Any successful investor, whether 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 put into practice. You need to have a solid understanding of the NFT market and the NFTs you’re trading in order to successfully buy low and sell high.
What is NFT?
An NFT is a digital asset that represents physical items such as art, music, in-game items, and videos. They are bought and sold online, frequently with cryptocurrency, and they are generally encoded with the same underlying software as many cryptos.
Although they’ve been around since 2014, NFTs are gaining notoriety 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 the very least one of a very limited run, with unique identifying codes.
Factors for Evaluating NFT Collectibles
- Purpose of the NFT
- The rarity of the NFT
- Utility of the NFT
- Tokenomics of the NFT
- Artist or Creator of the 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 ought to think about buying NFTs at the floor price.
The least expensive price for a non-fungible token is the NFT market floor price. The lowest NFT listed for sale, which would be the floor price, can be found by sorting the NFT items from a particular collection by price. However, not all inexpensive NFTs assure a profit. You should always choose an NFT project based on your interests because of this. The best thing you could do is follow the project before it is launched to ensure you’ll get the best price for an NFT collectible. Purchasing it at the floor price is always a wise NFT trading strategy in case the token gains popularity.
Search for Google Trends
Regardless of how inexperienced you are in the NFT market, you can quickly tell if a specific NFT market is still hot by checking the most recent Google trend. This will resemble marketing research more. But the reason for that is simple: that’s what it is. And what better place to ask this question than the search engine that everyone uses to browse the web? A great free resource that provides excellent insights into the general public’s perception of a topic or keyword is Google Trends. Ratings for word searches range from 0 to 100. A high rating suggests that NFT collectibles are appealing to consumers. It also suggests that now is a good time to buy subtly.
Try to track and compare market trends with the project’s trading volume for better outcomes. A project with many traders is more likely to be healthy than one with a small number of traders, so it is also crucial to keep track of this number.
Purchase NFTs collectibles from a few sellers
Any NFT investment that yields 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 sizable community that is willing to support the project.
The number of sellers for a given NFT collection should always influence your trading strategies. You need to 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 rises. This is so that more people than you will lower their prices.
Look for underpriced NFTs
Finding an underpriced NFT in a marketplace is the goal of every 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 purchased for is necessary for this NFT trading strategy to be profitable.
Although market prices should be taken into account, 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 ceiling
If you have the cash to invest in NFTs, which are valuable and in high demand, the ceiling, or top, is a great option. This implies that if there is greater demand for the project, ceiling NFTs may become more expensive. These products are also well-liked in the marketplace, where customers can sort products by price, from highest to lowest. They might be advertised as the best illustration of the project’s NFTs in various locations.
The disadvantage of this specific NFT trading strategy is that fewer people have enough money to buy NFT. Finding someone willing to sell at a fair price is difficult as a result. If the project loses support, ceiling traders could incur significant losses. This is a play with a high risk/high reward ratio for those with sizable bankrolls.
Also Read: Explained: What is Physical NFT? and How to Sell Physical Items as NFT
Source: https://coingape.com/blog/top-5-nft-trading-strategies-for-investors-2023/