Investing in crypto has become the latest trend in the financial sector. Cryptocurrency is an extremely valuable asset to have because, although it can be risky, there is a lot of demand for crypto and the potential to turn a profit is unmatched.
Large companies like Tesla and even small countries like El Salvador are big believers in the future of cryptocurrency, and their actions are defining the future of this market. Although there is a lot of money to be made, there is a sizable margin for error too. If you’re planning on investing in cryptocurrency, here are 9 rules that you should know and abide by…
#1 Start Small and Grow Your Investment Savings
If you’re new to the crypto game, we suggest that you start small and grow your investment savings. Rather than investing $5,000 off the bat, start saving weekly instalments of $50 or $100 dollars and invest this in various forms of crypto currency. This way you can start to diversify your portfolio and familiarise yourself with the market before you delve in headfirst.
#2 Set Yourself Trading or Financial Goals
As with any investment, you’ll need a financial plan in order to turn a profit successfully but before you can develop a plan, you need to set yourself some goals. What are you trying to achieve? Do you want to make long term investments, or are you looking to buy and sell over short periods of time? For example, you could set yourself a profit goal of $200 per month and slowly increase your target.
#3 Minimise Risk by Diversifying Your Portfolio
Trading cryptocurrency can be very risky, however, diversifying your investment portfolio is one of the best ways to minimise this danger. Instead of placing all of your money in a single coin, spread a sum of money across various digital assets. You can do this by choosing coins from different geographical regions or simply different blockchain projects.
#4 Don’t Hold onto Dying Investments
Panic selling is a big mistake, however, so is holding onto dying investments. Learn when to cut your losses and change strategies. For example, if you’ve invested $100 in dogecoin and it’s gone down to $40 dollars, it may be worth selling and investing your remaining amount in a more stable coin such as Ethereum. If you want to know how to buy Ethereum in Canada, check out this article.
#5 Set Your Emotions to The Side
As the market is incredibly volatile, investing in crypto can be very taxing on your emotions. If you’ve invested a large sum of money and the price of Bitcoin crashes by a high percentage, you could feel anxious and decide to sell your coins at a loss. Emotional investing is a big no-no in the crypto market and individuals have lost thousands of dollars from buying at peak prices and selling in a panic.
#6 Never Invest More Than You’re Willing to Lose
As you’ve probably heard before, no investment is risk-free, which is why you should never invest more than you are willing, or can afford, to lose. Not only could you risk losing part of your investment, but you could also end up losing it all. This is perhaps the most important rule of investing. Instead, set aside a sum of money each month and use any profits gained from your investments to buy cryptocurrency.
#7 Don’t Take Investment Advice from Strangers
Everyone thinks they know the best new coin that is about to take off and skyrocket to success. However, it’s not that easy. To avoid making silly mistakes and losing your money, make sure that you never take investment advice from strangers. Even financial advice from friends and family should always be taken with a pinch of salt. It’s better to do your own research before you invest money in crypto.
#8 Keep Your Cryptocurrency Safely Stored
Once you’ve invested your money, you’ll need to keep it safely stored. The best way to avoid losing access to your crypto is by keeping your security key safe and trading on reputable platforms. Check the security features that the platform employs in order to protect your data and your money. Good features to look out for include, two factor authentication during logins (2FA), withdrawal confirmations, cold storage for a majority of assets, and PGP email encryption.
#9 Use Your Common Sense and Trust Your Gut
At the end of the day, it’s important to use your common sense and trust your gut. If someone’s offering you the possibility to make millions in a matter of days, don’t take their word for it. Trading and crypto novices are the primary target for scammers, so make sure to watch out for any offers that seem too good to be true. However, it’s not just scammers that can tempt you into making bad decisions. Sometimes we are our own worst enemy. Be smart and buy during market dips, not all-time highs.
There’s a lot of money to be made in this new form of digital currency, however, a lot can be lost as well. For this reason, when it comes to cryptocurrency, you must be smart with your choices. After all, it is one of the most volatile markets that you can invest in. If you’re eager to get stuck into the cryptocurrency market, we suggest you take the rules we have mentioned into consideration.
Start off small, research the market, and watch your investments grow. Never invest more than you are willing to lose and avoid taking investment advice from strangers, or even family and friends. It’s important to be aware of the risks associated with crypto currency and minimise these by creating a diversified portfolio. Make sure to safely store your crypto, push your emotions to the side, let go of dying investments, and most importantly trust your gut. Other than that, have fun and start making your money in the cryptocurrency market.