Understanding Crypto - How to Trade
Never invest more than you can afford. Now that we have gotten this out of the way, we can begin. So you have gotten yourself some crypto assets. Maybe bought them, maybe got them for free here. And you have already chosen the right exchange for you and read all their terms and conditions.
Choose your investment
First things first - what are you going to buy? Remember that different projects have different rules. There are coins that have been in the market for years and are more or less stable currencies. As stable as can be in the crypto market. There are many new projects that are a gamble if the project will be successful. And there are projects that are rocketing right this moment.
Always understand what you are entering and what you expect from your investment. Each situation asks for different approaches and different personalities. If you are just getting started and want to see green lines in your graphs, choose stable coins that experts are betting on, expecting a slow and steady climb.
If you feel that you want to live “in the financial world” and set your stock exchange as your homepage, you can invest in more volatile stocks. Be ready to buy in the morning and sell in the evening. Understand that many people are doing this, so you are always in a race against others. Against people who have done this for years. So be careful.
Limit your spendings
The first and the last rule of any investing - never invest more money than you can afford to lose. This is the single unifying rule of all investments. It doesn’t matter how “sure” of a coin it looks like. It doesn’t matter how certain you are that it will rise. Never borrow money or sell something you’ll need just to invest. Never talk your friends into investing. The markets are volatile and unpredictable. You can never know for sure what will happen. Many promising projects have been stopped by things like technical issues, deaths, natural disasters and the likes. Nothing ever is 100% sure.
To best avoid anything like this happening is to diversify your investment. If you plan to be an investor, invest in various projects. If something happens to one, there will always be others to fall back on. A good strategy is to pick a few stable projects to “safeguard” your investment and then look for something riskier that you think will rise.
Be careful about the so-called “hype”. If everyone, the newspapers and your children are talking about a coin, there might be a chance that you are already too late. By that point every interested person has already bought said coin and the price might be inflated. Other investors know this and sell whenever there is publicity, knowing that it will attract new buyers. And then, when the interest has peaked and the prices return to the average line, they buy back.
The saying goes “Buy the rumor, sell the news”. In this case it means that you should buy what you think will do good and not when there is already a news article about the price climbing. One other reason is that there are various scams. If there is a sense of urgency for you to buy, a time limit pressure, it doesn’t leave you time to do your own research. At the end of the day, maybe the decline of the price is already around the corner and coin owners are just pretending it is fine so that you would buy the coins and they can exit.
Have some rules
There are many strategies for investing. Many of them deal with how and when to insert your funds in the market. Some people don’t invest all their money at once, but a small portion of it every week, that way staying in control. Some people have set strict rules for themselves what to do and what never to do. Some people set up automated sell orders if the price goes up to a certain point. Can they miss out on a higher climb? Sure. Will it actually go higher? No one knows.
The point is - we are dealing with money here. And it is very easy to get carried away. Because of that you need to set some rules for yourself so that you do not do something silly based on emotion. You bought a coin hoping that the price will double. Not only did it double, but it tripled. While it can be great news, it can also make a person greedy. You have gotten what you wanted, but now you want more. Then you lose it all. So you should always have rules that you do not break. No matter how sure you are.
Understand the changes
Don’t panic. There are always various things that change the cost of a coin, not all of them have something to do with the coin or its project. Sometimes the whole market is on a downturn. It might seem that only your coin is losing value, but actually all coins are being sold more than bought. Sometimes someone decides to exit and sells a lot of coins, so the price drops significantly. Sometimes a billionaire buys a lot of coins, raising the value significantly. The fundamentals haven’t changed, just the perception of it.
So you have to understand that many things are involved and it will always be impossible to predict every change and then react to that. You have to have the nerves of steel. If you find out that you can not emotionally handle it, it would be better for you to just hold the coins of projects you trust long term, rather than try and “play” the market.
There is no point in looking back and being sorry about lost opportunities. That is a sure way to be always unsatisfied. It is very easy to say what you should or should not have done after time has passed and we can all see how the price has changed. You made the decision at a time when no one know what will happen. So it was the correct decision at that time.
You will never be the one who sells it at the highest of peaks or buys at the lowest of dips. Don’t go chasing that or you will burn yourself. Set rules for yourself, withdraw when you feel it is right, never invest more than you can afford.
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