In the previous lesson, we understood how to buy NFTs and the different platforms to purchase various kinds of NFTs.
However, while you perform NFT trades, it is essential to follow a few practices. It will ensure that you reap maximum benefits while keeping your funds and assets secure.
I’ve dabbled with NFTs and their marketplaces for quite some time now, and here are a few tips that can help you with trading NFTs.
1. Do A Thorough Research
This step is perhaps an obvious to-do before you start NFT trading, yet people either don’t do it thoroughly or don’t do it at all. One of the reasons for this is doing extensive research is a lengthy but straightforward process.
So here’s a checklist that you can follow to keep it quick and straightforward.
- Check which blockchains support NFTs and which one has the better set of marketplaces.
- Find out the marketplaces that cater to your niche. For instance, art, games, entertainment, books, sports, trading cards, etc.
- Know the gas fees each platform charges and what its payment model looks like. Try to choose the ones with a transparent and straightforward structure.
- Security is another vital factor. What security measures does the platform employ? Have there been hacks before? These are some of the questions you must ask.
2. Understand Market Trends
While creating NFT collections and selling them, it is crucial to understand what kind of NFTs are primarily in demand. After all, it wouldn’t help if you create something that only a few people are interested in. Alternatively, you can also use the platforms to develop your niche for the longer term.
3. Analyse The Risk To Reward Ratio
While investing in the minting of NFTs or trading them on marketplaces, analyze how much you can invest, how much you can lose. Also, calculate the ratio between the risks of investing to the rewards you can reap.
Never invest more than you can afford to lose because that strategy will inevitably lead you to lose your funds quite rapidly.
4. Double-Check All Info, Especially Copyrights
Before minting new NFTs or trading existing ones, double-check all the information such as copyrights, features, licenses, permissions. You should do this before entering the blockchain.
You might be able to alter some of them after as well, but those are just additional processes you’ll have to go through.
5. Learn To Plan A Business
NFTs are for content creators who can showcase their creativity and monetize it to a great extent. But instead of doing it as a one-off sale or disparate sales of items, learn how you can leverage the market to plan a business initiative around NFTs and your skill set since this is what will help you in the long run.
These are some of the practices you must follow while trading/minting NFTs. Perhaps you can now use this as a checklist when you start trading initially and slowly learn the nuances of the entire space.