The cryptocurrency market has made millionaires and you can become one of them. Just master your mind and have some discipline when you invest in crypto. Here are ten basic tips that you need to know if you want to become a successful cryptocurrency investor.
1. Understand Your Investment
The first thing that you need to understand is that you should only invest in stuff that you really understand because hoping to make quick money, while not understanding cryptocurrencies at all is a bad idea! So please, before you invest in cryptocurrencies, learn as much as possible about them. This is what I mean when I say,
"Don`t pay other people to lose your money."
My first tip may sound quite simple but nevertheless, it`s essential when it comes to investing. It`s a common mistake that people invest their money in stuff that they don`t understand.
2. Diversification
Another really important thing that you always have to keep in mind when you are investing in crypto is that you should diversify your portfolio. Don`t carry all your eggs in one bag.
When you diversify your portfolio, you will drastically lower the risk of losing everything. The reality is, that there not only massive gains but also brutal drops, especially when a coin is over-hyped or a project misses some technical deadlines, massive drops are happening.
Simply, don`t chase every pump out there in order to protect your capital, instead only focus on a few selected assets and not on thousands. There are many new exciting cryptocurrencies coming to the market every day but chasing all of them can be extremely dangerous to your portfolio.
So keep in mind to diversify your portfolio as well as your investments because, in this way, you can spread your risks out. In case something goes wrong with your investment, you don`t have all eggs in one bag.
3. Take Responsibility And DYOR
In the end, you alone are responsible for your own investment decisions and no one else. You should always be able to live with the choices you made in the past and you should never blame anyone else for your financial losses, such as a bank advisor. You should make the decision on your own because you understood the product that you want to invest in.
That`s why it is so important that you always do your own research ("DYOR"). Doing your own research actually means reading a lot! You need to have as much information as possible from different resources. If you have done this, then you have finished doing your own research.
It is very likely that you will also make wrong decisions when investing. Then it`s important that you take the responsibility for your decision and that you learn from your mistakes in order to make profits from them in the future.
4. Don`t FOMO
Be cool when investing in crypto, and don`t FOMO! FOMO is an important term in crypto space and means “Fear Of Missing Out.” This feeling is especially prevalent when a cryptocurrency rises in its value significantly over a relatively short time. It can be described as a feeling of anxiety that other people are getting rich while you are missing out
The problem with FOMO is that your investment decisions are based upon emotion instead of logic and reasoning. It can often lead to a situation where trades are made for an asset that is overpriced, incurring much greater risks of financial losses.
When a cryptocurrency rises in its value significantly over a relatively short time then you are already too late. FOMOing in is dangerous.
5. Long-term Strategie
Make sure that you have a long-term strategy. The cryptocurrency markets are highly volatile, which means that the prices fluctuate widely. This can result in your investment being temporarily negative. Therefore, it makes sense to pursue a long-term investment strategy, which in the cryptocurrency market means around a year.
You have to see that there is a difference between investing and speculating. If you just do some day-trading then you are just speculating but speculation has nearly nothing to do with an investment.
If you want to know my personal long-term investment strategy, the diversification of my portfolio, and how I try to spot low market cap gems, you may check out one of my recent posts Sell The News And Buy The Dip 😎 Cryptonator`s Ultimate Crypto Investment Guide.
6. Fees, Taxes, And Inflation
Don`t forget to calculate fees, taxes, and inflation. These are exactly the three enemies that are gnawing at your profit.
For example, you have to pay transaction fees when you transfer your cryptocurrencies to an exchange and you also have to pay a fee for trading on the exchange. The more you trade, the more trading fees, you`ll have to pay.
Another thing is when you use Decentralized Finance Protocols. There you also have to pay fees. These fees are relatively high at the moment because the DeFi Protocols are working with smart contracts, most of them on the Ethereum Blockchain. When you have to pay a fee of $10 in Ethereum to earn 1% interest on your Stablecoins with Compound, then you have earned nothing after one year if you have invested less than $1000. If you also include the inflation rate in your calculation, then you even have a loss after one year.
That`s why it is so important to calculate with the three enemies who are gnawing at your profit: fees, taxes, and inflation.
7. Calculate With Losses
There is also something else you should always calculate with. You also have to calculate with losses. If you invest in cryptocurrency, then it will happen from time to time that your investments bear losses.
Now, this doesn't always mean that you are really losing money because these losses can be losses that only exist on paper. You are realizing a loss only when you are actually selling that specific cryptocurrency with losses. Until that point, the losses are only on the paper and not realized.
However, the possibility to lose money with cryptocurrency investments is always there. So don`t put your entire life savings into your crypto and don`t put any money into your crypto investments that you are not also willing to lose.
8. Don`t Get Greedy
Another very important thing is that you never should get greedy. When you can get greedy, you will get scammed more easily. It is important to understand that greed is the first ingredient for every successful scam. When you get greedy, you also lose your coolness. When you lose your coolness, you are guided by your emotions and not by a rational mind anymore.
This means that whenever you get greedy, you are going to put yourself in danger to get scammed or raked. This happens faster than you may think. The cryptocurrency industry is still relatively new and therefore, also the number of scams is increasing. Meanwhile, we have seen thousands of different scams over the past years, from very complex operations to extremely simple ones.
If you lose all your crypto because you got scammed, then it is really hard to recover from such a serious loss.
9. Reinvest Your Return Of Investment (ROI)
If you want to build up a fortune in the long term, you should also benefit from the so-called compound interest effect. The compound interest effect helps you to build up your wealth faster and faster. You don't benefit from this effect if you consume your profits beforehand, i.e. deduct them from your portfolio.
If you invest without compound interest, then you are just adding up your profits. If, on the other hand, you invest with compound interest, then you multiply your profits.
10. Simply Start Investing
My last tip for you is: Just start! Investing is ultimately not a theoretical subject, but very, very practical. You can acquire a lot of information, attend seminars, and read a lot of books, but the most important thing is to gain practical experience.
As I said before, you will make some mistakes, especially at the beginning, that cannot be avoided. Even today I still make mistakes but the important thing is to learn from them in order to benefit from them in the future.
If you already have some money saved, then start by investing a small part of it in cryptocurrency to gain practical experience. If you don`t have any savings at the moment, then simply start with small amounts, for example, with the cryptos that you are earning here on Publish0x or elsewhere.
Final Words
In the end, I hope that I could provide you with some helpful crypto investment tips and thank you guys as always for reading, liking, following, and tipping 👍
If you like, you can also follow me on Twitter.
You may also like: TOP 5 Ways To Earn Passive Income On Your Crypto 💰
