Beginner guide: 5 tips for investing in cryptocurrencies

If you are already reading this article, you may be interested in cryptocurrency investment.

Cryptocurrencies are considered as money of the future. However, before arriving in the future, you probably need some tips to become a experienced trader.

Today we bring you another beginner guide to your adventure in the crypto world.

Risk = profit

High returns in crytocurrency investment come from high market volatility. It is common for an altcoin to have a variation greater than 50% within 24 hours. And even for Bitcoin, the cryptocurrency with the highest market capitalization, it has already gone through fluctuation of 10% in one day.

So please always bear in mind: risk=reward

The risk of cryptocurrency purchases and sales is relatively high compared to that of foreign exchange, futures and stocks. Consequently, the return may be more attractive than traditional investments.

Diversify your portfolio

“Don’t put the eggs in the same basket.”

This logic works as well in cryptocurrency investments.

If you use all your money to buy one single cryptocurrency, you could miss out on opportunities to hedge risk with other cryptocurrencies.

Bitcoin and Ethereum are the most valued cryptos in the world. When they receive a PUMP, a part of capital may leave from the investment in less valued altcoins and be injected into them, resulting in the depreciation of those altcoins. On the contrary, sudden appreciation of altcoins can attract money from investing in BTC and ETH.

There are special situations that altcoins whose values will only receive appreciation when the related crypto goes downwards, such as EOSBEAR and ETHBEAR. EOSBEAR is a token that seeks a return that corresponds to -3 times of the daily return of EOS.

On the other hand, stable coins, as their name implies, have a stable value, for example, the price of USDT is pegged to the US dollar.

Hence, it is wisely to diversify your portfolio with different cryptos to reduce your investment risk.

Buy low and sell high

The most basic way for making profit in cryptos is to buy low and sell high. But in reality, not everyone can follow this rule in their investments, however simplest it may be, since they may have bought crypts at high due to FOMO (fear of missing out) and sold crypts at low because of fear to lose more.

A good tip to avoid this situation is to learn how to use the stop-limit function to set take-profit and stop-loss prices and avoid being influenced by reactions from other investors.

We should notice that price adjustments always precede an appreciation, in which the price drop can be seen as an opportunity to increase your portfolio position at lower cost. And valuations will always end after testing the next resistance level.

Long-term investment

Short-term investment requires more delicate strategies and deeper analysis.

In this sense, beginners can adopt long-term investment.

A good way is to buy the crypto in the adjustment period and set your desired selling price for a long period (a week or a month). You can continue to buy at a lower price but do not sell the crypto until the set price is reached.

A return of 1000% is not uncommon in the crypto world, but most cases only happen with long-term investments over 1 year.

Keep learning

The blockchain technology behind cryptocurrencies is something that is revolutionizing the world we live in.

If you decide to start your cryptocurrency investment, you must remain enthusiastic about learning new things which can be a project white paper, crypto graphs or technical analysis.

In this way, you will have more confidence when making decisions in front of market volatility.

If you are interested in knowing more about the crypto world, read other articles on our blog.