What are the golden rules to make crypto investment successful? The crypto market is extremely volatile and it does not need any special explanation as to why it is so.
Investing in crypto coins should therefore be made with a lot of caution, and, of course, after a lot of research and gaining adequate knowledge about the coins and the market on the whole.
Though crypto investing is more of a speculation, there is no scope for any guesswork in it.
This way you cannot expect to make a successful investment and profit down the lane.
There are lots of rules to follow while trading or investing in crypto coins.
If you are unaware of them, you are fortunately in the right place.
You may tend to think that you should invest in Bitcoin only because it is the first crypto coin to be launched, it is the most popular one, it has a wonderful track record and a long history, and it is the one that has outperformed all its close competitors in the past decade with its incredible growth.
However, other types of crypto coins are also quite good to consider since these coins have done well to increase their value significantly over the years.
Therefore, right from choosing the right type of crypto coin to investing in to making your calls, everything should be precise, specific, and timed accurately.
Moreover, the experts say that crypto prices will keep on increasing and will also fall dramatically.
Therefore, it is needless to say that you will need to follow the right trading signals apart from the proven strategies to invest in crypto and expect to have a high return.
14 Golden Rules to Make Crypto Investment Successful
Right at the outset you should know that returns on your crypto investment will not come overnight.
If you wish to invest in crypto coins, then, just like in any other type of investments, you will need to follow some rules for it to make it more productive. Here they are all for you.
1. Buy Low Sell High
The first thing to remember while investing in crypto coins is to buy the coins when the price is low and sell them off when the price is high.
This may sound very cliché but it is the basic golden rule for crypto investing that will ensure that you inevitably make profit from your investment.
This principle is very simple and quite easy to understand because, according to the basic nature of cryptocurrencies, these are extremely volatile and therefore there will be frequent ups and downs in the prices of the coins.
Therefore, you should make the best of the most opportune moments.
2. Avoid Emotions
Never, ever let emotions enter and influence your crypto investment decisions.
When emotions rule your decision making ability, it will surely hurt your investments, and nine out of ten times, you will end up making the wrong decision eventually.
Yes, it is true that as a human being you may get excited while investing in cryptocurrencies, a digital space that itself is very exciting.
However, while investing in crypto coins, you should get rid of any type of emotions whether it is excitement, nervousness, or desperation.
Also, you should never make any decision in a hurry. You should take enough time, if not a lot of it, to analyze the market and other different aspects very nicely.
This will also help you a great deal in getting rid of your emotions and making the most rational decision.
In addition to that, you may have heard about the abbreviation FUD by now.
This is actually a crypto lingo that stands for ‘fear, uncertainty and doubt.’
Typically, these are the three most common, and perhaps the most dangerous, feelings that you may experience while investing in cryptocurrencies.
These are the three that you should surely avoid while making a decision if you really want it to be right.
3. Avoid FOMO
You should also avoid the Fear of Missing Out or FOMO while making your crypto investment decision.
FOMO actually means that a person thinks that other people are enjoying some benefits that he or she may miss out on.
When it comes to crypto investing, FOMO actually arises when the price of a particular crypto coin rises and it creates an impression that every other crypto user is selling that particular coin off.
This makes one think that he or she should also sell it off so that the given opportunity is not missed.
Sometimes, you may also experience FOMO when you feel that a particular crypto coin is growing and you have not invested in it yet.
Often, in such situations, people sell off the crypto coins they currently possess in order to buy that seemingly growing crypto coin.
It is needless to say that, more often than not, these decisions are wrong and therefore you should abstain from making such decisions and instead stick to your crypto coin.
4. Follow a Precise Plan
You should create and stick to a strategically designed plan while investing in crypto coins.
Adhering to your plan will enable you to know what you really want to achieve and whether or not you are doing the right things to attain your goal instead of changing your strategy every now and then with the frequent changes in the market.
You should create your plan based on your preferences, your goals, and the investing style.
Also, a plan for making a long term investment should ideally be different from a plan for a short term crypto investment.
It is also very important to make sure that you place stop loss orders in your strategy so that you can sell your coins off when the price of it hits the set value.
This will not only help you to stick to your plan but will also help you to make right decisions not based on your emotions.
5. Think Long Term
You should always think of investing in crypto coins for the long term because, in no way, you can become a millionaire overnight.
