10 Crypto Trading and Investing Lessons Learned Over10 Crypto Trading and Investing Lessons Learned Over
The crypto market is known for being notoriously volatile but that does not mean you cannot conduct successful trades. A beginner in crypto investing and trading is likely to make mistakes but every mistake is a lesson learned. Here are common investing and trading lessons that crypto enthusiasts have learned time and again:
- Investments are easy, they are always risky. No one can be sure where the market is headed. So, every time you wish to invest or trade a coin, you need to understand the project, read the whitepaper, to see what you are getting yourself into.
- The truth is everyone makes money when it is a bull market where the prices are going up. However, the real traders are those that not only manage to survive but even make higher profits when markets are down.
- Diversification is the key to minimizing losses. The biggest investing lesson that crypto trading has taught us is that one should never keep all his eggs in one basket. Instead of putting in all your money into a single asset, you should spread it across multiple cryptos. Besides investing in cryptos, it makes sense to invest in assets like stocks, real estate, and gold so that in case the market goes south, you do not lose everything.
- It is naïve to think that the market will stay up forever; all markets fluctuate. Bitcoin, for instance, has gone through a tumultuous journey of frequent surges and crashes. You therefore need to learn how to make profits when markets are down.
- A common lesson most beginners in crypto trading learn is when they buy high and sell low. Ideally, you must buy low and sell it for high to make money. Many crypto traders tend to think that just because prices of an asset are soaring, they need to buy more; else they will miss out on the opportunity. However, the next day prices come down and they start believing that the crypto is crashing; this is when they panic and start selling their assets. The trick to making good trades is to be patient and wait for the market to settle before diving into it.
- One must realize that trade and investment are not one and the same thing. You buy low for an investment and keep it for the long-term hoping that prices will go up. In trading, you must plan the trade cautiously before you actually pull the trigger. While the entry point is most crucial in a trade, it is your risk management and money-management plan that saves the day.
- You need to be wary of get-rich-quick schemes and investment gurus. There is a lot of misinformation out there and crypto enthusiasts often make poor decisions in a haste to follow advice from others who may actually be amateurs like themselves.
- Ignore the noise and the market hype when trading or investing in cryptos; rather, have a plan in place to identify which trades/investments to focus on and which to avoid.
- Beginners must avoid leverage and leave it to the experienced traders. Leverage means using borrowed money for investing in a crypto which you must repay. It is when people borrow cryptos thinking prices will decline; they borrow cryptos, sell these, and wait for prices to fall so that they can re-purchase the asset and make profits.
- The market is beyond your control and that is the biggest lesson for a crypto trader. All you can control are your trade volumes, entry and exit points, and capital.