Today, everybody is talking about cryptocurrencies. New cryptocurrencies are of interest not only to specialists. The media is also always looking excitedly at the new possibilities of cryptocurrencies and their hitherto hesitant development.
This article provides the most important information & tips when investing in cryptocurrencies. Just learn what you should pay prior attention to. Let’s get started!
Tip #1: Reputable Cryptocurrencies
Invest only in reputable and already established projects with a good development team. Projects like IOTA, Ethereum, Ripple, or Cardano have proven in the past that they are able to enter into partnerships with companies outside the crypto world.
Tip #2: Diversify!
Don’t count on just one crypto. Any successful portfolio has some degree of diversification. If a sudden event destroys the future of a coin, your other coins can still make up for the loss.
Tip #3: Fundamental Analysis
Just monitor not only the chart development but also keep an open eye on the technical developments and partnerships of your coins. Charts can be created by large investors and day traders using short squeezes or similar methods of manipulation. It’s extremely important to follow the fundamental development of your cryptocurrencies, especially for a long investment horizon.
Tip #4: Rational Decisions
Avoid FOMO and FUD. FOMO (Fear of missing out) and FUD (Fear, uncertainty, and doubt) are two terms that were derived from emotions in human psychology. The point is that you should always try to make rational decisions when investing. Emotions have no place in trading!
Tip #5: Strategy Planning
It’s necessary to have a strategy. Whether you want to buy cryptocurrencies via day trading or invest long-term. Just plan in advance how you will behave if your goals are achieved.
Tip #6: Crypto Tax
Just think about the taxes! Trading in cryptocurrencies is considered as a private sale. Each of your trades must, therefore, be taxed at your personal income tax rate.
Tip #7: Security
Security is paramount when it comes to where to buy your bitcoins. A website of exchange should use SSL encryption and allow you to use 2FA (two-factor authentication).
Tip #8: Regulation
Unregulated exchanges aren’t subject to any financial supervision. This means that there is a constant risk that exchanges could deny your request for withdrawal of funds or, in the worst case, even steal your money.
Tip #9: Fees
Some exchanges are currently trying to take advantage of extremely high fee models. As an example, the VeriWox exchange allows its users to buy Bitcoins via PayPal with a horrific 10% fee. Make it clear in advance what fees you will expect so that you don’t have to experience any nasty surprises later.
Tip #10: Minimum Deposit
Only recently, small investors have had a chance to invest in financial derivatives on their own. Some exchanges still require a minimum deposit of several thousand dollars.
Tip #11: Selection of Cryptocurrencies
After you’ve bought your first bitcoins, you’ll surely want to invest in a few altcoins as well. Keep this in mind when you register for an exchange for the first time and make sure that the most important cryptocurrencies are all offered.
Tip #12: Demo Account
It can make sense to first try your hand at trading, especially when you’re investing in cryptocurrencies for the first time. For example, eToro offers a free demo account with which you can take your first steps on the trading platform completely risk-free.
Tip #13: Liquidity
How many active users does an exchange have? If an exchange only has a few hundred users, the alarm bells should of course ring. However, a low number of users isn’t just a sign of possible security deficiencies. Order books are of course also less full, which can lead to large price deviations in Bitcoin’s rate.
Tip #14: Crypto Exchange or Crypto Broker?
You should consider whether you would prefer to invest long-term or actively trade. In the case of an investment, you should think about a crypto exchange. We recommend a CFD broker due to extended trading options (e.g. trading with leverage).
Tip #15: Investments
There is one golden rule for any trader — Never invest more than you’re willing to lose. Just make sure you won’t lose a fortune and appear broken, and then invest.
What other cryptocurrency tips do you know? Just share your knowledge in the comments!
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