It is common knowledge that cryptocurrency prices are fraught with volatility that could make or mar fortunes in the blink of an eye. This quality of the asset class means proper management techniques have to be employed to make profits from such investments.
One of the methods of proper management involves tracking the performance of your cryptocurrency portfolio. There are several methods of tracking cryptocurrency portfolios, including the manual method of tracking each individual asset or using an automated cryptocurrency tracker.
The industry is filled with several trackers with different features and functionality, such as an inbuilt coin price tracker and the ability to customize the platform to specification. This article will gloss over how investors can track their cryptocurrency portfolio, the features of a great portfolio tracker, and why it’s essential to track portfolios.
Reasons to Track your Cryptocurrency Portfolio
1. Checking your Trading Strategy
Crypto investors utilize a wide range of trading strategies to beat the market. However, an increase in diversification has made it difficult for investors to gauge the performance of their strategy but doing so will ensure investors abandon strategies that are not working and stick to the ones notching consistent profits.
Diversification of crypto holdings goes beyond arbitrarily purchasing random assets for your investment basket. Rather, it involves taking a bird’s eye view of your portfolio and carefully selecting the assets to ensure that your holdings are well-rounded.
Tracking your cryptocurrency portfolio will ensure that your portfolio is not filled with only high-risk investments or only low-risk investments but with a healthy combination of the two, as indicated in the Barbell Investment Approach.
Options To Track your Portfolio
Users interested in tracking their portfolios have the option of tracking them manually. This method is time-consuming and monotonous as it entails the individual tracking of each digital asset in the portfolio at regular intervals.
This method is even made difficult given crypto’s wild volatility that has the ability to send prices crashing to new lows within hours.
Another alternative for investors looking to track their cryptocurrency portfolio is through the use of a portfolio tracker. A cryptocurrency portfolio tracker is an app or a website that allows users to automatically keep pace with the changing prices of different digital currencies in their holdings.
These trackers work by integrating with exchanges and wallets, allowing for real-time monitoring. A general rule of thumb is that individuals with five assets in their holdings should use a portfolio tracker for the ease that it provides.
Factors to Consider When Choosing a Portfolio Tracker
Before settling for the choice of a portfolio tracker, there are certain fundamentals that users should consider. The prerequisites are enumerated below.
The safety of your digital assets and private data is of utmost concern, and any loopholes in the chain can be exploited by bad actors to pilfer the holdings of users. For crypto portfolio trackers. This requirement is even more critical when it comes to portfolio trackers because they connect directly to the exchange accounts of individuals
The ideal crypto portfolio tracker employs military-grade security procedures and embodies features such as two-factor authentication (2FA). Another vital security metric for portfolio managers is using aggregator services to store customer data as an added layer of security.
Another key factor to be considered before settling for a portfolio tracker is its compatibility with a wide range of cryptocurrency exchanges. Preferably, investors are advised to settle with platforms that support both the well-known and the lesser-known wallets or exchanges.
It will be a rookie mistake to assume that all portfolio trackers might work with every cryptocurrency and so traders are advised to carefully go over the offerings before pitching their tent with one. Traders should bear in mind that there are geographic restrictions to using cryptocurrency trading portfolios.
The whole point of using a portfolio tracker is to save time by allowing the software to collate and present data to you automatically. Therefore, a crypto portfolio tracker should tick the boxes of automation instead of making traders go through the hassle of checking the performance of their holdings multiple times in a day.
This requirement is also linked to the functionality of intuitively displaying the portfolio’s performance from a single dashboard. The ability to change the display currency of the values of your holdings to fiat currencies of your choice is an added advantage.
Examples of Leading Portfolio Trackers
CoinStats is one of the leading portfolio trackers that shines above the others on the list because of its expansive features. It ticks the boxes of automation, compatibility, and security and goes on to embody the features of a profit/loss calculator, an opportunity to earn yield, and a news aggregator for users to stay up to date. CoinStats supports over 400 exchanges and over 5,000 digital assets and 24/7 customer support.
CoinTracking is a portfolio tracker that makes simplicity its forte. The trackers offer users the basics with the addition of impressive charts and reports on asset performance.
CoinTracking stands above the rest thanks to its innovative crypto tax preparation that includes capital gain reports and closing position reports amongst others.
3. Coin Market Manager
Coin Market Manager prides itself as an “automated journaling and analytics tool for crypto traders. The portfolio tracker has an inbuilt algorithm that identifies the trading strengths and weaknesses of users to gain an edge in the markets.
Traders of digital assets can either track the performances of their assets using manual methods or choose to automate the process using cryptocurrency portfolio trackers. The latter is an ideal choice for traders with holdings of five or more virtual currencies.
Before settling on a cryptocurrency asset, users should ensure that the desired platform meets certain basic conditions. The security, compatibility, and automation feature should be double-checked before users rely on the platform for their tracking needs.