Golden rules of crypto investing
By Crypto Nation – 2 May 2020
Entering the world of cryptocurrency: a dreaded moment when you don’t really know where you are about to set foot in. The usual fear of the unknown, and at the same time, how exciting it can be!
To help you make the right decisions in this vast universe, which is only just beginning, here are some golden rules, to maximize your chances in investing and trading cryptocurrencies.
Here are the 5 rules that we will go through :
Rule 1 – Learn about the cryptocurrency project you have in sight
This first point is absolutely essential. You have to know what you are investing in. Finding out about the project beforehand is an imperative to make an avoidable bad deal.
If you have found interesting projects in the very long list of cryptocurrencies that exists or if you only like the name… go to their official website and start reading up:
The basis: the Whitepaper , all at least serious cryptocurrencies have a Whitepaper.
This document, which is often technical, will seem complicated to you. He is. So don’t focus on it, but at least make sure that it exists and that it’s not just a cover page…
The important thing : The project Roadmap.
Where is the project at? What are its future developments? When is the next major update coming out? Will the price go up 1000% by the weekend? The Roadmap answers almost all of these questions. It will also be necessary to ensure that the previous announced deadlines have been honored in the past. A late project always annoys big investors.
The Listing : Where can we get this cryptocurrency?
If the project is listed on major platforms, like Binance or Crypto.com, it can be a sign of a project’s strength. Nevertheless, it can be very interesting to look on small exchanges for projects that you qualify as interesting and not yet listed among the very large ones! Listing on a reputable place often increases the price.
The Community: The project is supported by 50,000 people on their Twitter page?
This is a good indication to see a project grow. Contrariwise, a project that no one supports can either explode upward suddenly, or on the contrary die slowly without ever having known its heyday.
The Team: Who is leading the project?
And yes, it’s always interesting to see who is at the head of the project on which we are about to put part of our savings. Be careful that the project doesn’t just hinge on two developers lost deep in the world, although they can be very talented.
The other points:
Age/experience of the project? Type of project (DeFi, Payment, Blockchain…)? Powerful marketing? In short, there may still be plenty of other details to explore to be sure!
If you follow these tips, there is no doubt that you will be able to spot the rare gems that will propel your earnings. Do not hesitate to take a look at our favorite projects!
Rule 2 – Choose a platform in line with its objectives
First of all, it should be understood that not all cryptocurrency exchange platforms offer access to the same crypto projects.
The most important point concerns the security of your cryptocurrencies. Having $50,000 on Binance is not necessarily advisable (it is better to have them in your own Wallet) but it is not risky either. On the other hand, in the event that you let such a sum sleep on a small Korean exchange, a good guardian angel may be recommended.
Also pay attention to trading or withdrawal fees depending on the platform. Again, Binance is notorious for having very low fees. Register with the links/buttons directly on our site in order to reduce your costs on the different platforms, while supporting us!
We get to the point, what is my main objective?
- Take a first step in cryptocurrency without having to look at the prices? Head to the Stablecoins savings that platforms like Binance, YouHodler or SwissBorg offer, to earn from 4 to 12 % annual profits, without pressure.
- Make an investment allowing me to earn interest every day, regardless of the state of the course? So it is better to look towards platforms specializing in Staking and Masternode services, such as Just Mining or Feel Mining. Again, Binance offers many services in staking.
- Be present on a platform offering access to a very wide choice of up-to-date services and cryptocurrencies? Binance, as always.
- I am a confirmed trader, or a beginner who wants to start very (too) strong? Go play with the leverage that Binance Futures offers, but be careful not to burn your wings on your first bet.
Rule 3 – Have some notions in technical analysis and define your profile
Well, if you have made the efforts that the first point requires, you are already greatly limiting your risks.
Now, in order to maximize your profits, it is important to know when to buy and especially when to sell. And yes, this small project that you had identified, exploded upwards and you currently have a +1,400% to the bag. But you let yourself be fooled to want more, and you will sell when it will have been down -50%… pity, but well done anyway. In any case, know that you have rather the profile of a holder, a focused long term investor.
Unlike the Day Trader, you will analyze the fundamental of the project on which you are positioning yourself. The trader, aiming for the short term, will generally only do technical analysis of the market .
But whatever your profile, set goals, define and follow a strategy and then know how to stick to it!
Once you have passed this essential step, learn how to trade and use the appropriate tools, such as TradingView for example. Then of course, continue browsing our site, you will find a lot of advices.
Note that it is always said that it is better to trade in the direction of the trend. But it is possible on some platforms, like Binance Futures, to make a profit even at a falling price. This is called Short, the reverse of Long.
Last point here, you are going to need a strong mind to become an ace in the cryptocurrency markets. You will therefore have to learn to resist stress, and not get carried away at the slightest rise or fall in a price.
Take the time to know your limits and thus avoid inflicting pressure on yourself, to avoid any risk of stupidly closing your orders impulsively because of a moment of panic.
Rule 4 – Manage your risk
The cryptocurrency market is young and relatively poorly capitalized, which makes it very volatile, both on the upside and on the downside. In addition to any technical analysis of its price, the market is constantly fed by surprises, good or bad, which will have a direct influence on prices.
It is therefore common, even more so when starting out, that technical analysis does not go as expected.
To survive in this environment, it is therefore vital to know how to manage your risks. We have to recognize how much we are ready to lose in case of deviations in the expected price, that will happen sooner or later. To continue our life peacefully, whatever happens, let’s set ourselves the following principles:
- You have to invest in the crypto markets or trade only with sums of money that you can afford to lose.
- In trading, according to your strategy, position stop losses to offer you an exit door if prices fall.
- Avoid counter-trend trading, unless you are already experienced.
In short, do not bet half of your bank account on cryptocurrency, especially if you tend to have heart disease. This is not an advice, just common sense.
Rule 5 – Learn to Diversify
Now that you know the best practices and have all the keys in hand for a successful cryptocurrency investment, try to diversify.
There are a lot of horses (understand projects) in cryptocurrency. Fortunately, overall there are more good ones than bad ones. Diversifying yourself will therefore increase your chances of hitting the one that will make 350% in a weekend. But do not forget the rule n°1, you must know these projects and follow their news. So, unless crypto is your main business and you’re very well organized, don’t put your money on 25 different cryptos.
You can also keep some of your crypto rather than selling it all when you decide to exit. This would allow you to take advantage of a bullish movement that would continue.
One last thing to conclude, focus on investing in DCA. Dollar Cost Averaging is an investment / trading technique aimed at reducing or smoothing its average purchase cost. So to avoid investing all of your capital at once. Have multiple price targets to reduce your risk and optimize your investments. This also applies to the sale, proceed in stages.
So, on all these nice words, we wish you good trades, good investments and a lucky star! What will not be too much in this universe which reserves many surprises.
Do not hesitate to share with us your feedback, your beginnings or your experiences in the market.