Dogecoin (DOGE) is one of the popular altcoins and the first meme coins to exist. It’s a peer-to-peer cryptocurrency based on Litecoin (it even uses the same proof of work technology) and features Shiba Inu (a Japanese breed of dog) as its logo. Above all, it maintains a strong following in the crypto community. However, unlike Bitcoin, Dogecoin has no maximum supply: about 130 billion Dogecoins are in circulation, and 10,000 DOGE are mined every minute.

A brief history of Dogecoin as a Cryptocurrency

You might be wondering where Dogecoin came from. It was launched in December 2013 by two software developers, Jackson Palmer and Billy Marcus. Unlike other cryptocurrencies like Ethereum and Bitcoin, which were created to solve problems, Dogecoin was created to poke fun at Bitcoin.

In 2017, it’s when Dogecoin went mainstream when its value skyrocketed. Its market capitalization surpassed $1 billion for the first time. However, the following year it fell with the rest of the cryptocurrencies. During this period, its price was $0.0002, which was below a penny.

Later in 2021, Dogecoin gained an enormous following from Reddit’s WallStreetBets message board which helped propel its value. Notably, Tesla CEO Elon Musk also impacted Dogecoin’s growth after stating Dogecoin was his favorite cryptocurrency.

As of April 23, 2023, Dogecoin ranked 8th in cryptocurrencies with a market cap of $13 billion.

Why Investing in Dogecoin is a good idea for Beginners

Dogecoin is a good investment for beginners, especially those starting with small capital. Here are three other reasons why Dogecoin is a good investment:

1. Dogecoin has a unique market position: DOGE positions itself as the leading meme coin, and even other meme coins are built around DOGE’s idea.

2. Dogecoin has a strong and vibrant communitybehind it: Dogecoin’s community is one of its most significant assets that drive its value in the market. Its community includes millions of enthusiasts and influential names.

3. Dogecoin has proven to have longevity: Despite Dogecoin’s price being extremely lower compared to other altcoins like Bitcoin and Ethereum, it has shown its ability to survive even during the worst economic times.

However, the issue of the pump and dump scheme is common with Dogecoin. It’s something you should be aware of while making your investment strategy.

What you should do Before Investing in Dogecoin

Once you decide to invest in Dogecoin or any other cryptocurrency, there are essential things you should do. They’ll save you from investing blindly since you’ll better understand the kind of investment you’ll be getting into.

1.      Research about Dogecoin

The first and the most fundamental thing you must do before investing in Dogecoin is to obtain much information as possible. While getting information from friends or acquaintances is good, research is a more effective and reliable approach.

You might consider starting this process by reading Dogecoin white paper: you’ll get specific detail about the project from who, what, and when to why of the project.

Market data is another critical point you shouldn’t miss in your research. For instance, looking at the Total Value Locked (TVL) will help determine the viability of a cryptocurrency in the blockchain network. Another aspect of research is Dogecoin’s market liquidity.

Lastly, research Dogecoin’s market cycles before investing. It helps determine the best time to enter the market and secure great returns.

2.      Understand the risks and volatility of cryptocurrencies

Risk and volatility are critical factors any serious investor or trader considers before engaging in any form of investment.

Why does volatility matter anyway? It’s what opportunities to make profits. Mind you, digital assets like cryptocurrencies can be highly volatile in certain market conditions, and that means you need to manage risk appropriately. However, risk management is often dependent on your level of risk tolerance.

So, is volatility good or bad? Volatility means different things to different people depending on the kind of investment you engage in. Risk-averse individuals often avoid high volatility in the market, while risk-takers are more disposed to participate in a highly volatile market.

3.      Set realistic investment goals

Being realistic with your investment goals is important, especially if you’re a beginner. But wait, what are realistic goals? They’re goals you can attain without over-risking. For instance, expecting a 50% ROI on a single day is unrealistic.

Realistic investment goals will help you develop a clear structure of how to invest in Dogecoin and become profitable in the long run.

4.      Create a budget for your investment

Experts and experienced traders from various markets often advise one to invest what they can afford to lose. For this reason, you’ll need to create a budget before getting into this kind of investment. It helps you put your finances in order.

