Top 5 NFT Trading Strategies for Investors 2023
Any successful investor, either NFT or otherwise, must have a strategy. Knowing when to buy and sell is the most important aspect of NFT trading. There are a few different strategies that can be used in NFT trading, but the most common and easiest to follow is the buy low, sell high strategy.
You buy NFTs when the price is low and sell them when the price is high using this strategy, which is exactly what it sounds like. Although this tactic is straightforward, it can be challenging to implement. You must have a solid understanding of the NFT market and the NFTs you trade in order to buy low and sell high.
What is NFT?
An NFT is a digital asset that represents physical objects such as art, music, in-game items, and videos. They are bought and sold online, often with cryptocurrency, and they are generally encoded with the same underlying software as many cryptos.
Although they have been around since 2014, NFTs are gaining popularity now because they are becoming an increasingly popular way to buy and sell digital artwork. A staggering $174 million has been spent on NFTs since November 2017. NFTs are also typically one-of-a-kind, or at least one of a very limited edition, with unique identification codes.
Factors for evaluating NFT collectibles
- The purpose of the NFT
- The rarity of NFT
- Benefit of NFT
- Tokenomics of NFT
- Artist or creator of NFT
Top 5 NFT Trading Strategies for Investors 2023
Buy the floor
There is a good chance that NFTs will continue to exist for many more years as the market for them continues to grow in popularity. Because of this, new investors should think about buying NFTs at the floor price.
The cheapest price for a non-fungible token is the NFT market floor price. The lowest NFT listed for sale, which will be the floor price, can be found by sorting the NFT items from a particular collection by price. However, not all low-cost NFTs guarantee a profit. You should always choose an NFT project based on your interests because of this. The best thing to do is follow the project before it launches to ensure you get the best price for an NFT collectible. Buying it at the floor price is always a wise NFT trading strategy in case the token becomes popular.
Search for Google Trends
No matter how inexperienced you are in the NFT market, you can quickly see if a specific NFT market is still popular by checking the latest Google trend. This will be more like market research. But the reason is simple: it is what it is. And what better place to ask this question than the search engine that everyone uses to surf the web? A great free resource that provides excellent insight into public opinion on a topic or keyword is Google Trends. Word search ratings range from 0 to 100. A high rating suggests that NFT collectibles appeal to consumers. It also suggests that now is a good time to buy subtly.
Try to track and compare market trends with your project’s trading volume for better results. A project with many traders is more likely to be healthy than one with a small number of traders, so keeping track of this number is also crucial.
Buy NFT’s collectibles from a few sellers
Any NFT investment that makes a profit assumes that you will be able to sell it for more money than you paid for it. Naturally, it will be more challenging to sell an NFT without a significant community willing to support the project.
The number of sellers for a given NFT collection should always influence your trading strategies. You must have a significant enough trading volume to close a sale if you want to sell. The challenge of maintaining competitive prices grows as the number of sellers increases. This is so that more people than you will lower the prices.
Look for underpriced NFTs
Finding an underpriced NFT in a marketplace is the goal of any novice NFT investor. This approach works regardless of whether there is little interest in a particular NFT collection because it is independent of market trends. Finding NFTs that are currently selling for less than they were bought for is necessary for this NFT trading strategy to be profitable.
While market prices should be considered, they should not be your only consideration. You can assume that the NFT value has increased if the market for a project as a whole has improved.
Buy the roof
If you have money to invest in NFTs, which are valuable and in high demand, the cap or top is a great option. This means that if there is greater demand for the project, roof NFTs can become more expensive. These products are also well liked on the market, where customers can sort the products by price, from highest to lowest. They can be advertised as the best illustration of the project’s NFTs in various places.
The downside of this specific NFT trading strategy is that fewer people have enough money to buy NFT. It is difficult to find someone willing to sell at a reasonable price. If the project loses support, roofers could incur significant losses. This is a high risk/high reward game for those with significant bankrolls.
Read also: Explained: What is physical NFT? and how to sell physical items as NFTs
