When you first start crypto trading, you are likely to learn some harsh lessons. The volatility in prices coupled with a 24/7 market means that you always have to be on your toes and ready to react. Whilst some people can make a lot of money, it always comes with risk, and you can be sure that there are just as many people who have lost a lot of money as well. Before you begin, here are five tips you should know.
Before investing in a project, you should do a huge amount of research to ensure you are fully aware of all the positives and negatives. This can be particularly difficult. Finding accurate sources on projects is notoriously tough.
Some people are so invested in projects – even the terrible ones – that they will not believe a bad word said about them. Instead, they will consistently talk about how their cryptocurrency is going to change the world and make them a lot of money at the same time.
You will often find these people lurking on the usual social media sites such as Twitter or Reddit.
But what key points should you be looking for? Firstly and obviously, you should look for a strong product. Too many cryptocurrencies are currently trying to build a new and improved version of what is already in existence. Yet their project is not only pointless, but worse than the current systems we have in place.
Secondly, you should check how the cryptocurrency was created. Was it through a pre-mine with the developers holding the largest stash ready to dump on unsuspecting investors? Perhaps it was an ICO where they raised millions, but since then there has been little to no advancement?
How consistent is the development team? Are updates both to the code and to the community provided on a regular basis? Are they open and honest? Or do they promise to tell you to wait and see but guarantee things are in the pipeline?
What is the community that surrounds the cryptocurrency like? If they behave more akin to a cult than sensible adults, it is likely that the cryptocurrency isn’t going anywhere special.
Learning who to trust and who to distrust in this industry is difficult. Unfortunately, there are many people in this industry who’s biggest money-maker is going to be you – “the chump”. They will attempt to get you to join their paid group or watch their YouTube channel claiming to be experts despite knowing very little. The easiest method is to follow the traditional Bitcoin saying: “Don’t trust, verify”.
Learning to be patient is a key skill when crypto trading. Rushing into decisions or FOMOing to a coin when you see a price rise is an easy mistake to make. Emotions can be extremely annoying and play tricks on you when trading cryptocurrencies.
A better play when crypto trading would be to create a plan and ensure you stick to it.
Be fearful when others are greedy and be greedy when others are fearful
If everyone is getting excited about massive price rises, it is usually a good indication to sell some of your cryptocurrencies for profit. Similarly, if you are sensing quite a bit of depression, then that is also a useful indicator to begin loading up on cryptocurrencies.
Whilst this may sound easy, it can actually be very difficult. Not getting sucked into the hype and controlling your emotions is one key skill you will need to learn if you want to become successful at crypto trading.
Take some time off
When you first start trading cryptocurrencies, you will probably get an adrenaline rush and be full of excitement. This can continue as you see your portfolio rise and fall over time. However, it can also be extremely draining and mentally consuming.
Therefore, it is important that you take time off and enjoy the more important things in life. If you fail to do so, you could find yourself burning out quicker than you could imagine. This can hinder your decision making, so make sure you keep your brain and body fresh.
It's important to take a break from looking at the charts once in a while and enjoy the outdoors ? pic.twitter.com/K8wBqLxyHK
— Kektoshi (@Kektoshi) April 10, 2019
Know your history
If you are new to the cryptocurrency industry, you are in luck in that you have 10 years of history you can view – from coins that claimed to be “better than Bitcoin” but are now dead to Ponzi schemes that were able to rake in millions of dollars.
Learning the lessons of the past will help you see through some of the lies and delusion that is still present today.
Crypto trading conclusion
Trading cryptocurrencies isn’t for everyone, and despite what you might hear, it isn’t easy. Just as many people have made money than have lost it as well. On top of this, it is extremely difficult to know who to listen to for fear of being scammed.
Most people who trade do so purely so they can gain more Bitcoin. Buying and HODLing is another avenue should the world of cryptocurrency trading appear too scary for yourself.
If you do decide to take the plunge though, don’t rush into it and ensure that you have done as much research as humanly possible.