I’ve gotten involved in researching and investing in cryptocurrencies for a couple of months now. I am just as excited and wide eyed as I was from the beginning, but I’ve learned a ton….the hard way. The purpose of this article is to share with you my growing pains with the hopes that you can avoid the same mistakes while saving time and money. We evolve and adapt or we fail epically sometimes, experience and learning digested is what separates losers from winners, overachievers from underachievers.
My Dos and Dont’s – (Subject to change)
Do research all you can about a currency, company, the industry they are in, who the competition is.
Do not rush in to buy anything after watching one youtube video that was so compelling that it gave you goosebumps. How about seeing a coin rise rise rise like there is no tomorrow. Sometimes the hype is valid, but try to understand external factors that can affect where this currency ends up. Things such as potential government rulings, economy, sector they are in, what the competition is doing or about to do.
Do go against the heard. This takes mental stamina, this part is not for the foolish but for the disciplined. When everyone is rushing to buy the hot coin, step back and observe. Yes some have just doubled their money in a matter of days. That’s great, but you didn’t buy in early so let it go. Please know that for every single rise in the market there is a fall. Look at all the charts, the best of them all rise and fall sometimes rapidly. The nutty thing about this space is that the only way it resembles the stock market is that technical analyses done right still hold weight. The cryptocurrency market does not sleep however and has no closing bell. Go to bed seeing your investment sinking, wake up and there it is rallying. If you want this then get used to a wild ride.
Do not let your emotions get the best of you. You will not miss out. The coin you’ve eyed is now on fire and you are wondering if it will be too expensive to buy later. The answer is no, there will be a rally then a fall off, guaranteed. Yes there may be a higher low, but entering in here is better than entering in when everyone is going insane buying. They now have to sit and watch their investment sink and then painfully wait for it to break even.
Do not play double-dutch unless you’re an experienced trader. Jumping in and out and all around will cost you. Pick a solid company with a solid track record, dev team and vibrant community, buy while it’s sinking and just hold it.
Do build a portfolio depending on how much you plan to invest. Here’s what I tell family and friends who are thinking of investing:
1. $1000-1500 – Buy Bitcoin and Litecoin, hold it and forget about it.
2. 1500-2000 – Same as above but add in a top 25 in market cap where the product is a platform not a currency.
Platforms such as Ethereum, Stratis, LISK, NEO, Iconomi and many others are going to be around for the long haul.
These cryptocurrencies bridge the gap between this space and the practical world. If you are speculating in those still
under $1, then dive in and add some of them to the portfolio too. As of now some examples are Ripple, IOTA and NEM.
Leave Doge coin in the dog house :-)
3. +$2000 – Same as above but just more.
Unless you’ve dumped a ton of money into really bad one, be patient and hold. Time in the market trumps all. Try it with me and see the outcome.
I’m learning with you, please feel free to share your insights as well.