It is a good idea to always keep these 10 easy to remember commandments in your head when investing in cryptocurrencies.
My 5 Dont’s
- Don’t Panic – It is vitally important to always keep your nerve and not to panic sell when the market dips. You need to be aware that you are investing in a highly volatile market. Of course it wasn’t a lot of fun to hold a sustantial amount of cryptocurrency from 17th of December 2017 to 6th of February 2018 when Bitcoins went from nearly 20k to a little over 6k and all the Altcoins showed the same behavior. BUT keep in mind that it only took Bitcoin from 13th of November till 17th of December to go from 6k to nearly 20k. Since the lowest point Bitcoins have recovered again to levels above 10k. Try to remain calm and not immediately sell all your coins when the market plunges. This has happened many many times in the past and will happen again in the future, so far the value of Bitcoin has always recovered.*
- Never Invest Money you Need – This ties in with the first commandment. If you have invested money you need to pay your bills then you will panic and life will be much too stressful for you. The nice thing about cryptocurrencies is that you can invest a small amount. So please only invest money you do not need to live. It will still hurt if you loose money of course, but it will not cause any real hardship.
- Don’t believe all FUD – FUD means Fear, Uncertainty and Doubt and refers to a strategy of influencing people by sharing negative dubious or uncertain information in order to create fear. If you read some negative headlines about a particular cryptocurrency or the crypto market in general don’t just believe everything that is written. Media wants users to click on their headlines so they will always exaggerate. Headlines such as “Cryptocurrency Declared Illegal in India”, “Bitcoin is Biggest Bubble” and “Regulators Crack Down on Cryptocurrencies” are not uncommon as they tend to catch peoples attention. Bitcoins death has been predicted so many times since I invested in 2015 I lost track of my count (luckily there is a website that keeps count, BitcoinObituaries). Every time some negative article appears somewhere I will have a friend sending it to me as a warning since I’m rather open about the fact that I’m invested in several cryptocurrencies. If you have a solid background in cryptocurrency and take the time to research the articles you will most likely find that the truth is rarely what it first seems.
- Don’t check the price constantly – In the very early days I actually had an app on my phone that I checked every few minutes to see how the price of Bitcoin is doing. It drove me insane… Now I don’t check my portfolio more than once a day and I’m very used to seeing 10% +/- per day. Also keep in mind that unlike traditional stock markets, cryptocurrency markets are open 24/7. If you have too much invested you will wake up in the middle of the night and feel like having to check the current price.
- Don’t take any unnecessary risks – Cryptocurrency is already a risky investment, but you can limit the risks you expose yourself too by acting smart and following a few simple rules.
My 5 Dos
- Store your coins safely – Always keep your private keys PRIVATE. If your private key gets stolen so does your money.
- Do your research – Do not buy anything you don’t understand the basics of. If you have no idea what a coin is supposed to do or which real world problem it attempts to solve then don’t buy it. If you have no information about an online exchange then don’t use it. If you have no idea how a wallet works, then don’t store your private keys with it.
- Beware of FOMO – NEVER buy a coin because of FOMO (Fear of missing out). FOMO is spread on various platforms such as Twitter, Forums,… and it is usually done by people that have bought the specific coin cheaply and want the price to increase so they can sell their coins at a win. This is also called a pump and dump scheme. The only thing you will do by buying into FOMO is make other people richer.
- Have clear goals – It helps a lot to have a clear goal regarding your investment. Do you wish to hold your cryptocurrency for a certain amount of time? Do you want to make a certain overall profit? Would you rather take outparts of your investments each time something specific happens? Would you like to daytrade (I seriously do not recommend this!)? When will you sell? These questions can only be answered by yourself. No-one can give you a fool proof strategy for making money with cryptocurrency although many try to sell you their “model for making money with cryptocurrency”. There isn’t a single person on the planet that can predict the future and if there were they wouldn’t have to sell you their books or models, they’d already be rich. My personal strategy is rather complex and sharing it has no meaning because it is tailored to my families needs, knowledge, beliefs and financial means.
- Enjoy – I really like having invested in something I believe in. I also really enjoy learning. The world of cryptocurrencies is developing at such a rapid pace there is always something new to learn. I enjoy talking about cryptocurrencies with friends and family, I like reading articles or watching funny crypto youtubers. I am happy if my investment is growing and I’m not too sad if the price is falling as I strongly believe it will rise again. I also highly enjoy helping other people that are struggling with certain concepts or don’t know where to start.
* Of course past events are no indication of the future.
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The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a licensed professional for investment advice. Terms and Conditions