For instance, you’ll not channel money meant for basic needs and emergencies into your investments. In short, budgeting helps control your finances in a better way.

What are the Best Ways to Invest in Dogecoin?

Still, wondering how you could invest in Dogecoin? There are two common ways to invest in Dogecoin, i.e., trading and buying and holding DOGE. Let’s get into more details.

A.  Invest in the spot market

What is a spot market in crypto? This a market where crypto assets like Dogecoin are instantaneously exchanged and settled: immediate buying and selling of crypto assets at real-time market prices. It also facilitates trading cryptocurrencies, where you can buy and hold them until their value rises. Usually, this kind of market is supported by crypto exchanges such as Binance and Coinbase.

For instance, when purchasing DOGE, you’ll use an exchange to make a market order at the best available spot price. This transaction is immediately placed as a bid on the order book. Then when there is a seller on the exchange with similar specifications as your order in the market, it’s automatically filled. Now that you own the DOGE, you may hold it till its value rises to sell at a profit. This kind of investment is based on a buy, low, sell high principle.

Want to know how to buy Dogecoin? Check out this brief guide down here.

Step-by-step instructions on buying Dogecoin

Step 1: Open an account with a crypto exchange – as outlined above, there are various crypto exchanges you can choose to open an account with. You’ll also be required to verify your identification while signing up.

Step 2: Select a payment option and deposit– you need a payment method that will allow you to deposit money into your crypto exchange account. Often, most exchanges accept debit/credit cards, bank deposits, and third-party payment options like PayPal, etc.

Step 3: Place an order to buy Dogecoin – search for Dogecoin’s symbol (DOGE) on the crypto exchange. Once you have found it, specify how much you want to invest or the amount of Dogecoins you wish to buy. While finalizing the buying process, you should review the details of your purchase.

Step 4: Determine how you’ll store your Dogecoins – by default, your cryptocurrency is stored in the exchange’s wallet. However, depending on your security cautiousness, you may withdraw your Dogecoins and store them outside the exchange. Such options include cold and hot wallets.

B.     Invest in the CFD market

Another excellent way to invest in Dogecoin is by trading Dogecoin’s CFDs. What exactly is CFD trading? First, CFD stands for “contract for difference.” Now Dogecoin CFD allows you to speculate on the price movement of cryptocurrencies without owning Dogecoin. Therefore, you don’t have to deal with the technical process of buying, owning, and storing Dogecoin. Your goal is to capitalize on price movement; thus, you can take long or short positions in the market.

Usually, to trade Dogecoin CFD, you’ll need an account with a brokerage firm like VSTAR. Interestingly, in CFD trading, you’ve leverage trading that increases exposure to amplify your buying power in the market.

What are the advantages of Dogecoin CFD trading?

1. Margin trading– CFD trading allows you to open positions on margin, which offers an opportunity to make big profits from a relatively small amount of capital.

2. Take short and long positions– in the CFD market, you can take both short and long positions because you’re simply trading the difference in price and not tied to the underlying asset. It means you can take advantage of either market direction and make profits.

3. Better regulations and security– most brokerage firms offering access to this kind of market are regulated. Therefore, your funds and data as a client are protected.  

4. Trading is all around – in the crypto CFD market, you can trade the Dogecoin CFD 24/7 throughout the year.

5. Access to advanced technical instruments – most brokers offer advanced tools to help traders in trading, including technical analysis and risk management.

6. No wallet needed- in CFD trading, you don’t need to own or store Dogecoin; thus no worries about a crypto wallet.

What are the disadvantages of Dogecoin CFD trading?

1. Brokerage Fees/ commissions – you’re likely to be charged some fees (swap fees), especially if you hold positions from one day to the next. However, the fees vary from one broker to the other. Some brokers don’t charge it.

2. Volatility –the CFD market is quite volatile, which presents opportunities to benefit from. On the other side, it can lead to massive losses, particularly if you don’t manage your risk.

3. Leverage can also magnify losses –leveraging is an essential aspect of CFD trading because of its power to magnify profits. On the flip side, it can as well magnify your losses.

