The crypto market is rapidly developing, with new coins launching every year. However, novice investors often need help figuring out where to start and how to invest effectively. These seven guidelines will help you form the right approach to investing and protecting your assets.
Don’t trade excessively
Those who indulge in online roulette will probably know you should always control yourself and know where to stop. The same applies to crypto investments.
It is challenging to resist the opportunity to profit from price volatility. After watching several videos online, many beginners choose to trade on a cryptocurrency exchange. At the same time, they use all their investments in the hope of getting rich quickly. However, they soon begin to understand that it is more complex than it appears.
If you want to master crypto trading, read how to limit the risk of losses. Your further success will depend on your discipline.
Allocate a small percentage of your deposit for the first trading operations. They may not be the most successful. Therefore, this amount should be such that you do not mind losing.
Study the market, the dynamics of the behavior of various assets, and simple strategies. Try to figure out what determines the increase and decrease in prices. Read and listen to interviews with professional traders; their experience is essential for developing the right mindset.
Bitcoin (BTC) is the world’s largest and most popular crypto. Therefore, bitcoin attracts many investors, affecting its value.
The bitcoin price has grown over 20 times over the past three years. Since interest in the coin is expected to increase, this could continue affecting its price.
Experts recommend regularly investing 5-10% of your salary in BTC. At the same time, you do not need to try to trade. Instead, it is better to hold assets for the long term. Since with a lack of experience, you risk losing, if not all, then most of your savings.
The crypto market is also volatile. Very often, when prices move due to the fear of losses, investors sell the asset at the lows and then buy back at the highs. As such, keeping an eye on industry news to broaden your horizons is vital.
Invest in quality, liquid altcoins
Refrain from buying new and little-known altcoins, even if they seem promising. Some of them may turn impressive returns, but many, at best, remain in their positions for several months. Thus, you can end up tying your resources but then miss out on many other good opportunities.
If you are willing to be patient and HODL, it is best to buy not one but several of these coins as you diversify your risks. Even in this, the share of bitcoin in your portfolio should be the largest.
Periodically monitor your assets
Having collected a portfolio of cryptocurrencies, ignore informational noise. Analyze your investments occasionally. Sell assets that have appreciated, and consider buying those which have contracted but remain potent.
Follow major players
Study the interests of large players, what coins they invest in, and why. If you still decide to purchase new altcoins, choosing a well-known project they are interested in is better. You can allocate a small percentage of your deposit, which you are willing to risk.
Don’t use leverage
Each exchange has an opportunity to buy a cryptocurrency on credit. Such trading is called margin trading or trading with leverage.
While this increases the potential profit several times, it also increases risks. If the price goes against you, you can lose your entire deposit.
With the high volatility of the cryptocurrency market, liquidations occur regularly and for large amounts. Beginners should be cautious; if they trade, they must use a stop loss.
Ideally, at the initial stage, don’t use leverage.
Store assets on hardware wallets
Keep the purchased coins for a long time on special wallets that are not connected to the internet:
- Hardware is a form of a flash drive.
- Local on a computer or in an application on a smartphone.
There are better places to store assets than exchanges. Exchanges are susceptible to hacking and can be blocked by financial regulators. Store passwords for wallets on flash drives, for example, and keep them secure.
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