Investing in cryptocurrencies is very risky. But is it worth it?
Cryptocurrency has become a trending concept recently. Many people are showing interest in it, while several have already begun to invest in crypto. Besides, numerous experts claim that crypto will shortly take over fiat currency and become the primary source of financial exchange.
Benefits of crypto trading include protection from inflation and low costs – the main reasons compelling people to invest in it. Cryptocurrencies offer an easy transfer of funds, smooth currency exchanges, and quick transactions.
Moreover, crypto trading involves no third-party intervention, which enhances self-governance and management. Its decentralized nature makes trading secure, immutable, and private.
However, since crypto is still a relatively new concept, it can be tricky for individuals to understand. So, if you are a beginner looking to invest in cryptocurrencies, you must look out for these dos and don’ts.
1. Do know the risks
A crucial point to remember about cryptocurrencies is that they’re highly risky. Most cryptocurrencies’ market is highly volatile, which can make trading challenging. Therefore, knowing the risk before investing in any cryptocurrency is vital.
A good idea would be to separate a specific percentage of the amount you are willing to risk and only invest that much in crypto. Don’t go all out on your first investments. Always start small and gradually step towards the big leagues.
A viable approach would be to start with more stablecoins such as bitcoin, Litecoin, or Ethereum. Litecoin is probably the most affordable option. If you’re looking to invest in it, you can buy ltc now from reliable online platforms.
The growing popularity of cryptocurrencies is even paving the way for never-seen-before behaviour. Criminals worldwide are trying to crack open codes to launder money and steal from people’s crypto wallets. Hence, knowing all the risks before investing in crypto helps steer clear of fraud and other deceptive behaviour.
2. Don’t invest without a plan
Spontaneity and impromptu behaviour might work well for a vacation or a night out, but it can cost you significantly with something as sensitive as crypto investments. Therefore, never invest in cryptocurrencies without an adequate plan.
It is crucial to realize that cryptocurrencies differ from your traditional fiat currency investments. As a beginner, you must enter the crypto market with a well-devised plan, or else you’ll be in financial trouble.
The foundation of a good investor is prior planning. Before trading, always ask yourself the main goal behind the investment. Remember, trading without a plan is simply gambling, and gambling isn’t a sound investment technique.
Planning will help you anticipate potential problems and help you cope with market changes. Furthermore, it will provide guidelines for decision-making, give you a sense of direction, and help you achieve your investment objectives faster.
3. Do control your emotions
As mentioned previously, cryptocurrencies involve a high risk – meaning sometimes your investments might perform badly, but other times they might show remarkable gains.
Whatever the case is, you must not let your emotions take over. Fear and greed can lead to impulsive decisions and unprofitable trades. Besides, lack of control over emotions is why many people fall prey to scams and frauds.
It’s also crucial to control your fear and greed by doubling down, overleveraging, and refraining from seeking quick profitability. Moreover, consider trade and investment planning to avoid impulsive decisions, and learn from others.
Sometimes other investors’ mistakes can turn into a lesson for you.
4. Don’t invest because of your “fear of missing out”
If you are investing in crypto only to not miss out on a trending concept, don’t trade. You shouldn’t waste your hard-earned money on something you aren’t passionate about or are only doing because of others. Crypto is risky, and you must be serious about your investments.
Don’t buy anything without research. Merely exploring a trading website and witnessing a currency rise in value over the last 24 hours isn’t research. Your research must be more specific and deep-rooted.
Understand everything about the coin you will be purchasing. A good idea would be to see its trend over the last couple of years and read a few articles about its next predicted value.
It would be best not to succumb to peer pressure in investment cases. You can end up losing everything by blindly following others.
5. Do diversify
Diversification isn’t only pivotal in workplaces but also in your investments. Diversification decreases the impact of market volatility, reduces the time spent monitoring the portfolio, and helps seek advantage of different investment instruments.
Moreover, diversification helps achieve long-term investment plans, helps keep the capital safe, and smooths out returns.
Spreading your investments across different coins is critical to being a successful crypto investor. Putting all your eggs in one basket won’t do you any good. A diverse portfolio will help spread out risk and prevent your money from going into a loss.
Try and invest a small amount in a range of different cryptocurrencies. So, if one coin tanks, you won’t instantly lose all your money.
6. Don’t trust but verify
More than 46,000 people reported losing almost $1 billion to scammers in crypto. Unfortunately, scams and frauds have become increasingly common in the crypto market. Therefore, you must not trust any vendor blindly.
Do proper research and conduct a thorough background check before purchasing any cryptocurrency from them. Abundant verification is the only way to steer clear of scammers that abound in this market.
You must never give support staff access to your machines, give out your 2FA security codes to anyone, or accept outbound calls asking for your confidential information.
Moreover, only contact the seller via their phone number and never send cryptocurrency to an external address on behalf of alleged support agents. These might seem obvious SOPs, but you’d be surprised to find out how many people fall prey to these fraudulent tactics.
Investing in Crypto for Beginners
Cryptocurrencies are an attractive investment especially given their phenomenal hike in value.
When first invented, bitcoin cost almost nothing, and now it is trading for more than $23,000 on the market. That is enough to prove that crypto will soon become the leading medium of exchange.
However, crypto investments can be challenging, and keeping a few tips up your sleeves is best. Here are some tips for beginners looking forward to investing in cryptocurrency:
- Do know the risks.
- Don’t invest without a plan.
- Do control your emotions.
- Don’t invest because of your “fear of missing out”.
- Do diversify.
- Don’t trust but verify.
Always research, look for referrals, and don’t blindly invest in crypto. Crypto is still a defenceless mechanism, and you must ensure security by taking precautions.
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I am Adeyemi Adetilewa, a media consultant, entrepreneur, husband, and father. Founder and Editor-In-Chief of Ideas Plus Business Magazine, online business resources for entrepreneurs. I help brands share unique and impactful stories through the use of public relations, advertising, and online marketing. My work has been featured on the Huffington Post, Thrive Global, Addicted2Success, Hackernoon, The Good Men Project, and other publications.