Are you looking to get started with crypto finance but don’t want to get caught up in losses? First things first, cryptocurrency is a $1-trillion-dollar industry globally. It’s an attractive market for millions of currency traders looking to make the most of extreme volatility and investors who need to diversify their portfolios.
Although crypto industry regulation is still developing, that hasn’t stopped people from rushing in. But while some have made fortunes off of crypto, many others have lost their life savings in it.
Crypto investing requires diligence and savviness. We’re here to share some top best practices to observe.
1. Avoid Shady Cryptocurrencies
Bitcoin is the undisputed star of the cryptocurrency show, but there are hundreds of other currencies on offer in various marketplaces. These currencies aren’t created equal. The truth is some have no value at all, and we’ve seen a few spectacular collapses, going down with millions of investors’ money.
Whose fault is it?
Hands can be pointed to regulators who failed to prevent those cryptocurrencies from being offered, but the ultimate blame lies with the investors. It’s your job to do proper due diligence before purchasing a cryptocurrency. The allure of getting in on a cryptocurrency when it’s dirt cheap is strong, but you’ll only have yourself to blame if it fails.
2. Embrace the Fact That Crypto Is Easy Money
Sure, people have made six figures (or even seven) in crypto in a matter of days. By any definition, that’s easy money. All they did was pump in capital and speculate. Thanks to crypto volatility, it’s possible to make a fortune in one wild market swing.
But such cases are the exception, not the norm. It takes the average crypto several months to realize a sizable yield.
As such, from the onset, engrain in your mind the idea that crypto isn’t easy money. This will prevent you from making impulsive crypto purchases during periods of high volatility.
3. Practice Risk Management
Don’t put all your eggs in the same basket, so goes an old age that you need to keep in mind when investing in cryptocurrency. Whether you’re a day trader or take a longer-term approach, you shouldn’t put more money into crypto than you can afford to lose. Because you can lose it all in a flash.
Define your budget for investing in crypto and stick to it. Don’t use money that wasn’t in the budget to open new trades or rescue positions that are threatening to wipe out your account in the hope that the currency will reverse its movement.
4. Diversify Your Crypto Portfolio
Once you’ve gained confidence in your crypto investing abilities, you’ll want to increase the size of your holdings. That’s fine, but avoid focusing on one cryptocurrency. Diversifying your crypto portfolio is a smart way to not only spread your risk but also potentially maximize your returns.
5. Cash Out Some of Your Winnings
You’ve made money in crypto? Thumbs up!
It’s a sweet feeling, and you’re eager to make a lot more money and get rich(er). All good, but don’t fail to cash out a percentage of your winnings. Letting your profits pile up increases your trading capital, but with more capital, you’re at a heightened risk of abandoning your trading strategy.
So, find crypto ATMs near you or use other withdrawal methods to convert your profits into real cash and enjoy the fruits of your labor.
Make Money with Crypto Finance
Despite the wild ups and downs, the world of crypto finance is thriving. People are making fortunes in it, and you can, too. Apply these best practices and your crypto trading or investing journey will be easier.
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