Cryptocurrency is a term that we’ve all heard, but there are only a few of us who understand. However, for millions of individuals, cryptocurrency makes perfect sense. It’s systematically mathematical certainty, defined rules, and resistance to being co-opted by specific interest groups make crypto one of the most apolitical and soundest financial tools ever developed.
Cryptocurrency might make sense for some. However, the world it settles in is a messy and complicated one defined by ambiguous and overlapping rules and illogical geo-restrictions that can, for example, create manageable microtransactions in one area and taxable even in another.
That’s the reason we have crypto accountants, to help us with the upside-down financial system that we settle, as well as to make sense of the upside-down state of Creating Shared Value (CSV) that we present to them annually which contains our digital asset activity.
If you don’t want to make costly mistakes as a newbie in the crypto investment industry, these are some of the things that you should follow to guide you as a new crypto entrepreneur.
Don’t Panic and Stay Calm
Cryptocurrency is extremely volatile, and it can be one of the reasons that you’re freaking out. It’s the same forces that let us see more than one thousand times returns on our investments, can also develop situations when you immediately see 90% of your money vanish. It works like a roller coaster. It goes up and down at maximum speeds.
Whenever you come across an article stating that this dip is the end for Bitcoin for the reason that some countries are improving their blockchain laws or something the same, remember that China already banned crypto three times or more. However, Bitcoin and other coins are still standing and existing.
Make Sure to Diversify
Avoid putting all your eggs in one basket. While the possibility to earn more is raised with the amount that you have invested in a coin, the possibility to lose more is also maximized. Another tactic to think about it is to view the cryptocurrency market as a whole. If you think that this is just the start, then more than likely, the whole market cap of cryptocurrencies will skyrocket.
What are the odds that the increase in market cap will be completely driven by one coin vs. being managed by several coins? The best method to safely achieve the overall growth of crypto is to diversify and reap the benefits of growth from several coins.
Didn’t you know that between January 2016 to January 2019, Verge has increased by 13,000x, Corgicoin has increased by 60,000x, and Bitcoin has skyrocketed by 34x. While you would have obtained dramatic gains from Bitcoin, diversifying into other coins could also land you potentially more significant gains.
Don’t Feel You’re Too Late About Cryptocurrency
Many people want to get into the world of cryptocurrency, but they feel they’re already “too late,” and they’ve been saying the same statement ever since Bitcoin hit $1. Lots of people are saying, “It’s too late to join,” as early as 2014, if you dig deeper into the BitcoinTalk forums.
Moreover, at some point, some people who are now in cryptocurrency had the same thought, until they watched it earns another 100% and realized that this magical digital money doesn’t always make sense.
Don’t Chase FOMO Trading
Fear of Missing Out or FOMO trading is one of the most common reasons why investors and traders lose their money. Everyone who joined cryptocurrency is not immune to FOMO. Every once in awhile, you find yourself inching closer and closer to that market buy when you see a coin blowing up before it hits one of your carefully thought out limit orders. It’s been a difficult impulse to resist.
You must approach cryptocurrency investments like you are also bargain hunting. Research about a coin’s history and you must zoom out and view it at its entire lifespan. Identify an excellent entry point and set your buys. You may have tried to purchase whatever coin you’re trying to load up on when the market is down.
Experts suggest you start with a very small investment. Before you start to invest, you have a lot of researching to do. And before you start studying, take a small amount of cash and invest it into crypto. It will encourage you to monitor the charts more frequently and get an idea of how volatile the industry is.
Always Learn From Your Mistakes
Don’t ever accept a complete loss. Make sure to assess the situation and try to find out why it happened. Take your experience as an evaluation for your next step, which will be better since you already have more ideas now. Everyone started as amateurs, and we have tried losing money throughout our entire experience in trading.
Keep in mind that no one wins in every single trade. Never let the failures discourage you because the truth is, they only make you a better trader if you wish to learn from them.
Do You Own Research and Don’t Listen to Twitter Traders
Some people on Twitter bring significant benefits to investors by providing investment strategy and reliable analysis. However, there are even more individuals on Twitter who want to drive more coins after they’ve purchased, and dump after you pump their bags.
Many of these accounts will tweet about requesting for coins that have burst out into an uptrend. A few days after that, they will post some results telling something that their followers have booked 500% Gain on BSCoin.
They will clear and repeat this procedure until they have convinced a lot of individuals who will now pump whatever coin they Tweet. Some traders utilize this strategy with responsibility, but others fall into the dark side.
Stay alert, and listen to others when you know they’re reliable sources and you can trust them, but you still need to do your research and come to your conclusion.
Don’t Neglect and Always Check the Ticker Symbol
Ticker symbols aren’t universal and may differ from exchange to exchange in rare cases. However, those cases may come back to attack you. For instance, Bitcoin Cash trades on other exchanges as BCC, and it trades on others as BCH. The ticker symbol for BitConnect is also BCC, which was recently dismissed as a Ponzi Scheme. If you purchase BCC with the idea that it was a Bitcoin Cash, then you might end up losing your investment.
Honestly, there are some coins now that people invest in entirely based on the chart. If you see enough positive price history and buy signals to back it up, then you can go for it.
If you look at coins for concise term trades (3 weeks or less), focusing on the technical analysis over fundamental analysis could bring you higher returns.
For long term investments, always make sure to do your own research. You can get your most significant percentage gains if you invest in long term bags. When you look at a coin that you consider as a long term hold, always think of the worst-case scenario. If the cryptocurrency were to burn to the ground tomorrow figuratively, would this coin be one of the few survivors?
It’s okay to be bull when it comes to crypto as a whole. However, always think that there’s a surprising amount of money in this market with a minimal amount of significant use cases that effectively executed.
Don’t Buy During An Uptrend
Cryptocurrency such as Bitcoin does “correcting” every few months when it tends to drop in price dramatically. Crypto tends to adapt itself for the next surge up.
Avoid Storing Your Cryptocurrency on An Exchange Wallet
Stocking crypto on an exchange wallet won’t provide you a way to your private key, and that solely beats the idea of a decentralized currency. In the past, there have been numerous times when trusting third parties has lead to losing an overwhelming amount of cryptocurrency.
You should download the official wallets and store your crypto holdings there.
Don’t Join Pump and Dump Organizations
Much like the numerous individuals on Twitter who pump their wallets by directing their followers to buy coins that they’ve already bought in, there is a telegram about “pump and dump” and discord organizations that will guarantee enormous gains. The dilemma with this strategy is that there’s always someone who will lose, and nine out of ten people, it’s you.
To increase the ranks and receive trading signals in advance, you must invite and attract more individuals to the group. The more traders you encourage, the sooner you obtain the trading signal.
If you join an organization that now has a considerable amount of members, it’s going to be challenging to persuade enough people to increase your “rank” enough to get trading signals before the crowd. If you join an organization that doesn’t have a considerable amount of members, and you persuade and invite as many traders as you can to join in on this literal pyramid scheme.
Don’t Invest or Trade Without a Strategy
Never invest without any plans and goals when it comes to cryptocurrency.
Your strategy should include the methods you will use to reach your goals. Establish your goals, and write them down by hand.