Cryptocurrency investing and trading has become a hot topic in recent years. Over the past decade, this financial opportunity has transformed from being on the fringes of the investment world to becoming a genuine, very profitable endeavor.
The success stories in recent years have inspired many aspiring investors to explore cryptocurrency trading. Before you jump in head first, consider these five helpful tips for beginners.
Ignore the Hype
One of the most valuable pieces of advice for cryptocurrency beginners is to block out the noise and ignore the hype. Yes, trading cryptocurrency can be incredibly profitable and rewarding. It’s an exciting opportunity that’s decentralized and works outside the traditional currency trading platforms and protocols.
However, as with any form of trading, success with cryptocurrency takes time, investment, dedication to expanding your knowledge, and more than a bit of luck. As you enter this realm of investing and trading, you’ll come across a lot of naysayers who tell you you’re wasting your money. You’ll also find a lot of people with the secret formula to become a billionaire.
So what do you do? Dedicate yourself to education from reliable, unbiased sources. Take some time to evaluate the legitimacy of what you hear and read, then make decisions for yourself.
Start Small and Diversify
When you hear about crypto alerts indicating overnight exponential increases in certain markets, it can be tempting to go all in. Before you reallocate your retirement savings to cryptocurrency, stop and think about your actions.
The best recommendation for getting started in cryptocurrency trading is to start small and diversify. Don’t invest more than you can afford to lose right now. If you already have existing traditional investments, keep them, and add a bit into cryptocurrency investing. As you get the lay of the land, you can increase your investment.
Regardless of whether you gravitate toward cryptocurrencies or traditional investments, you should never put all of your eggs in one basket.
Having the right information can make a huge difference when starting with cryptocurrency trading. It might take some time to understand what you’re reading and how to use that data to make decisions, but having reliable tools can simplify the process.
Use a tool like Cryptolume to send you crypto alerts, highlight changes in volume and price in various currencies, and help you make logical data-driven decisions. Having a tool with live crypto alerts can also help you act fast when things are changing.
Using digital currencies adds complexity to how you handle your money and protect yourself. It’s important to ensure you have robust cybersecurity features in place, operating on a VPN and avoiding public networks while trading. Use an alternative email address for your trading accounts that offers two-factor authentication and isn’t used for anything else. Also, use an encrypted password rather than the same password you use for Netflix, Gmail, and Facebook.
You also need to protect yourself by making your cryptocurrency foolproof so that you don’t accidentally lose it to cyberspace if your computer crashes.
Protect yourself from scammers by finding industry recommendations and advisors you can trust. Finally, understand that the IRS tracks cryptocurrencies and that you’ll be expected to report your income at tax time.
Understand the Process
It’s crucial that you understand how trading works, what the financial requirements are, and how to navigate the environment. Even if you’re only starting with a small investment, you’ll want to understand what you’re paying for.
For example, “wallets” are a way of storing your currency. A hot wallet is online and ready to trade. A cold wallet is offline and more secure. In other words, it’s like having both checking and savings accounts. However, you wouldn’t know that if you didn’t just read it.
Understanding the process makes you less susceptible to rookie mistakes and scams, helping you make the most of your investment over time.
In summary, read before you invest, get access to crypto alerts, and only invest what you can afford to lose. Make informed changes to your investment over time and see what comes out of your new journey into cryptocurrency.