Since cryptocurrencies are known to make sensational ups and downs during its growth process and value, nothing will happen very soon.
It is only the early investors who are now benefited from their investments due to the rise in value, respect, and reputation by the crypto coins.
If you do not want to have any regrets on your investment, think about long term investment because the value of crypto will surely grow no matter what the charts say.
If you hold, or HODL as per crypto lingo, onto your crypto coins, in all likelihood, you will make a lot of profit in the future, especially when you know that several banks and financial institutions are now launching crypto services.
6. Diversify Your Portfolio
The best way to make your investment successful is to diversify your portfolio instead of putting ‘all the apples into one basket.’
This is applicable for crypto investment as well.
Investing in crypto coins, as you may know, comes with its own set of risks of which volatility is the most significant one.
Therefore, it is more prudent to invest in more than one type of crypto coin. It may be of small amounts but should be many in number. Period!
This way, you will minimize the risk of losing all your money invested in one asset.
If in case the price of one crypto coin falls, the others will balance the loss because prices of all different types of crypto coins are highly unlikely to fall at the same time.
Instead, some of the coins will perform better than the others since they are all correlated.
7. Affordability
You should never invest in crypto coins more than you can afford to lose.
You should also be okay with locking your money on a specific coin for the long term.
All crypto investments are risky and there is a high chance that you may lose it all not only due to your improper strategies but also due to technical glitches, market crash, government regulations, and exchange or system hacks.
Therefore, do not invest everything that you have in cryptocurrency. Instead, you should take a step back before you make your investment and reevaluate your financial status.
If you do not have the cash that you can leave idle, you are not ready yet to invest in crypto.
And, do not invest in crypto on loan, mortgage, or by using your credit card.
Remember, there is no guarantee that you will always make profit from it but you will need to repay your loan along with a substantial amount as interest to your borrower even if you lose all your money on crypto.
Therefore, stay away from taking any desperate decision but simply wait for the time when your financial health restores and allows you to make your investment in crypto.
8. Find a Reliable Broker
Now that you are ready to make your investment in crypto, it is time for you to look for a reputed and a reliable broker. When you find one, your battle will be half won.
There are hundreds of online brokers and crypto exchanges to choose from but make sure that you in no way choose the one that you come across first.
Research a lot to find one that is genuine, has been doing business for years, has a pretty decent track record, and has a lot of users who have a lot of good things to say about them.
Do not go for one that is sketchy or makes tall promises that seem to be too good to be true because they are.
Also, choose a broker that is regulated. This is important because your money will be at stake and your coins will be with them if you prefer storing them in an online wallet with the exchange.
It is only a regulated broker who will be able to provide you with best trading fees and prices, security measures, and customer support.
Finally, choose a broker that offers a free demo account. This is essential for the beginners to get a feel of crypto trading and investment first-hand without having to invest money from their own pocket initially.
Make sure that you practice a lot using this demo account and go live only when you are confident with yourself and the crypto market and mechanisms involved in it.
9. Be Decisive
When you invest in crypto, you should be prudent and decisive and not invest blindly depending on what you hear from others or on the trends followed.
If you really want to take some tips from the professionals and experts, make sure that these are actually ‘tips’ and not their ‘opinions’ which they are sharing just to exploit the investors who are less or not informed.
If you find that they are asking you to invest in a particular crypto coin it may be that they want to exit safely.
Therefore, be knowledgeable before you make any moves.
10. Do Your Own Research
You should religiously do your own research before you make your investment in cryptocurrencies.
For this you should use different price charts, bars, graphs, investment patterns, crypto tools, risk analyzers, whitepapers, indicators, and a lot of educational resources.
This will help you to deal with the unpredictable nature of crypto and the humans as well.
While you do your research you should make some fundamental analysis to know about the coin better with its market cap, road map, tokenomics, and utilities.
Also, do some technical analysis to know about the erratic movements of the crypto market so that you can predict any changes or upcoming trends.
Going through different use cases is also helpful in knowing the real world benefits of investing and holding a crypto asset.
You must not ride on hype but account for volatility of the crypto space to know whether it is experiencing a huge ‘pump’ indicating that people will cash out their holdings in the coming months.
11. Be Traditional
If this is your first time investing in crypto coins, you should go old school and choose to invest in the traditional crypto kingpins to be safe and successful.
