Cryptocurrencies are growing fast, and it’s making its early investors rich. This is an undisputed fact. The huge rise in popularity and price of Bitcoins and other cryptocurrencies have attracted hundreds, if not, thousands of new participants in this new digital currency trend. This only proves how lucrative the markets are, and how cryptocurrency is positively shaping the future of financial technology.
With all these positive news in mind, not everyone succeeds in their cryptocurrency investment. Just like when you invest in stocks, there are major risks to be wary of when it comes to investing in digital currency such as exchange shutting down, market value dropping, and government policies changing. That’s why its only advisable to just invest what you are willing to lose. You don’t want to risk your whole income or a lifetime’s worth of savings, especially if you are just starting. To help you properly start your journey in cryptocurrency investment or convert coins to cryptocurrency, here are some dos and don’ts you should keep in mind:
Do your research
It’s not smart to bet your hard earned money on something that you don’t really understand. So before burning some cash, you want to spend a good amount of time studying how cryptocurrency works. This step is paramount for anyone who’s just starting with any investment. Same goes if you are interesting in funding an altcoin or ICO consultancy. Research about their concept, visit their website, read online reviews, look into background of the people involved, until you are 100% sure where your investment is going.
Do plan your trade
Planning your trade is important to all types of trading, most especially in cryptocurrencies since this industry can be unpredictable. As you may have already read, the charts and markets move quicker as compared to a forex charts. This is why you want to use stop losses if you are just day trading so you can still take profit. Don’t get greedy and don’t let fear of missing out bring your bigger losses.
Do use a safe coin storage
As a general rule, you should not store tokens or coins that are worth more than what you are willing to lose or more than your 1 month’s salary. Store it in a software or hardware wallet and apply security precautions to avoid possible problems. Your wallet should have private keys that you should never publish, send to other individuals, or share in any other way. Private keys are just as valuable as your email and credit card passwords. It’s best to use 2FA with Google Authenticator for added safety net.
Don’t worry too much about the pump and dump
The pump and dump happens when coins are getting too much attention such as trending on social media or influencers promoting them. As a result, people will start buying and pump up the price of the coins. But once it reached the limit, participants will sell off and this is when dump begins. Avoid trading during these spikes since the coins usually have little value, only invest in solid assets, which are already proven technology and have huge potential.
Don’t Expect Huge Haul
There’s no guarantee that you will make a huge haul on every trade even if you are partnering with an established ICO marketing company, and that’s fine. Overtime, cryptocurrencies have changed a lot that the buy and hold method are more likely to be effective. If you are actively trading, you could expect to get 1-10% haul.
Don’t Close the Line of Communication
When you are trading, it’s important that you know what’s happening on the other end of the trade. Whether you are the seller or buyer, it’s common courtesy to let the other party know that you are going to trade.
Whether you want to convert your Bitcoin into cash or convert coins to cryptocurrency, it’s always best to read a few dos and don’ts to avoid pitfalls. Keep these pointers in mind as you start your way to becoming a cryptocurrency investor.