While there are many different ways you can make money with NFTs, one of the most popular and profitable ways to generate profits is by trading. Essentially, the fundamentals of successful NFT trading is to buy a token for a low price, and sell (flip) it for a higher price. While it may sound simple, it’s actually quite difficult to do well.
To be a good trader, you must understand the various factors that influence price action, understand supply and demand, know how to read charts, know when to buy, know when to sell, and more. Fortunately, if you’re looking to make money by trading NFTs, you’ve come to the right place.
#1 Factors That Influence Price Action
There are many factors that determine the value of an NFT token. The main aspects you must look at with regards to an NFT project are, the art, the founding team, the roadmap and utility, the community, the tokenomics, the marketing, the mint price and the supply. Ultimately, a combination of these factors and a projects performance will influence the price of the NFT at any given time.
#2 Supply And Demand
Unlike crypto, NFTs are an illiquid asset, meaning that in order for you to sell an NFT token (create supply), there must be a buyer (demand). For this reason, you must understand the concept of supply and demand. Not only is it important for buying and selling, but it’s also crucial to understand how the supply and demand influences floor prices. Ultimately, a collection with a low supply (no one selling) and high demand (everyone wants to buy), the value of it will ‘skyrocket’.
#3 Chart Reading
Knowing how to read charts is an absolute must in NFT trading. Without charts, you will be buying blindly and this will likely push you towards being someone’s exit liquidity. Understanding charting, volume and data will help you identify resistances and supports, which essentially will inform you of when to buy and when to sell.
The goal of NFT trading is to buy low and sell high. Unfortunately, many newer traders fall into the trap of buying high and selling low. By taking the time to properly educate yourself, you will exponentially increase your chances of success in the NFT space.
For more tips on tradings NFTs, read our exclusive interview with one of the most experienced NFT traders in history.