10 Tips for First-Time Cryptocurrency Trading

Cryptocurrencies tips for investing

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Large investors already trade cryptocurrencies and new cryptocurrencies do not stop coming out every day. Although the undisputed king is still bitcoin, which is closely followed by ethereum.

It is no longer considered only as a speculative asset but they have begun to see a promising future for it and nobody wants to be left out of the boat. These tips can help you invest:

1. Do not invest more than you can lose

Although this is a maxim in any investment, cryptocurrencies it charges even greater value in the volatile and uncertain scenario in which they move. A professional trader never invests more than 1% of his capital in a trade.

2. Investigate

Do not believe everything that is published about a cryptocurrency. You should research and contact experts in the cryptocurrency in which you want to invest. Know what your value proposition is and if it has a utility that can lead to market adoption. If there is utility, there is value.

3. Resistance to FOMO

FOMO is the fear of missing something. If you are going to invest with the feeling of losing something, the only thing you are going to lose is money. It is important to remember point 2.

4. If it’s too good to be true, it probably isn’t

There is a lot of smoke in the investment world and cryptocurrencies are not going to be the exception. There is no Holy Grail or invincible investments. It is important to remember point 2.

5. It should not be believed, it must be verified

Before investing, you should verify that everything they say is true. There is a lot of charlatans going around in the world of cryptocurrencies taking advantage of unsuspecting investors. That is why point 2 is so important.

6. Do not rely on unit bias

That a cryptocurrency is trading at 1 does not mean that it is cheaper because it is not about that. Why was the currency created? What is your function? How many people are behind? How busy is the GitHub repository where open-source updates are generally logged? What is the security model: proof of work or other? Point 2 becomes more relevant.

7. No keys, no coins

Leaving the keys in the hands of anyone can be doom. L platforms as finance decentralized or DeFi numerous attacks have been targeted in recent months. Even centralized exchanges can be attacked and your passwords exposed. You should opt for a cold wallet or cold wallet as a ledger or even your computer. Only those cryptocurrencies that are going to be traded should be kept in the hot wallet.

8. Can be purchased by fractions

Bitcoin allows you to invest in it up to 8 decimal places, so you do not necessarily have to buy a full one, which allows you to make investments that are not so large and take advantage of the advances in the price without risking too much capital.

9. Know the tax consequences

Cryptocurrencies are not exempt from taxes and the constant advances are giving them a legal framework so that you have to pay them. For this reason, the fiscal scenario of each country of residence must be analyzed so as not to be surprised.

10. Do not obsess over the market

You do not have to spend hours sitting in front of the computer watching what happens with the price. The market fluctuates normally. A specified amount of cryptocurrencies should be purchased using Dollar Cost Averaging (DCA) at regular intervals (daily, weekly, monthly, or annually) and not looking at it.

The main aspect of these ten points is information. You should not invest without sufficient information and knowledge. The universe of cryptocurrencies is immense and there is a lot to analyze.

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