Learn the three golden rules for investing in crypto here. These tips are for the newcomers to crypto trading, but a gentle reminder to the long-term investors as well.
Investing in crypto can be a worthwhile and successful venture. Yet, many investors are put off due to a lack of knowledge of the industry or the volatility of these digital currencies. Investors must also remember that this type of investing is a zero-sum game, meaning not everyone can win – and some must lose.
To be one of the former rather than the latter, you need to read white papers, research the team behind the coins you will invest in and make sure everything is backed up with a secure wallet and safe practices. Do some window shopping and start by looking at the Luno Bitcoin wallet with its squeaky-clean safety record.
After setting yourself up to invest, live by these three golden rules:
Golden Rule #1: Combining Tactics
The world of cryptocurrency is a combination of technology and finance. Having two industries work together like two pedals on a bicycle has resulted in the best trade setups combining technical analysis with fundamental techniques.
Crypto traders are not unknown to panic-buy when hearing about coin features in the fear of missing out. Instead of joining the crowd with this habit, it is more effective to add fundamental research into your investment routine.
However, these fundamental moves should be backed by technical analysis and mapping prices. This will allow you to interpret the best time to enter the market.
Golden Rule #2: Quality Beats Quantity
A common mistake between newbie crypto investors is that they over trade markets. Smarter traders are able to hold and be patient. It is often the case that markets become more lucrative at the time markets are exaggerated.
The quantity of trades you make is not always going to make your investment better. Instead, make quality investments and trust your fundamental and technical research. Moving over to a hyped-up currency just because of a single news story or whisper in your ear will not always pay dividends. It may make all your research a waste of time.
Golden Rule #3: Risk Management
The best crypto traders are never correct all of the time. That would take some superhuman powers. Yet, learning to invest in crypto is not just about getting it right more times than not. It is about having an exit strategy when you don’t.
When you are on the wrong side of the market, it is crucial that you can admit that to yourself. You got it wrong. And so did one million other successful crypto traders, but they remained successful because they could see and admit they had it wrong early. Trying to ride a storm out of pride or stubbornness is not a strategy that creates winners.
There are different ways to know when you should exit, including changes in trends and a change in the moving average.
Remember to cut your losses early – and let the winners ride out.
About the author
Richard Stables has a degree in Economics and 15 years’ experience running his own business. He has a keen eye for investment opportunities together with a huge passion for cryptocurrencies and blockchain technology.
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