are two types of moods that sellers might be in. First, if you see that there is a gap between NFT prices, it may mean that sellers aren’t in a hurry to sell their assets. Therefore, if you offer a lower price, it’s more likely that they won’t react. However, if the prices are tight, it may be a signal that the sellers are trying to get rid of their assets. By offering a lower price, you may make them reduce their offers. As a result, you may have to lower your price even more. It will affect your potential return. That’s why it’s recommended to sell NFTs in a calm market when there is not a lot of supply.  

Best NFT trading strategies

These trading strategies have shown to be very successful when investing in NFTs:

1. Find the NFTs at the floor price

NFTs increase their value with time, which is why you may want to buy them at floor price (i.e., their starting price). Bear in mind that not every NFT has the potential to be profitable, so you will have to follow your interest. A good tip would be to follow the project before launching so that you may buy at the floor price.

2. Look for Google trends

The more popular a project is, the higher the chances that it will increase in value. For this reason, you may want to look into Google Trends. Word ratings usually are the most popular – and the higher the rating, the better it is. By looking into the proper keywords, you will quietly buy the right NFTs at the perfect moment.

3. Use the value strategy

The value strategy means that you are buying NFTs sold at a very high price. If you are just starting as an NFT trader, this option may not be a good one for you. Still, if you have the budget and you have been trading for a while, these NFTs may bring great profit in the short term.

4.   Buy ceiling

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If you have a decent budget, then you may want to buy ceiling (or top) NFTs. These assets are likely to be profitable because not only are they uncommon, but they are also in high demand. If they are in this category, it means that the project demand will increase – and therefore, the price of the NFT will go higher.

Why you should invest in NFT

NFTs proved to be one of the most lucrative markets in the past few years. Their prices skyrocketed in 2021, with various influencers and investors discussing their potential. With the right trading strategies, many of them boast that you can get a good income out of NFTs.

NFTs date back to 2012, but they only gained popularity in the last two years. Things began to move when Beeple earned a whopping $69 million for selling artwork. While many crypto enthusiasts are still wary of NFTs as they are a new concept, they show great promise for success.

Why you should have an NFT trading strategy

NFTs can bring a lot of profit, but only if you know what you are doing. A good NFT trading strategy will find the best methods to locate, buy and sell the asset. It will take the current market into account and help you make only the best investments. This way, you will not be putting your money into NFTs that are not likely to succeed.

This is what an NFT trading strategy does for you

There are several opportunities that NFT trading can bring your way. That being said, for you to be successful, you need a good strategy. Here are the advantages that a well-thought-of trading plan would offer:

·  Bring a great profit opportunity

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NFT is a rather unique concept, and many influencers swear by it, saying that they made great profits from purchasing or selling the tokens. That being said, each NFT has its own value – and to make an actual profit, you will have to invest for a fair amount of time. With the right investment strategy, an investor can reap a profit in both the short and long term.

·  Promote original creators

The NFT marketplace lets content creators tokenize their digital objects, removing the threat of copyright. As a result, both the content creator and the owner have their work protected.

There have been several isolated incidents where artists say their work has gotten tokenized, without them approving it. That being said, experts within the NFT marketplace believe this issue will get fixed soon enough. Not only does the marketplace need to check if the NFT already exists, but for it to be tokenized, the creators must sign an official agreement.

If your strategy is successful, NFTs would become even more valuable. This will promote original creators to make even more artwork, selling it as NFTs.

Basic NFT strategies for newbies

As a newbie, you must be very careful when formulating a trading strategy. Here are some easy ones for you to follow:

1. Diversify your portfolio

Even if you are certain that one NFT you purchased will eventually cost a million, you should still diversify your portfolio. Don’t put all of your money into just one asset. That’s a rookie move because you never know how the market will change.

2. Buy collectibles with few sellers

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If you are planning to sell the NFT later on, look for the pieces that have fewer sellers. A limited supply will increase the price of an asset and will increase the value of the NFT.

3. Check for underpriced NFTs

As a novice, you may want to look into underpriced NFTs. The market itself does not matter, but you do need to make sure it has a chance to surge later.

Summing up

Although the NFT market seems dangerous and unclear, you just need to spend some time reading about it and try to buy and sell some assets. As there are NFTs with a low price, you won’t risk a fortune when practicing. 

Disclaimer: No strategy can guarantee a 100% correct outcome of the trade.

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