It is quite difficult for traditional investors to not get carried away on a wave of FOMO (fear of missing out) when they hear the chatter that surrounds cryptocurrency. However, investing in this market without prior knowledge and research can be a risky proposition and it can end up making you suffer. So today, Fuad Ahmed, has a few tips that he wants to pay forward to help newbies learn and develop their skills in this field. So, here are 10 of his top tips when it comes to investing in cryptocurrency.
1. Follow the news
The smartest way to start operating in the cryptocurrency market is to start following the news religiously. The thing about crypto market is that since it is still nascent and there are plenty of developments happening every day. These developments can either skyrocket your investment or completely tank it. So, it is crucial to stay updated on the news that could impact your investment.
Start off by building up a list of resources that you can rely on for instant insights.
2. Take it slow
Just because an industry is taking off, you can’t dive into it blindly and put all your life’s savings on the line. Experts such as Tim Draper suggests that it is wiser to get involved only a little bit at a time. So, the most preferable way to invest in cryptocurrency would be to purchase a small amount of it at a time. This will not only reduce the risk of losing a lot of money but it will also ensure that you can learn practically about the discipline. There are examples of a lot of people who thought they understood the market right off the bat, but they only ended up losing a major portion of their investment.
So, to avoid bearing the brunt of such problems, take baby steps and only invest when you are sure about the outcome being in your favor.
3. Shirk away from the noise
On one side, cryptocurrency skeptics preach that it is merely a fad and the hype surrounding it is unnecessary, which is why people shouldn’t invest into it. Whereas, on the other side, crypto evangelists predict the most fruitful outcomes of it and hearing them talk almost makes you feel that the grass is always green on that side.
So, as you might have probably judged by now, the two sides are at opposite extremes. Our advice to you would be to ignore the noise from both sides and only take logical decisions which are free from any personal or outsider bias. In regards to the noise, the Satis Group predicted that it is bound to increase in the upcoming months. So, investors’ best bet is to trust their instincts and put their money in what the believe will take off.
4. Hope for the best but brace yourself for the worst
One word that is ubiquitous in the crypto market is ‘uncertain’, and uncertain the crypto market is. Before entering the industry, you have to mentally prepare yourself for what can unfold. You might face some really unfavorable outcomes but truth be told, you can minimize adverse results by a little practice and experience. However, initially it won’t be easy to ignore the risks associated with the crypto market, so be sure to brace yourself for that. A little perseverance and grit will take you places.
5. Ignore bad trade or investment strategies
A problem faced by plenty of investors in the crypto circle is that they often find themselves talked into following the advice of self-proclaimed gurus that do nothing, except get them on a fast track to losing all their money. When you do come across such individuals, be sure to take their advice with a grain of salt and come to a decision logically.
6. Do your research
In today’s digital age, pretty much every information is on the web. So, it’d be ignorant to not look at the research and get talked into making trades which would only make you incur a huge loss. If you are considering purchasing a particular coin, scour the web for its relevant whitepapers. So, just like having GPS in your vehicle, be prepared as an investor in the crypto world by doing your research.
Be sure to look at the facts regarding how a particular coin operates or makes money. If you can’t find this information, then we would recommend you to look for another coin to invest your money in and shirk away from the shady investment opportunities which appear to be a bluff.
7. Don’t put all your eggs in one basket
By this point, we mean that diversification is the key to success and by having enough options to reap a profit on your investment, you will reduce your chances of incurring a loss. So, instead of just having blind faith in one kind of coin, do your research about enough coins and then put money in the most viable options which will likely bring you a return.
This way you will also have diverse information about the market.
8. Create an alternative email address
This is a proactive measure you can take to protect your data. Using your personal email to make investments can lead to data breach and you should at all times take measures that will minimize the risk of it.
Ensure that your email address has the two-factor authentication in place to provide additional security.
9. Learn about both the hot and cold wallets
Cryptocurrency can be stored on two platforms which are termed as the hot and cold wallets. Hot wallet is the online facility where cryptocurrency can be stored, whereas cold wallet is the offline facility to store cryptocurrency. Hot wallet is considered to be the more viable option because of its convenience. But cold wallets are much safer as they have a low risk of getting hacked. So, choose either one of the wallets according to your preference.
10. Be vigilant around mobile wallets
Trading cryptocurrency via mobile wallets has a great risk associated with it. Even though it is way more convenient than opening up your laptop to trade, convenience should not be more important than safety.
By now, we hope you have an idea of how you can go about investing into cryptocurrency. It may seem tricky but once you get a hang of things, you will find it quite easy to understand.