The unexpected realm of cryptocurrency investment is widely known. The cryptocurrency market could be daunting, and the idea of investing your hard-earned money in trading could be terrible.
But unlike investing in traditional stocks and bonds, crypto trading has attracted younger crowds and a digital-savvy population. The growing popularity of this market and driving masses to support and make money is interesting to explore.
"Don't put all your eggs in one basket" holds true for cryptocurrency investment too. Financial investment is complex, and many lack the basic literacy of financial terms. A financial market lays the foundation on strict rules, experience, and an investment strategy.
There are proven rules and strategies making way for cryptocurrency investment to get a little easier.
If you are a newbie speeding up in this market and still diving through the ground rules and getting confused, understand this market is like that. People get confused. They get uncertain. They get overwhelmed.
But there's nothing to store your confidence to not partake in this gigantic pool of profits (and risks).
Understand that the market is volatile and wrong decisions are part of the journey.
Some rules stand by informed investment decisions and help you win.
But before we go ahead, let's decode
What Is Cryptocurrency Investment?
It allows for secure online payments for goods and services but maintains an online ledger with strong cryptography backed by blockchain technology to secure transactions. The system does not rely on any banks or legal bodies to operate. It is a peer-to-peer system that can run anywhere to transfer and receive payments.
Cryptocurrency Investment Rules
1. Look for the market cap
Financial advisors accept the fact that figuring the coin to invest in can get complex. But you can always have it easy by eyeing the market cap rather than the coin price. The market cap deciphers the value of the cryptocurrency and the project's actual value. The supply and demand, the coin's movement, reflect the profitability, not the actual price.
A sound investment strategy always lies with investing in coins with a considerate market cap to mitigate future risks.
The lowest price coin may tempt you for a while, but if it has not garnered enough money, it may not be worthy of holding on to market trust.
A coin with a lower market cap is safer to avoid unless you have exceptionally concrete reasons to invest in.
Other aspects on how cryptocurrency investment works are trade volume and liquidity. If the coin cannot be exchanged for fiat, it is no point to harbor unnecessary stress. Better off, let them go.
2. You Can Not Always Be Right
With any investment strategy, there is an underlying pressure of risks. How solid a risk management strategy you are building determines your investment practice.
And cryptocurrency is no exception. With glorious rewards come significant risks.
As a crypto investor, you can't always befriend with wins.
A good investment decision can not always be right, just like the poker game where the player can win or lose, which does not account for the player's credibility.
As an investor, there cannot be a foolproof investment strategy. But manage your risk the right way. Look upon long-term goals to maintain the authority in your zone.
3. Low Buys, High Selling
Buying low, selling high — this is one common-sense maxim for almost all kinds of investments. It is the ideal strategy to walk on, as prices spike when assets are cheap and sell later on.
For more reliable crypto markets like Bitcoin and Ethereum, "buy the dip" is sworn by investors. The ideal mechanism a cryptocurrency investment market witness is:
Stop, drop and roll.
Stop for the dip, drop your hats when the coin price is lowest and roll after selling it when the prices appreciate after a few months.
The appreciation and depreciation in the coin prices account for its volatile nature and make it an ideal digital asset for investing long term.
If your wise investor instinct believes cryptocurrency is the future, you can let go of trading and hold on to the coins for the foreseeable future.
4. Standalone, Don't Follow The Crowd
With this, two terms are coined - FOMO and FUD.
FOMO means fear of missing out; it is the impulsive buying of coins when you see the price of coins is instantly touching heights. When others are tagging along with massive profits, it naturally pushes you to jump into the bandwagon and taste it, too. But the con of investing through FOMO is traders invest when the coin prices rise, but it can abruptly plummet too. It reflects on the decision-making and may give rise to unnecessary anxiety.
Also, FUD is fear of uncertainty, and doubt. The crypto space is still not mature enough to ear the wave of new announcements. It is still tiny compared to gold and other stocks and will probably crash with negative statements.