How to trade Dogecoin CFD: Step-by-step process

Step 1: Register for a CFD trading account with VSTAR as your broker – while registering, ensure you choose the option of a live account so that you can trade with real money. It entails filling in basic details and the KYC process. You might also consider a Demo account to understand better how the CFD market works.

Step 2: Make a deposit/ fund your account – once the broker approves your CFD account registration, you must deposit some money to start trading. Different brokers have different minimum deposit requirements.

Step 3: Set up your leverage – Ensure you set up appropriate leverage before taking your first trade. Similar to deposit requirements, the leverage offered by brokers differs. Some brokers offer a leverage of 1:30 to 1:100, and others can go as far as 1:500 or more.

Step 4: Search for Dogecoin’s CFD symbol and trade – your trading account is now ready for trading. Therefore, pick your position size and open a position instantly, according to your analyses. You can also set stop or limit orders, which are automatically activated once your preferred level is reached. For instance, you could trade DOGE/USD, DOGE/USDT, DOGE/BTC, etc.

Step 5: Monitor your open positions – It’s essential to monitor your positions to close partial profits (optional) or cut down your losses depending on the market conditions.

Step 6: Close trades – you can close positions manually or let the trades run till they hit your take profit or stop loss levels.

Crypto CFD trading vs. Spot trading: A quick comparison

Both crypto spot and CFD trading have benefits and drawbacks and often suit different investors. For instance, the crypto spot tends to work best for individuals that want to hold Dogecoin for the long term and often don’t want or don’t understand leverage trading. Conversely, CFD trading suits traders that understand margin trading, can easily identify trading opportunities in a volatile market, and only intends to hold trades for a short period.

Trade CFDs with VSTAR

Want to start your journey to cryptocurrency CFD trading? VSTAR is the ideal brokerage firm for trading various crypto CFDs regardless of your experience. First, beginners access a free demo trading account to help them practice and test their trading strategy. In addition, they access resources that have helpful information to guide them through their trading journey.

Secondly, VSTAR offers low to zero trade commissions and protection on a negative balance. The best part is that VSTAR is a regulated firm; thus, your capital is protected.

Above all, VSTAR provides different deposit and withdrawal options to make your trading experience seamless.

Monitoring Dogecoin Investment

As an investor, you must often monitor and track Dogecoin’s value. It helps you better understand market movements. It could also help you identify more investment opportunities when its price is at certain levels. Above all, when monitoring and tracking are done right, it helps keep your greed and fear in check.

It can be achieved with the help of setting notifications for specific price movements. Alternatively, you could use crypto portfolio trackers.

You must also understand the factors that influence the value of a Dogecoin. These factors include supply & demand, utility, government regulation, hype & fear, and economic conditions (interest rates, inflations, etc.)

For instance, sometime in 2019, Elon Musk was partially responsible for hyping Dogecoin, and it saw a massive increase in its value. In 2022, it was a different scenario when the entire crypto market was bearish. There was a massive sell-off of cryptocurrencies triggered by fear. Lastly, in challenging economic times, people are more likely to invest in cryptocurrencies like Dogecoin to hedge against inflation.

Investing in Dogecoin: What is the Bottom Line?

As outlined above, it’s vital to research Dogecoin before engaging in any investment. Ensure you have an understanding of the fundamentals of investing in this particular cryptocurrency. Consequently, you’ll at least know what works and what doesn’t work in the market. Therefore, you can quickly strategize on the specific investment types that suit you and how to mitigate risk.

More importantly, you should set clear and attainable goals as part of your investment goals. It helps you avoid being over-ambitious, which could lead to over risking.

Like most investments, investing in Dogecoin sets you on a path of great financial benefits if done properly. On the other hand, there are also risks. Therefore, your investment strategy ought to outline a way to manage that risk in case things in the market don’t turn out as you anticipated.

Lastly, despite the recent crypto fall, Dogecoin still has great potential in the crypto market. It is still among the top-rated cryptocurrencies in terms of market capitalization. As of April 2023, experts are still optimistic that Dogecoin’s price can reach about $0.13 to $0.16 this year. It could offer investors approximately 40% ROI based on its current price.

*Disclaimer: The content of this article is for learning purposes only and does not represent the official position of VSTAR, nor can it be used as investment advice.