An NFT or non-fungible token is a digital asset that represents physical items like videos, art, or music. You can buy and sell them online and they are usually encoded with the same software as cryptocurrency. They have been in existence since 2014 but gained massive popularity lately.
If you are into artwork, an NFT is a great way to invest in them. They are also one-of-a-kind and limited, with unique identifying codes. With NFTs being the latest technological advancement in recent years, a lot of traders are interested in buying and selling them to earn a profit.
As a successful investor, you must have a strategy that helps you decide when to buy or sell. There are different strategies you can use to ensure that you are making the right move at the right time. In this article, we take a look at the best NFT trading strategies.
Best NFT trading strategies
- Look for NFTs within your price range at the floor price
Start looking for the lowest NFT advertised for sale at the floor price if you are a beginner investor. You simply need to sort the NFT items by price and keep in mind, not all inexpensive NFTs will assure a profit. Hence, look for a project that is based on your interests. When you buy an NFT at the floor price, you increase the chances of gains as the token becomes popular.
2. Look for Google Trends
Even if you are totally new to the NFT market, you can identify which NFTs are hot by looking at Google trends. Before you use Google to learn how to buy an NFT, use the search engine to look for the trends. It will help you with research and the search engine knows what’s working and what’s not. Google is the right resource that gives insights into the public’s perception of a keyword and the ratings will go from 0 to 100, a high rating means high interest. Compare Google trends with the trading volume for a better understanding.
3. Buy NFTs collectibles from different sellers
As a trader, you want to sell the NFT at a profit which means you need a community that is willing to support a project. The sellers for a certain NFT collection should influence your trading strategy. Look for NFTs that have a significant trading volume to ensure that they will sell at the right time.
4. Identify underpriced NFTs
Every investor is on the lookout for an underpriced NFT. Look for the ones that are selling for lower than they were purchased for and you will take home a profit. Whenever you see that the market for a project has improved, the value of your NFT will increase.
5. Buy the ceiling
It is a good idea to cash in on the NFTs that are high in demand and valuable as well. This means, with higher demand, the ceiling NFTs will be more expensive but there is a disadvantage of the strategy that only a few people will be able to afford them. If the project gains more support, you can make a profit and if it loses support, it could lead to massive losses.
Benefits of trading strategies
While NFT trading is a great way to invest in NFTs, there are many benefits of having a trading strategy. You must remember that NFT is an investment and there is always a certain risk element involved. Hence, to minimize the risks and maximize the chances of success, you must have a trading strategy. Besides that, it will:
- Help make the right decisions to buy and sell
- Allow you to make the most of the market opportunity
- Reduce risk
- Identify the right price to enter the market
- Guides you to approach deals
- Helps build a roadmap to understand your prior performance
The best time to implement these strategies?
Getting into an NFT at an early stage should come with careful consideration. If you have been following an NFT project for a while now and believe that it has the potential, it can help to get in early before the project gains popularity. There is no right time to implement a particular strategy, the decision comes down to your risk appetite and investment goals. Buy the ceiling might not be ideal for everyone because it needs a significant amount of investment, similarly, there is no guarantee that buy the floor will generate profits.
Hence, no matter the trading strategy you choose, it is important to research and follow the NFT project for a while before making a move. The right trading strategy for you will be the one that reduces risk and generates a return in the long term and an ideal time to implement it is whenever you are ready to enter the world of NFT investing.