How to make money investing in cryptocurrencies
By Saeid on ALTCOIN MAGAZINE
In this blog post, I want to talk about the different ways you can invest in cryptocurrencies. There was a lot of hype around this space, it currently has calmed down a little, but it soon will grow again. Many of us have heard about cryptocurrencies and blockchain in one form or another. We have seen people grow very rich from it and others lose fortunes in it. But when we see the charts, the growth, and the money made, it is pretty damn mouth watering!
A lot of professional investors are advising people and companies to get off zero, meaning to have at least a very small percentage of your savings or investments in cryptocurrencies. Why? Well, it is because of the huge possible returns and most importantly because it is here to stay. Cryptocurrencies and blockchain technologies are going to reshape many aspects of our future.
If you want a good description of what sort of impacts cryptocurrencies can have on our future, you can check my post:
So how can you get in on it? Where do you start? What is the best strategy for you?
Hopefully, you can answer these questions by the end of this post. Bellow, I will explain some of the best ways you can get started investing in the space and compare the methods so you can decide which one is best for you. You can also decide to implement a mixture of these strategies. So let's get started.
How it works
Each strategy will have a short description, following with a set of aspects I will be comparing them on:
- Prerequisites: The knowledge or backgrounds you need before you start
- Time: The amount of time it will take from you to work on it
- Risk: The amount of risk it bares if done right
- Emotional stress: The amount of emotional stress implementing the strategy can inflict upon you
- Minimum level of expertise: Minimum level of expertise needed in the field that is related to the strategy to get started
- ROI (return on investment): The return on investment timeframe and amount
Of course, all of these indicators are relative and are meant for comparing the strategies in this post.
In the end, I'll bring some tools and resources that I think can help you get started with the strategy.
1. Research projects and invest in the ones you believe in
You should go this route if you are really passionate about the space and want to dive deep into learning about it. For this strategy to work, you need to understand both the technical and the economic side of this space and also be willing to put the time and effort into the research. You will have to research many cryptocurrencies and analyze them deeply. You should also follow the project’s team and stay updated on the news.
These are some of the questions you should be able to confidently answer before you invest money:
- What problem/s is the project trying to solve?
- What is the significance of the problem they are trying to solve?
- What is their competitive advantage?
- What is their business/economic model and why will it work?
- What is the founders' plan for attracting users and customers to the project?
As you have probably noticed, this strategy is for someone with a good understanding of this field and who has the time to do the research. On the other hand, it arguably has the best long-term return on investment.
summary:
- Prerequisites: basic knowledge of the space and a lot of passion
- Time: medium
- Risk: relatively low in the long-term
- Emotional stress: medium
- Minimum level of expertise: intermediate
- ROI (return on investment): very high in the long-term
Tools & Resources:
- article for understanding the blockchain technology
- coinmarketcap.com
- blocktivity.info
- The project's website and whitepaper
- icoalert.com
- cointelegraph.com
- coindesk.com
- blockonomi.com
- ccn.com
2. Invest with a cryptocurrency index fund
This strategy is really good for those of you who have heard about this space and believe it will grow but do not necessarily have the time or the expertise to dive deeper. This is also a great way to just get started and get some skin in the game.
summary:
- Prerequisites: None (just believe in the entire space as a whole)
- Time: very low
- Risk: medium
- Emotional stress: low
- Minimum level of expertise: beginner
- ROI (return on investment): medium
Tools & Resources:
3. Day trading
In this strategy, you are spending a lot of time analyzing different markets and their charts in order to buy and sell at optimum price points. You are basically trying to find short-term lows and highs in order to buy and sell respectively to make a profit.
This method can bring decent returns and it can also work very well in the short term. But, the downside is that it takes a lot of your time, energy, and occupies your mind even when you are doing other things. There are tools and resources to automate some parts of it so you won’t have to constantly be on top of things, but a huge part of it will still remain at your feet.
This strategy also needs a good amount of technical analysis knowledge. The good thing is, that you can start with relatively small money in order to learn, and if you put in the time and energy, you can improve exponentially. You will be learning to recognize patterns and follow trends to make profits off of them.
If you are a person with a low tolerance for stress, I definitely don’t recommend this. This strategy has a lot of ups and downs. Even the most experienced and professional traders still lose money. But, their key to success is that they overcome their emotions, learn from their mistakes, and stick to their plan. In the long run, they will just win a lot more than they lose, and that is how they make money. So if you think you won’t be able to handle the constant ups and down, don’t go this route.
summary:
- Prerequisites: basic knowledge of markets and technical analysis (to start with)
- Time: very high
- Risk: medium
- Emotional stress: very high
- Minimum level of expertise: intermediate
- ROI (return on investment): high
Tools & Resources:
- tradingview.com is a great tool with great charts and indicators to play around with
- 3commas is a great tool to automate some parts of your strategy and focus on the bigger picture
4. Using bots to trade for you
In this method, you use computer programs, or bots, to automatically analyze the market and trade on your behalf. The bots can range from using only completely automated technical analysis techniques to using machine learning in order to learn the best action. Either way, this method has tremendous advantages, the biggest of which, it removes human emotions from the equation. These bots also have the advantage of being very fast which can make a lot of difference.
summary:
- Prerequisites: relatively good programming skills — ability to work with web APIs
- Time: only takes time for the programming and testing part
- Risk: low
- Emotional stress: None
- Minimum level of expertise: intermediate
- ROI (return on investment): high
Tools & Resources:
- A tutorial for writing a trading bot with python trading on the Binance exchange
- Your preferred exchanges API documentation
Conclusion
All these methods have the potential to bring you great profits. But the most important thing to keep in mind is, no matter which strategy you pursue, you must be patient and keep improving your skills. As long as you keep learning and don’t let minor setbacks deter you, then you will be fine and ultimately succeed. What I will recommend is to start out small, just to test the waters, and gradually grow your investment as you become more comfortable in the space.
As always, I hope you guys enjoyed the post and found it helpful. If you have any questions, leave them in the comments and I’ll try to answer them as soon as possible.
Before moving on, make sure to press follow, leave a clap or 46, share today’s highlight and if you missed the last article, click here.
Read about the Altcoin Magazine Mastermind Event here.
Follow us on Twitter, InvestFeed, Facebook, Instagram, LinkedIn, and join our Discord and Telegram.
The purpose of ALTCOIN MAGAZINE is to educate the world on crypto and to bring it to the hands and the minds of the masses.
