The world of cryptocurrencies continues to grow at breakneck speed. However, jumping into a crypto investment without a deep understanding of its market, possibilities, and threats might appear to be risky and unprofessional. There are lots of things you should know beforehand, like how to choose the best crypto exchange or the safest crypto wallet to fit your needs, and lots of other data. In case you don’t know where to start, we are here to help. Discover the list of the top things you should know before diving into crypto trading.
Get Ready For Learning
The most common mistake of hundreds of beginner investors is starting to trade without having a deep knowledge of how the industry works. The fact is that making business transactions with crypto is usually fast and easy, so many newbies rocket launch their investment activity just from making a couple of deals. Of course, you might start to gain profits right at once. However, having no investment strategy is likely to be a failure in the long-term. Brush up your knowledge of crypto before making any operations on the market.
Be Aware Of The Possibility Of Drastic Changes
There is nothing new to the fact that cryptocurrencies are volatile. However, the changes in the crypto value might appear to be more drastic than you expect. To have an idea of how volatile the crypto market can be, you can investigate a particular cryptocurrency e.g. Ripple, check XRP’s past performance and price forecast here.
The value of most types of coins often has numerous ups and downs within the shortest terms. The fact is that the market for digital money is less predictable than the stock exchange. Therefore, the first thing you should be prepared for is the high level of risk. Moreover, you shouldn’t panic when something doesn’t go as you predicted. The situation might change to completely opposite in a blink of an eye! That is why it is vital to invest wisely and avoid playing with your financial future.
Forget About Having A Proven Rate Of Return
Many crypto experts compare their trading activity with gambling. Why? The niche of digital money has little to no regulatory standards. Therefore, the rises and falls of the value of coins are very difficult to predict. This means you can’t calculate your returns similar to trading on the stock markets. Just remember that the cryptocurrency and stock markets are not complying with the same rules. Moreover, it is not recommended to build a long-term investment plan based on crypto.
Avoid Storing All Coins In The Same Place
When it comes to trading and storing coins, diversification is a must. To have a brilliant crypto portfolio, it is better to trade different types of coins. What is the best cryptocurrency to invest in? How to choose the most promising crypto coin? You will need to find the answers to these questions and make your crypto trading more diverse. Invest in different coins to reduce the risks of losing money in case the value of a certain coin suddenly drops.
Create An Extra Email
In case you use a regular email account for making all deals, you are facing a risk of exposure to a data breach. It is always a good idea to create a separate email to be used in trading, as well as add two-factor authentication. It is also recommended to choose an uncommon username that doesn’t contain any personal information. For example, [email protected] is not a good email address since it contains your real name and surname. Don’t give the hackers a chance to trace you using identifiable data. Keep in mind that your confidentiality and security should be your top priority.
Find Out More About Crypto Wallets
Storing coins in a safe and reliable way is another important point for successful trading. Crypto wallets are designed exactly for these purposes. There are two most common types you might have heard about. These are “cold” and “hot” ones. Hot wallets might be a good alternative for beginner investors who trade small amounts of coins. They are very convenient and easy-to-use but have higher risks of being hacked. Cold wallets are considered to be safer and are good for saving cryptos for a long time, while hot ones can be used on a regular basis for fast trading.
It is also important to understand the difference between exchanges and wallets since they are separate services. In case you keep your coins on exchanges, you don’t have keys. Therefore, you are at high risk to lose your assets in case something goes wrong with the exchange. Not to mention, such incidents have already happened. Therefore, spend some time to investigate the opportunities of various wallets to choose the most fitting alternative for your needs.
Be Careful With Mobile Wallets
In case you are planning to use a mobile wallet for trading cryptos in high volumes, you are at great risk. The reason is that mobile wallets had been compromised plenty of times. Obviously, your mobile phone can be lost, stolen, or hacked easily. In other words, convenience should never go beyond security.
Avoid Fake News
As a beginner in the world of cryptocurrency, you might face lots of fake news and unreal promises of earning thousands of dollars in a single click. However, it is always important not to follow your emotions and invest wisely. Always double-check any info you find online before initiating the deal, otherwise you may easily fall into the traps of crypto scammers. This simple trick will help you sort out only fresh and relevant information, as well as invest effectively. It is better to follow only trustworthy and reliable sites to check the info about different coins.
Hopefully, these tips will help you build your investment strategy and start your crypto activity in an easy and safe way. You can also sign up for our newsletter to keep in touch with the hottest tips and news in the crypto industry.
Andrew is a writer that does most of his work on cryptocurrency-related topics. While he’s primarily interested in Bitcoin, he also follows major altcoins and the innovative ideas that new cryptocurrency and blockchain projects are bringing to the table.