This is a legitimate concern for investors, particularly those who have been used to traditional investment vehicles such as stocks and bonds. The cryptocurrency market is known to be extremely volatile, which means wild price fluctuations can be an everyday occurrence. You might see your holdings increase significantly tomorrow, and then the next day it goes down suddenly. To avoid making rookie mistakes, here are five of the most important things you should learn before investing in cryptocurrencies.
1) Use a trusted cryptocurrency exchange
There are many cryptocurrency exchanges out there, but not all of them are the same. Be sure to limit your list to those that have established a solid reputation in the industry. The last thing you want is to trade digital coins on a particular exchange in then see it close down without any warning. This has happened several times in the past, so do your due diligence and research about the different exchanges instead of using the first one you see online.
2) Define your investment terms
Before you put money into the cryptocurrency market, you must first figure out whether you want to be in it for the short- or long-term. If you want to make money quickly, then a short-term investment strategy is in order. For the most part, this involves trading digital coins on a regular basis. Others, meanwhile, settle for the long-term strategy, often referred to as holding in the cryptocurrency world. This involves buying certain coins and holding on to them for at least a few months or until they reach a certain value.
3) Buy low, sell high
If you have prior experience in trading, then this strategy should already sound familiar. Making a successful trade means buying low and then selling high. Of course, this is easier said than done. To help you make the right moves, you can use cryptocurrency trading software such as Bitcoin Loophole. This trading robot uses sophisticated algorithms to help you decide when to buy or sell. You can also use the different features that allow you to manage your risks.
4) Research about the coins
Many cryptocurrency investors tend to ride the waves. Basically, this means looking at the coins that have increased in value and then investing in those coins in the hopes of making money quickly. Without doing your research, however, you may end up losing all your money in a blink of an eye. It is better to research about the coins you want to invest in instead of simply doing all your trades blindly.
5) Store your coins properly
This is something many beginners ignore. It is of utmost importance to store your digital assets in a safe place. You never want to leave your coins sitting on an exchange for the reasons mentioned earlier. You should invest in a digital wallet in which you can securely keep your coins. If you are a long-term investor, it’s better to use an offline wallet as it is safer compared to their online counterpart.