If you do not know much about cryptocurrency, it is really important to take things slowly and learn all that you can before you make any decision. You basically need to acknowledge the fact that you are a newbie.
Remember that most people out there do not actually know much about cryptos. In fact, they tend to think that everything is just gambling. This is definitely not the case.
You can make a lot of money with cryptocurrency. Actually, it is quite common to have a return of 100% or more on the investment made in just one week. However, it is also possible that you lose a lot of money, all in just days. That is why you want to be careful as you make crypto investments.
As a newbie in the cryptocurrency world there are so many things that you have to learn. Here are those that you should actually start with.
Learn About The Technology Before You Invest
This should always be the very step you take. You have to learn about the industry. This does not mean that you have to learn all the tech jargon that is used at the moment.
What you need to do is read articles, guides, posts on crypto forums and watch vlogs. Basically, no matter what source of information you choose, you need to get it and digest it. This allows you to quickly understand “what the deal is” and you can quickly figure out why the banks fear cryptocurrencies and blockchain as a whole.
Do not trust anyone with the money that you have. This is not what cryptocurrencies are about. There are numerous scammers that will try to take advantage of your limited knowledge. Only make an investment when you know enough about it to be fully confident that you will get returns.
Only Invest What You Can Lose
You will hear this a lot when it comes to investments. This includes all investments, not just crypto investments.
Crypto markets can be really volatile so you want to invest just the money that you can part ways with. The entire market can go up or down a lot in a short period of time. There are periods when everything is influenced by sentiment instead of what happens in the industry.
Crypto markets are natively risky. You have to exercise caution and never invest more than you can afford to lose.
By taking this recommendation seriously you also gain the advantage of not being affected by stress as you invest. When you are pressured, it is easy to make bad financial decisions.
Focus On Long-Term Gains
The situation in which you put money into Bitcoin or another cryptocurrency and you make a big profit fast is really rare. Cryptocurrency should never be seen as a way to get rich fast. Short-term gains are definitely possible but they will not be a huge part of your actual profit.
Unfortunately, most people involved in crypto markets do not really know what they put their money in. They just want the short-term gains. If this is you, it is a clear setup for disaster.
Every single investment decision you make should be done based on adequate patience and due diligence.
A very important thing to remember is that the technology behind cryptocurrencies is still growing and being developed. This is just the infancy stage of the technology. Short-term investments are just really risky choices that you make as you put money in a market that is highly volatile.
Always Diversify The Portfolio
There are basically 2 vital rules to respect when you make financial investments:
- Invest just what you can afford to lose – already highlighted above.
- Never put all your money in one investment.
Diversifying your investment is very important because it protects you from huge losses. Obviously, most people are interested in putting their money in BTC and ETH since these are the biggest and oldest cryptocurrencies. However, this is just a small part of the market.
Generally, most investors recommend that you put a large part of the investment budget in the two cryptocurrency coins mentioned and the rest should be invested in other altcoins or opportunities.
As you diversify the investment, be sure that you stay away from all “shitcoins”, which are practically digital coins that are just created to scam people. These are normally ponzi schemes or just pumps-and-dumps. Simply put, they are a guarantee you will lose your money.
Always Analyze Profits And Losses
You always have to keep your eyes on your investments. Profitability is all about buying low and selling high.
A guaranteed way to lose money is to just buy something or invest in something and then let it run without supervision or guidance. Do not make this fatal mistake.