The world of cryptocurrency has been attracting new investors for the better part of a decade now. While most can’t hope to join the ranks of crypto millionaires overnight by investing in a lucky coin or two, more and more people have started giving careful thought to diversifying their current “traditional” holdings and investing more in cryptocurrencies.
In this piece, we want to help out potential crypto beginners with a few tips on what to condor before making your first trade.
1) Don’t Invest More than You Can Afford to Lose
Financial experts on CBNC warn that “cryptocurrencies are volatile, risky investments, and that you should only invest what you can afford to lose.” It’s important to note that this is not advised to avoid the market altogether –– merely to be careful with what you commit to it. Make sure your own finances are completely sorted before you make any decision to invest in cryptocurrency (or really any other market for that matter). Then, if you do have funds that can be put into crypto, you can try to build them gradually, or invest more when you have more available.
2) Choose the Right Wallet/Exchange
There are a lot of apps or platforms where people buy, hold, and sell cryptos. Some of the most popular options are Coinbase, eToro, Crypto.com, and Binance; we’re also seeing some other financial trading platforms embracing crypto, with Robinhood notably having joined the ranks earlier this year. Before you start investing with any one of these platforms, recognize that they each offer different selections of coins and security measures. They also have different reputations, and in some cases are regulated differently in specific countries. Do some research, talk to friends who have already gotten started, and get a feel for which platform you’d like the most so that you’ll be comfortable when you get going. Your First Crypto Trade
3) Research the Coins
Once you’ve decided on a wallet, you should also do careful research into any specific cryptos you consider buying. Each coin should have a white paper that explains its objective and future plans, even though the market is so volatile. Even altcoins that have little to no value (affectionately known as “shitcoins” in some circles) should have white papers or some other documentation that shows why they were created in the first place. Coins that have nothing you can find through some basic research are red flags and are best avoided. Once you decide on reputable coins to focus on, meanwhile, it’s wise to research price history, what factors influence movement, and what if anything points to the positive or negative movement going forward.
4) Consider Practicing First
If this is your first rodeo, it’s also worth noting that you can practice with play money first. In a write-up on demo trading platforms, FXCM makes clear that said platforms fully simulate real market conditions to give users an accurate feel for how it all goes. While demo trading has traditionally been associated with forex and stocks, for the most part, it can now be conducted with regard to popular commodities –– including leading cryptocurrencies. Practicing with demo trading will give you a better idea of what it’s really like to buy and sell assets in such a new and volatile market, especially if you’re someone who learns best by doing.
5) Resist FOMO
FOMO, or “Fear Of Missing Out” is notorious for leading people to make terrible decisions on impulse –– such as investing life savings on a coin, hoping to win big, and never having to work again. FOMO is often brought up jokingly, but it’s a dangerous state to be in with regard to investment. In order to avoid it, Psychology Today tells us to “Focus less on potential losses of missing out and focus more on immediate gains of what’s being done in the now.” To apply this to crypto, we recommend starting by keeping an eye on the news and making small decisions until you feel comfortable. Avoid the natural FOMO that comes from watching others make gains off of cryptos’ periodic spikes, and focus on your own strategic decisions. Are you ready for Your First Crypto Trade?
We hope these tips will help you make the decisions you’re most comfortable with as you begin your cryptocurrency journey.
by Jaimielee Barron