Today we will focus on a very hot topic right now, yes Bitcoin and other cryptocurrencies. We will cover how to invest in cryptocurrency and more importantly what to stay away from and what to think about as a beginner. With that being said, let´s go!
How to Invest in Cryptocurrency – Top 10 Newbie Tips
We have seen a massive flood of investors moving towards Bitcoin but also other cryptocurrencies of course. The reason for that is pretty obvious, their value skyrocket in a very short period of time, investors started investing, cash flow was made…
This post is not going to tell you to invest or not, this post will simply present you with 10 simple advice that will help you (as a new investor) in the crypto world so you can make much more intelligent decisions, and also on who to trust and who to stay away from.
1. NEVER Invest more than you can afford to lose!
It is recommended to not have more than 1-5% of your total investment portfolio in crypto, and more importantly, you should only invest what you can afford to lose.
Once you have doubled your profit, then cash out the initial amount so you are only “playing” with profits without no risk.
2. Learn to recognize FOMO when it hits you
FOMO is a short term for “Fear of missing out” and is a very common “theme” among investors on the market right now. It most times leads to impulsive unthoughtful decisions like “emotional investing” for example, so if you ever feel “the urge” to get in on a skyrocket upswing because you don’t want to miss out on the “opportunity”, please stop yourself, look at advice nr 3 (below) #3 and try to be a bit more analytic in your investment decisions.
3. Do the research if investing in an ICO
NEVER forget this, you are purchasing an asset with your own hard earned money, and it should, of course, be your goal to make it profitable, right?. Start of reading on the whitepaper that is on the main site for the “questionable” coin. A good way to avoid a lot of the MANY scams can many times simply be done by critically evaluating the question: “Why do this coin exist?” Is it simply trying to apply a blockchain to something that doesn’t need it or is there a transactional inefficiency/problem that the unique properties of the blockchain can solve?
- Who are the owners? What is their reputation? How are they organized? Do they get complaints from their users?
- Who is their competition and what market are they’re targeting, how big is it?
- How was the coin created? Is there a dividend structure, profit sharing plan, is it a store of value within a digital economy? How many coins will be released?
- Does it offer to mine? If it does, will you be able to earn more by recruit people to your “team” under you? If so, I strongly suggest you run the other direction as it is (most likely) just a “pyramid thing”, you know what I mean, right?
Extra tip: If you don´t want to be all that analytic yet then simply stick to the most trusted and well-known Bitcoin, Ethereum, Litecoin, Ripple, etc
4. Look for warning flags and recognize that most of the altcoins have a net present value of NOTHING.
You should be very sceptical at EVERY new coin you come across. Why? Well, because right now there is a big “hype” for coins that have no use in whatsoever area, other than making scammers rich, many times in 100% Ponzis and Hyip structures. Those things never works and the only one getting rich from such a scam, is the scammer himself.
Some obvious red flags are:
- Promises of riches in no-time.
- You are told to recruit people to your team under you (Pyramid scheme BIG Warning)
- The people behind (the founders) the coin have anonymous teams or members with a questionable past.
- Does not require or benefit from a blockchain. (Be aware because some will tell you they do even if they don´t)
- Shiny Websites filled with tech language that sounds impressive to people who don’t know a word of what´s being said.
5. Many people are losing money
Please don´t fall for the “get rich quick” bullshit. There is an ocean of scams online right now, especially in the crypto world. For example, there are many so-called “auto-trading programs that claim they have found “loopholes” and “guaranteed earnings” and so on. Yes, you can absolutely make money with trading, but not with such programs. In short, they are designed to steal your money. If you want to make money trading then stick to the good old saying: “Learn to be able to earn”. There are great trading programs out there that offer you both training and also demo accounts for you to use and practice with until you feel confident enough to start with your own money.
**Want to read about our #1 recommended trading platform? Then click here
6. Do NOT chase a pump and dump
Never buy a crypto coin based on a fast “upswing” alone. There is a big risk that it is a so-called “Pump and dump” – in other words: a trading scam where people (scammers) organize to coordinate the laddered purchase of an asset, then wait for others to come in at some delay and further increase the price before coordinating the unloading of their position once a specific price target is reached. In general, it is better to look for coins that have long-term investment value (see advice #3 and #4 above).
7. Make your short-term trading decisions based on news, as well as technical analysis
If you do day-trade (or short-term trading), do it when you have a high conviction or certainty that a specific news you have informed yourself with, will lead to an increased value. Educate yourself! In forums and communities, sign up for our newsletter at the bottom of this article to get a FREE educational investor kit). Combine this information with indicators like upcoming roadmap item releases, partnerships, fork airdrops, etc, to positioning yourself to get in at a reasonable entry point. Good indicators are MACD (moving average convergence divergence), RSI (relative strength index), market depth and support-resistance lines.
8. Diversify your portfolio
There are MANY different coins you could invest in, however, try to diversify your portfolio by holding some “foundation assets” such as the biggest ones, like for example: Bitcoin & Ethereum that are “safe”, also, why not some finance coins such as Ripple, privacy coins such as ZCash or Monero etc.
By diversifying like that you dramatically minimise your risk of losing money, in case of that your chosen assets dumps, and also dramatically increase your chances of “hitting the jackpot” if one of your chosen coins all of a sudden will increase a lot in value.
9. Accept that it’s OK to miss out on a lot of great investments
Please, do not rush things. Instead, you will be much better off if you take your time to think through your decisions and strategies. Short-term movements are most times not successful, so start by focusing on the fundamentals instead.
10. Use (Safe) regulated platforms for short-term trading
It is not hard to use platforms where you can trade with the most well-known cryptocurrencies and also deposit by simply using your credit card or Paypal. They are safe and legit, regulated and many times also offer you practice accounts, so you don’t have to risk any of your own money to learn how to trade before you put real money into the mix.
Ok, there you go! Follow the 10 tips “rules” above and you will be just fine. If you want to get more advice and crypto opportunities when it comes to how to store in the safest way possible, where to invest, how to earn cryptos instead of buying them, mining, etc then you might want to sign up to the list further down on this post:
I hope you found this article on how to invest in cryptocurrency helpful. If you got any questions about the article I will be more than happy to answer them below in the comment section!
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I wish you success!
Founder of: $tart Make $top Waste