Is it Hard to Start Investing in Cryptocurrencies?
Many people who are unfamiliar with cryptocurrency often have questions such as, is it hard to begin investing, and what do I need to know before making my first trade? The first question is fairly easy to answer as it has never been easier to begin investing, but the second one isn’t so simple.
There are a few things you should remember before starting your investing journey that will make crypto buying and selling so much easier to do.
Understand what you are investing in
The first thing you need to do is to understand what you are investing in and the necessary skills to invest in crypto. Most cryptocurrencies are based on projects, but there are many that simply exist as a meme, or something similar.
If a stranger came up to you and simply asked for money for an “investment” but didn’t tell you what it was for, you more than likely would keep your money in your pocket. Use the same thinking with cryptocurrencies, as they aren’t all built the same.
Do thorough research on the project
Once you have narrowed your choices down to a few tokens, you should then research each project. The value of any token comes from the value of the project they are a part of; meaning, the better the project, the more valuable the token.
This will also give you a chance to see the legitimacy of the company behind the token and give you a better understanding of what the future has in store and where the token is heading.
Choose an exchange
You then need to choose an exchange on which to buy and sell your tokens. It’s important to choose one of the bigger, more established exchanges as they will have better coin choices and security.
Exchange vs. wallet storage
Once you have selected an exchange, you need to decide if you want to keep your tokens on the exchange or in a private wallet. While one isn’t substantially better than the other, there is one fundamental difference between the two: If you keep your tokens on the exchange, the exchange controls them. If you take your tokens out and store them in an offline wallet, they are better protected, they are 100% yours, and no one else can touch them.
Before you start buying every token you see, you should set an investment budget. Your budget should be an amount you can easily afford that won’t affect your monthly income. There is a very simple rule of thumb regarding investing; never invest more than you can afford to lose.
There is also no need to go overboard if you find an exciting coin or there’s a dip. Market fluctuations happen all the time, and there will constantly be opportunities to buy a lot of tokens at a good price.
Watch the markets
Once you have invested, you should make an effort to check the markets regularly. As mentioned before, dips and spikes happen all the time in cryptocurrency, and you don’t want to miss out on a good opportunity.
Have an exit plan
There is the constant message of HODL (hold on for dear life) in the crypto space, meaning don’t sell, no matter what. While this may be fine for some, it isn’t practical for others, especially if you want to walk away with a profit at some point.
Instead, have an exit plan or a milestone you want to reach before you sell. If you sell and make a profit, you can always reinvest.
Finally, always ensure you have a diverse portfolio of tokens and that you haven’t put all of your eggs in one basket. In crypto, diversifying works slightly differently than in regular investing.
Some tokens are tied to Bitcoin or Ethereum, and therefore fluctuate as the Bitcoin or Ethereum price fluctuates; stablecoins fluctuate depending on the fiat currency they are tied to.
What this means is that you should have a mix of Bitcoin, Ethereum, and stablecoin-based coins in your wallet to ensure that you don’t lose value across the board if there is a dip.
None of the information on this website is investment or financial advice and does not necessarily reflect the views of CryptoMode or the author. CryptoMode is not responsible for any financial losses sustained by acting on information provided on this website by its authors or clients. Always conduct your research before making financial commitments, especially with third-party reviews, presales, and other opportunities.