No wonder, over the brief span, crypto has garnered pokey negative headlines from critics. With every no-good headline, crypto may experience a dip and bounce back in a short time.
5. Capital Management
The investment strategy to mitigate potential risk depends extensively on managing capital. Before every investment, think once, and analyze the means you can afford to invest in. Consider how much you can invest in projects?
Going along with the primary investment strategy — you can't put all your eggs in one basket.
This is on winning rule by crypto investment advisor moguls.
As a beginner, play safe and remember to diversify your portfolio.
The golden rule —"know what you can afford to lose."
- Manage your capital to understand
- Deciding at what price you will pull out?
- How much to invest in each coin?
6. Luck And investment
With every investment comes the burgeoning risk of losing. And luck is a term often circulated. Luck is a massive variable in any form of trading. For example, in poker, you can have the most significant cards in the beginning and end up losing, too.
The takeaway here is to dig into informed investment decisions. If a sound investment with a rigid strategy cannot give returns as expected, it could be luck. A rushed investment with no room for strategy and plans may join your hands with success, too, all because of chance.
Luck is a variable out of your hands and control, followed by rules. Anyone can get lucky, and even the ace players may use it, so seek advice who has played with strategy, not a fluke.
Assess your decisions for a long prospect in mind and keep learning to stay ahead of the curve.
7. Emotional Management While Trading
Emotion can take over even the mindful thinking power. Losing too often or winning steadily can play with the emotional cycle.
The crypto market is too volatile can take a toll on your emotional wellbeing and therefore stay calm. Take control of your rational thinking. Rightly said, few wins won't make you a winner, and few losses won't turn you into a loser, either.
The Crypto market is growing, and there is no place for emotions, but decision-making has. It may not be the rule of cryptocurrency you're looking for, but it tops the chart if considered.
Calming your emotions and keeping stress low can only be achieved by meditation. Consider it the investment that will live long giving you dividends in trading and life.
It is said that trading is an art, and practicing it can only hone your skills. But practicing it will advance in risks and losses. While you might have losses, that is the best practice to learn to trade in the cryptocurrency investment market.
Stay dedicated, and success will follow. Learn the steps, the methodologies from the crypto moguls, watch out for potential risks, and give time to excel in your skill sets.
Before plunging into this crypto arena, dig into what it is capable of and how it can let you achieve your short-term or long-term goals. Don't skip things and dedicatedly lend time to master this art combined with risks.
Comb through the internet and gather information diligently.
9. Stay Informed
Staying up to date in the crypto market is non-negotiable.
Price fluctuations are prevalent in the crypto market, and a few weeks in this may seem like a year on Wall Street.
The massive widespread of the world's crypto market running 24/7 gives rise to constant price fluctuations, and as a trader, you need to gear up.
If not updated with the trends, you can miss out on the most pivotal information. The places wherein you can accumulate the pieces of information are:
Reddit: It has a vast community with reputable cryptocurrencies and vital information in one place.
Steemit: Well funded by its cryptocurrency, this place is gold for crypto investors, and it well explains even the tiniest drop of information.
10. Mark The Word Of Experts
Information is the central point in cryptocurrency. It is relatively new, and the abundantly flowing words can spin minds.
While you grow and tap on opportunities and boost confidence as an investor, there is room for mistakes as well.
Therefore, stress upon the words of experts. Their expertise is there to minus the mistakes they made.
The maxims by crypto enthusiasts and experts could be the ray of light when everything else is falling.
Be fearful when others are greedy and greedy when others are fearful.
The crypto market is risk-filled. It is drenched with possible volatility, and you need a handful of rules before investing in crypto.
Many cryptocurrency investment apps do the job easier, but a risk management strategy should tag along if you need to invest.
In brief, the critical pointer for a sharp-witted cryptocurrency investment is
- Avoid emotional decisions
- Trust on coins with a reputable foundation
- Stay consistent
As a naïve investor or a mature trader, you must set your principles in place and trade to make profits. With the meteoric rise of cryptocurrencies, the market hits the mainstream and is an excellent shot.