When it comes to investing in cryptocurrency, knowing the type of investor you are could help you understand which factors to consider when getting started.
First off, it might be wise to ask yourself; do you want to see relatively quick asset growth, or are you in it for the long haul? Are you going to accept the risks of making a quick impulse decision, or do you need more time to think it over? The answers to these questions vary for each type of crypto investor and inevitably, the result depends on the action taken.
We must bear in mind that identifying with a specific type of investor doesn’t make you any better or less than your crypto investor companions, but gaining a better understanding of the different types that exist may help you realize a few important aspects of investing.
Let’s have a look at what we perceive to be the top six categories of crypto investors. Grab some popcorn and get comfortable!
Please note: This article is not financial investment advice, but rather examines the similarities and differences of various crypto investing behaviours.
- The Toe Dabbler
- The Questioner
- The Risk-Taker
- The Short-Termer
- The Long-Termer
- The Tactical
The Toe Dabbler
If you’re a first time investor, you might find you’re a Toe Dabbler! These investors are often younger people who are typically newcomers to the crypto world. Obviously, the Toe Dabbler can come in all ages and forms, but the key characteristic they have in common is that they are investing for fun and not much else. You’ll find many of these investors buy into ‘interest’ coins like Dodge or Hello Kitty coin. Toe Dabblers don’t feel stressed or pressured to perform well, but try their best to learn as much as they can, to perform as well as they can. Most professional or avid traders probably started out as a Toe Dabbler, so don’t take this kind of investor lightly!
Ironically, Toe Dabblers usually learn so much that they can end up making a decent profit. The sooner you begin, the more time you can spend learning as much as you can. If you’re looking for a good resource to start learning, check out Dacxi Learn! However, with all that being said, the more that Toe Dabbler continues to trade and invest, the quicker they’ll transition into a different type of crypto investor who’s accumulated more knowledge and experience. Before we get ahead of ourselves and compare our investment skills to others, we must remember that good investors started somewhere. Are you a Toe Dabbler? Well then, you’re just starting your journey to becoming a spectacular investor.
Be patient, stay motivated, aim to acquire as much knowledge as you can, and enjoy the process!
If you still consider yourself an investor but don’t share the same level of immediate enthusiasm and anticipation that Toe Dabblers and other traders have, then you may just be a Questioner. These are typically investors who understand that skepticism is the real job of a trader. Considering how many scams, hackers and shitcoins that exist in the crypto world today; it might be valuable to take each fragment of crypto news with a slight dose of caution. Questioners do just that and more, by actively looking for any and every reason to view a new project with a grain of salt. In fact, other types of crypto investors might not want to hear what Questioners have to say, as it often contradicts their generally positive outlook on cryptocurrency. Only when something is 100% accurate and lacks any reason for doubt, will a Questioner endorse it and invest in its platform.
No matter what you think about Questioners, it’s clear that they can attest to the notion of “facts before feelings,” reminding the rest of the crypto community to be patient before acting too soon on a new project.
Some of the most well-known, successful traders would call themselves Questioners, so don’t think that they are by any means negative! Would you call yourself a Questioner when it comes to investing in crypto?
The Risk Taker
The Risk Taker tends to enjoy investing with a little more risk and thrill involved. Your Risk Takers are typically investors who aren’t afraid to let it all fly in hopes of the best gains. You might know some Risk Takers yourself, as they only talk about the crazy investments they make. One of our customer service staff invested into Bitcoin on a spontaneous whim, and ended up buying an MG! (hyperlink to video). However, it’s not always the case that people are this lucky.
Some might argue that investors are Risk Takers to begin with, but this group of investors takes the reputation to the next level. Naturally, they are under a lot of pressure, otherwise they wouldn’t be Risk Takers. A hefty majority of crypto investors would stray away from this kind of investing, as you could easily lose all of your money. And many have! Remember, the absolute golden rule of investing is to be willing to lose all of the money you’re investing and don’t risk anything you cannot afford to lose! Our beloved Risk Takers tread lightly on this very fine line.
A Short-term Investor is commonly someone who is looking to get out of their cash positions in a coin in a relatively speedy manner. These types of investors are involved in what’s called short selling, which is the practice of selling first and then buying it back later. This trader’s expectation is that the price will fall; the price they sell at is higher than the price they buy it at later. What differentiates the sale price and the buy price produces a profit or loss. This form of selling is one strategy you could use if you believe the price of the underlying asset will decrease in the future and you are seeking to profit from that decline.
Considering how volatile the crypto market is, this type of investor would have to dedicate their time tocontinually tracking the price movements of their investments. Short-term Investors boast large gains in a short amount of time, which is what attracts many investors to this kind of practice. Don’t forget, just as fast as these investors can make a profit, they can lose it even faster. As we’ve seen, the price of an asset can drop instantly in crypto markets, often when least expected; which leaves Short-term Investors drowning in red. Invest as a Short-term Investor at your own risk, and understand everything that you need to do in order to succeed before getting started.
Unsurprisingly, “The Long-term Investor” is someone who performs in contradiction to a Short-term Investor, so, you might already have gathered where this is heading. Long-term Investors purchase an asset and own it with the expectation that the price is going to rise. These investors normally HODL (Hyperlink to Dacxi HODL video) and have no plan to sell the asset in the near future. A key principle of a long-term investment is the ownership of the asset. This contrasts with Short-term Investors, because they buy coins with the expectation of selling and then repurchasing at a lower price. A key difference between a long position and a short position in investments is what the investor expects to happen to the price of the asset.
Long-term Investors are in it for extended time periods, understanding that it will take some time before they can see massive returns. More often than not, Long-term Investors put in large sums of money with the hope of gain, regardless of the time before they see a return. Do you invest in cryptocurrency in hope of making a lot of money in the distance future? You might just be a Long-term Investor.
The Tactical Investor
Last but definitely not least, we have the Tactical Investor. Similar to the Questioner, Tactical Investors take time before making any large investments. This is because they’re methodical in all of their actions, formulating precise plans and strategies for their ‘enter’ and ‘exit’ cash positions. These investors know exactly what they’re getting into, sometimes even overthinking their plans (I’m sure we’ve all been guilty of that!). Some people associate the Tactical Investor with the Smart Investor, since both tend to have the best returns. Rarely will you see a Tactical Investor feeling down with large losses, since they’re usually racking up green signs or at least breaking even.
At this point you’re probably asking, “so how do I become a Tactical Investor?”. Well, it’s actually simpler than it sounds, but it will take some time. To be a Tactical Investor, you must accumulate a wealth of experience to the point where you’ve developed and tested your own strategies to achieve consistent success. Tactical Investors areby no means perfect, so don’t be surprised if you see someone who you thought to be a Tactical Investor fail at times.
Would you consider yourself a Tactical crypto investor?
Whichever type of investor you consider yourself to be, you’ll certainly be able to identify with at least one or two of the types above. The more you know about the different types of investors and their typical personality and investing traits; the more successful you will become in the future.
Do not just take the advice of ‘diversifying your portfolio’. Aim to find the best combination of all investor types in order to diversify your own investment style.
Till next time team!