Are you thinking about taking a plunge in the cryptocurrency market? You are certainly not the only one who is thinking it right now because the timing has never really been better than this. The crypto market is experiencing another bull-run and there are numerous competing digital currencies that exist in the market today, much more than they used to be. This is a testament to the increasing popularity of the cryptocurrency movement, as well as the interest taken by the public for becoming a part of it. It is an exciting time and you would want to get started right away.
However, before you decide to make your first move, you have to understand that the crypto space is definitely not for the faint-hearted. The volatility of this market is the primary reason why most people have ended up making massive returns, but it is also a very unforgiving market. When it hits the highs, they can take you through the roof, but the lows can end up being gut-wrenching. It is nothing short of a roller coaster ride and one that you may end up enjoying. But, this is only going to happen when you are familiar with the risks and ready to accept them.
The first thing that you need to know is that buying or trading cryptocurrencies is a tad different than what you have seen in the traditional stock market or how you deal with the local bank. This process can be rather complex because the space is still evolving, which makes it vital that you do your homework. Learning lessons the hard way will not help you in any way and is just a recipe for disaster. You will end up feeling frustrated, losing your funds, and wind up with a bad taste in your mouth when it comes to cryptocurrencies.
If you want to put your best foot forward, there are a few things that you can do to help you. Want to know what they are? Read on to find out:
Figure Out your Investor Profile
This is basically a gist of what kind of investor you are and knowing your investor profile is essential to identify what direction you should move in. Are you someone who likes taking risks or do you have a conservative nature? Are you looking for quick returns, or do you want to achieve long-term stability? Are you just starting out, or do you classify as a seasoned investor? You need to determine these things before you can begin because it will help you in developing the right strategy.
There are a number of ways through which you can get an insight into your investor profile. You can run a quick search on Google and come across numerous quizzes that can help you understand where you stand on the spectrum of things like aggressiveness and risk. Bear in mind that your investor profile might change with time, especially if you are a newbie. It is not very uncommon for people to start out passive when they are just learning the ropes and then switch to a more active approach, as they become more confident and sophisticated in their knowledge.
Understand the Terms
If you are new to the world of cryptocurrencies, then you have to understand its language in order to become a savvy investor. This involves digging into terms like blockchain, understanding the technology and the role it plays in the crypto market. You also need to know what peer-to-peer (P2P) purchasing means. Exchanges are another thing that you have to get acquainted with in order to buy and sell cryptocurrencies. Plus, you also have to be familiar with the concept of crypto wallets because they will be required for storing your bought cryptocurrencies.
Look for a Trustworthy Exchange
When you are just starting out, it is imperative that you look for a trusted and reliable trading platform or exchange for buying your cryptocurrency. Coinbase, Kraken, and Binance are some of the larger and well-known crypto exchanges and have an impressive trading volume. The exchange will provide you with an opportunity of converting your crypto into other currencies as well as other major government-backed cryptocurrencies.
Rather than looking for the best deal, it is a better idea to go with an exchange that has the best reputation in the market. Scammers are quite abundant in the crypto space and going for a reliable platform can give you peace of mind. After all, there are no chargebacks that can be made here, no customer support centers you can call, and absolutely no way that you will be able to get reimbursed. Therefore, it is best to begin and stick to a reliable source.
Find a Wallet
Cybersecurity is crucial when you invest in a digital space and exchanges are a popular target of attracks, so you need to protect yourself. Once you purchase crypto on an exchange, move it to a wallet of your own rather than leaving it with the exchange. There are different types of wallets that you can find in the market, but it is best to opt for a cold wallet because it can offer optimal safety. If not, you can also choose from a range of online wallets that can be found.
Move Beyond Bitcoin
It is true that Bitcoin is the top cryptocurrency in the market, but you should know that all good investment strategies involve diversification. You shouldn’t just focus on the leaders in the market and also check out some other players like Ethereum, Bitcoin Cash, and Litecoin. When you invest across different cryptocurrencies, you will be able to spread your risks and create a more balanced portfolio.
The crypto market is full of surprises and prices can move quickly and wildly. You need to come up with appropriate strategies for buying and selling cryptocurrencies in order to navigate price fluctuations in the short term and in the long term as well.