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July 14th, 2022. Considering the current market conditions, investing in cryptocurrencies could be a wise move to make before the trend reversal. Yet, when doing crypto, you should be well aware of the fact that there is a thin line between your investments soaring up to thousands of dollars and going to waste.
That’s because digital assets are experiencing substantial ups and downs, seemingly, on the spur of the moment, and the entire space is still quite immature. These are the exact reasons why you need to get familiar with the basics before starting your crypto investing/trading journey.
#1 Invest Only What You Can Afford to Lose
Crypto trading is a play that can bring you big gains, however, blindly investing everything you have is no different from betting. Simply said, do not risk your trusted instruments and savings accounts, or, God forbid, slip into debt or take out a home equity loan on your house.
Don’t be one of those who made major financial sacrifices just to buy crypto, hoping that they would make a nice chunk of change overnight, and then lose everything they had. Instead, keep your head cool and enter trades that won’t affect you financially, at least not your everyday life.
Putting your safe assets, such as your home, on the line, and laying out money on the risky ones is quite silly. Leave some room for speculative investments only if you can afford to lose that capital.
#2 Build a Balanced Portfolio
When trading crypto, you need to diversify your portfolio to minimize risks. Do a little bit of everything – Bitcoin, stablecoins, altcoins, and make moves based on your risk tolerance. We highly recommend not risking more than 2% of your total portfolio when entering trades, although, ideally you should stick to a 0.5% maximum. On the other hand, by putting your eggs in just one basket, you’d be dependent on the performance of a single asset.
No doubt, trading a single cryptocurrency can help you maximise profits (when you know what you are doing) but, on the contrary, this kind of strategy leaves no room for errors (and, as a beginner, you’ll be probably making some).
Needless to say, relying on just one crypto, you’ll have to be patient and wait until it gets moving. Some coins tend to have longer periods of consolidation, and, ideally, you should pick the ones that have higher price volatility to be able to enter trades more frequently and, ultimately, make some profits.
#3 Make a Trading Plan
Every seasoned crypto trader has a trading plan. Having one, novice traders can detach themselves from making emotional decisions, reduce stress, ensure they don’t miss on profitable trades, and, most importantly, scale their portfolios.
Without a plan or strategy, you’ll be far more likely to enter off-track trades, especially when trying to regain losses. It is super important to determine key psychological levels, support and resistance zones, and set buy and sell orders, otherwise, you’ll be biting the dust and, eventually, completely bungle the chances of making money with crypto.
#4 Stick to Fewer Trades
The crypto market is, more often than not, driven by manipulation and social media, and newbie traders mostly rely on either before entering trades. Making uninformed decisions and buying at the top is a recipe for disaster, and that’s exactly what media buzz pursues you to do.
This is also when crypto starts becoming overwhelming for traders who then try swinging from one trade to another, hoping that they would recover losses or make faster and bigger gains.
The thing is – you’ll be far more likely to lose money by making too many trades or, even worse, selling at a loss just to enter another risky trade. Instead of hoping for instant megabucks, it’d be much wiser to stick with strong cryptocurrencies, fewer trades, and embrace low to modest profits (at least for starters).
#5 The Right Wallet Is Key
Before starting crypto trading, you should inform yourself about different crypto wallets. A crypto wallet is, as its name suggests, a digital wallet where you can safely store your coins. By choosing the right wallet, you can keep your assets proof against hackers and scammers.
Just imagine making decent profits on multiple trades and losing all of your hard-earned money just because you’ve chosen a wallet that is not secure. This is every trader’s worst nightmare!
So, it is clear that the level of security a crypto wallet can offer should be unmatched, but what are some other features you should pay attention to? Well, it should support multiple currencies (so you can make trades with ease, within a single app) and provide a great, user-friendly and intuitive interface just to name a few important functionalities.
Lykke Wallet is an app that ticks all of these boxes and even comes with some extra perks. Not only does it store cryptocurrencies securely but its intuitive interface makes it seamless to buy, sell, and trade crypto (and Forex) at a 0% trading fee.
The app supports more than 20 cryptocurrencies and over 10 Forex trading pairs and allows you to set up a trading bot you can use for testing various strategies and unleashing your crypto earning potential. Now, that’s what we call the best-in-class trading experience!
For rookies, crypto trading is the make-it-or-break-it type of deal. Mostly driven by back-fence talk, emotions, and impulsivity, most end up losing a great chunk of money before you can say Jack Robinson.
Although it is easier said than done, try avoiding the above-mentioned traps, get to know the market and technical analysis on a higher level, and put your trust in a secure crypto wallet to protect yourself from unexpected losses.