These coins include and are not limited to Bitcoin, Ethereum, and other Altcoins such as Polkadot, Polygon, and Solana.
These crypto coins are some of the most reliable and tried and tested ones that will offer transaction efficiency, mining scalability, blockchain interoperability and more.
12. Be Knowledgeable
You should be well abreast with the crypto market to be a successful investor.
For this you will need to be well informed about the current happenings and the key events surrounding the crypto space.
You should also follow news and learn about the latest technological developments and regulations imposed on crypto in your region.
Some of the most important events that you should be knowledgeable about at this point in time are global launching of the CBDCs, initiation of ETH 2.0 as a more sustainable Ethereum ecosystem, unmatched growth of Non-Fungible Tokens or NFTs, interest of global companies in the Metaverse space, the functional DeFi projects and more.
13. Coin Selection
Select only the crypto coins from the decentralized exchange that you think are good to invest in but keep all your options open.
Do not be rigid or prejudiced so that you miss out on the real gems.
You should ideally follow the numbers and not the market while making your choice.
Also, make sure that the Volume tab is your primary filter. The ones with higher volumes will move the fastest at a very low opportunity cost.
If you choose these coins you will save yourself from being caught in the pump-and-dump trap.
You must check the moving average indicator line to know the percentage change in the price of the coin.
If you see that there is a sharp and a sudden drop in the price of the coin from its all-time high, you should not invest in it.
This is because the upswing trend of it is already broken and further investing in it will result in a loss.
If you find that the uptrend is solid and it is a bull market, you can buy high and sell even higher.
It is also good to check the market cap of the crypto coin you want to invest in.
Although it is not a deal breaker, this will help you to know whether or not people are interested in investing this particular coin.
Also, check the circulating supply of the crypto coin because you should not choose one with an infinite supply.
This is because a crypto coin with an infinite supply will not move fast and its value will go nowhere in the near or distant future.
TVL or Total Value Locked is another good thing to check about the coin which will indicate that there is adequate money locked into the coin to commence its actual launch.
This is actually the funding pool where money is deposited by the lenders which shows how much risk has gone into it exactly.
In this case, the higher it is the better.
14. Additional Tips
Here are some additional tips for you which will also help you a lot in being a successful crypto investor.
As said earlier, you may buy the dips but do not always do so because every dip may not be worth buying due to the consolidation and cooling down factors.
Instead, you should focus more on value buying to be on the safe side with your investment during the times when the particular crypto coin or the market starts a fresh rally.
Always start by investing a small amount of money and scale into a small trade to see if it is moving in the right direction.
If it does, you can keep on increasing your amount and adding your position size until it is funded fully.
Do not be greedy while you are dealing with crypto.
If you find that your gain is extreme, you should ideally sell half of your holding to take profits routinely.
You should not hold all of it or sell all of it being greedy and fearing FOMO. Either way, you may lose most, if not all, of your money.
Never buy on margin, which is another way of investing in crypto coin one a loan.
This is a process where you buy crypto by borrowing money from the crypto exchange but do not actually own the coins.
This only allows you to increase the amount that you can buy which surely is a leverage but is also a double-edged sword.
If it is right you can make profits but if it is wrong you will end up owing more than you invested and even lose all your crypto coins when you get the ‘margin call’ from the exchange.
As said earlier, you should place stop loss on your strategy but make sure that you have ‘mental’ stops or ‘time’ stops.
These will be much more effective than the ‘hard’ stop losses, which several platforms may even not allow you to use as well.
This will cut the losses and join the winners.
If you hold positions, do not hold long positions. You will be benefited when things do not go in your way.
You can sell all or half of your holdings so that the small losses do not turn out to be huge ones at the time of maturity.
Finally, make sure that you follow several websites for taking a look at their insightful crypto listings along with their performance charts.
This will enable you to know which particular crypto coin is doing well in the market currently and which are the ones that are simply scam projects.
Conclusion
Crypto investment and trading is not about being lucky most of the time. It is a speculative venture that comes with lots of ups, downs, and risks. If you want to be successful you must know the golden rules, the basics and be disciplined.
I have special interest in crypto and intend to help common people to gain knowledge about the digital asset as well as its potential. Follow Me at Linkedin.
