We are, after much procrastination, you have finally made the decision to invest in Bitcoin and crypto-currencies. Here are a few tips to get started, avoiding as much as possible falling into the traps that all novices have been more or less taken the feet.
1. Putting all your eggs in the same basket : error
You have found the white paper of a crypto-currency that the idea fascinates you to such an extent that you are thinking of investing your entire bet in this one ? This is not the best idea in the world. Even if your choice is very promising, nothing says that the market will agree with you. And seeing that it is he who sets the prices… It is not uncommon that a crypto-currency with huge potential vivote for months (see the history of the price of Ripple, Stellar, etc). This may frustrate you. All the professional investors will tell you : don’t put all your eggs in the same basket. Whether on conventional markets or in the crypto-currency.
2. Don’t fall in love with your investment
The market of crypto-currencies has a unique feature : some investors swear by a currency, thus developing an emotional attachment is potentially dangerous. Have you ever seen an investor in the stock markets to wear a T-shirt “I love AMZN” (Amazon), or a trader FX drinking from a cup “JPY rules” ? No. Yet, many investors in crypto-currencies, when they buy one of them, seem to like getting in religion. This is not healthy. Of course, you can have a preference for one or the other. But this should not make you lose sight of the fact that you have invested money in order to earn a profit. Don’t let your feelings impair your perception of reality.
3. Don’t panic when it pitching
You probably already know , the market of crypto-currencies is extremely volatile. However, to be faced with this volatility when one has invested money may push investors to the less seasoned to the panic (and even the more experienced, to tell the truth). As a beginner, to want to undertake “corrective actions” to limit the case is I think a mistake : you might make things worse. It is therefore better to pass the storm : corrections, global and abrupt caused by the king Bitcoin that coughs are frequent. With time, you accommoderez.
There’s a fire ! Source Pixabay
4. Always keep a little bit of mutinions in reserve
The “FOMO” (fear of missing out, fear of missing, is driving many investors, has always be fully invested in crypto-currencies, and you never have dollars or euros in reserve. You see the market climb up and your dollars don’t take advantage… Until the moment where we are witnessing a severe correction ! This is the perfect time to go to the purchase taking advantage of the balances.
5. Buy when it is flat calm
Because of the famous FOMO, the players in the market of crypto-currencies have a tendency to jump on any currency that begins to move upward, fear not to take advantage of a possible bond. It may be that the currency Thing, that just exploded of 20 % or more, double in the coming 24 hours… or corrects to return to its original point, or even lower. Not to be a victim of the famous ” pump & dump “, it is better to adopt the opposite strategy. Going to buy when you see a currency stabilize after a significant decline. The chart below is very useful in this sense :
Source : WallstCheatSheet.com
6. Don’t focus on the unit price
Many beginners focus only on the unit price of a crypto-currency without worrying about the number of coins in circulation. To avoid the calculations tedious, focus on the market value. It will help you better understand the upside potential of a crypto-currency.
7. Want to play immediately the day trader : error
Day trading, which involves buying a crypto-currency to gain profit in the very short term (an hour, or even minutes sometimes), can save you a lot of money, but to lose everything, especially if you make the odd suicidal to trade on margin without any prior experience. Unless you have a gift, the novices have an interest to wear the costume of the ” hodler “, namely the one that keeps its parts in the long term. Take the time to observe the market, to familiarize yourself with the charts and price movements. If this is not the panacea, foundations of technical analysis is also interesting. You will then be able to start small, and eventually you spend more for day trading.
Trading – Source Pixabay
8. Do not take profits : error
What goes up always ends up down at one time or another. On the market of crypto-currencies, everything goes very quickly, either upward or downward. When you have registered substantial gains, consider taking some profits, even if you reinvest elsewhere. On this market, the spectacular gains of an asset in vogue are aware of the corrections just as flamboyant. The difficulty is, of course, to identify the most high. You will improve with experience. I advise you to study the charts from November 2017 to January 2018 Ripple, IOTA, and Cardano, which are very instructive to illustrate this point.
9. Not having a defined strategy : error
In the extension of the previous point, before you buy a crypto-currency you need to set a plan, be it for a purchase in the short or long term. What is your target price, your exit strategy ? It can be adapted in function of events, of course.
10. Do not give in to overconfidence in the virtue of your results
You have started to invest in the crypto-currency say at the beginning of December, you have already doubled your starting capital what makes you think that you are a trader of engineering ? At the risk of disappointing you, it is false : you have just made as well as the market as a whole, the value of which has doubled since. You must understand this : for a little over 2 months, crypto-currencies are in a huge bull market. It is therefore relatively easy to make money, at least to multiply the errors listed above. When the market matures, this will be more complicated.
And to conclude on one last tip : as it is often repeated, so invest not more than you are willing to lose !