Crypto trading is highly attractive for many investors. This is especially the case for beginners that are drawn in by the possibility of making a lot of money.
It is true that you can make a lot when you invest in crypto but you can also lose a lot. Just as with any other investment opportunity out there, you should be careful. With this in mind, here are some really simple common sense crypto trading tips to help you make smart decisions when trading crypto.
Invest Just What You Can Afford To Lose
The number one rule in investing also applies to cryptocurrencies. This is a market that is highly volatile. We already had several time periods when losses appeared. Even if the market is on an upswing, cryptocurrencies are tricky to monitor and control.
Because there is no guarantee that your investment will grow as fast as you want it to or grow at all, it is important to invest just the money that you can actually afford to lose. This is also important because you might have to keep your funds “trapped” in a cryptocurrency for a long period of time. For those of you who prefer safer investments, a stablecoin like META might be a good choice.
Pay Close Attention To Bitcoin
While you can make a lot more money with some altcoins, you still need to keep your eyes on the “king” of all cryptocurrencies: Bitcoin. When Bitcoin price goes up, this tends to affect other coins. The exact opposite also applies.
Diversify Your Investments
You can earn more when a large part of your budget is put into the coin that climbs the highest and the fastest but when you just invest in one or two coins, risk is drastically increased.
Just as with stocks, it is really important that you diversify your investments. Obviously, most of your budget should be put in the really stable coins, those that have a higher chance of growth. At the same time, investing in some that are a little riskier can bring in more money.
As an example, between 2016 and 2018, when looking at January dates, Corgicoin increased in value by a huge 60,000 times. Bitcoin showed a growth of 34 times. While you would have made a great profit with Bitcoin, you could have made even more if some of your budget would have been put in Corgicoin. You would have made an even greater fortune investing in Dogecoin or Shiba Inu in 2020 and 2021 compared with BTC. Ethereum has also shown great growth potential over the last couple of years and is a more solid bet than some of the upstart altcoins for 2022.
Avoid Blind Investments At All Costs
There are countless scammers around and people that just want to make money with cryptocurrencies by taking advantage of others. Exploiting the less-informed investor is a great way to make money for many but you do not want to be taken advantage of. Be sure that you only invest when you have all the information you need. If you want to trust an investor and you need advice, look for those with a proven track record in successful cryptocurrency investments.
Learn From The Mistakes You Make
Last but not least, you will surely make some mistakes. What you learn from them is just as important as learning how to invest in cryptocurrencies in the first place. Be sure that you learn from absolutely all the mistakes you make and you will keep getting better and better with cashing in on crypto in 2022 and 2023.
