Before you start getting everything set up to actually purchase crypto you should do a little (okay a sh*t ton) of research.
Everything I wish someone told me when I started. I hope it saves you some money!
Image Courtesy of CardChat
Here is a step by step guide on how to begin the process of investing incryptocurrency.
If you are looking for more of a step by step guide on the actual process of buying a coin/how to store it safely and (or) trade it, skip to step #6.
EDUCATION
1. Accept the fact that you know nothing.
You need to accept the fact that you know nothing, don't come into this with preconceived notions of how the market might behave.
*Basically, *don't come into this market with here-say from your friends who said $ETH is going to hit $100,000 by May 2018.
If you have a background trading stocks, I'm not talking to you- bring your understanding of Technical & Fundamental Analysis onto the Blocktrain(copyright pending).
That being said, make sure to do so with an open mind, just because your strategy worked 93.27896% of the time with Forex doesn't mean it's going to work here.
Bonus Round: One does not "HOLD" in cryptocurrency, one "HODLs"
2. Research Blockchain technology and the currencies that rely on it.
When I first dove into the crypto world, Reddit was my best friend.
Check out r/Cryptocurrency & r/Blockchain to get you up to speed.
Here are the subreddits for each of the Top 10 Market Cap Coins
/r/Bitcoin /r/Ethereum /r/Ripple /r/BitcoinCash
/r/Litecoin /r/Dashpay /r/NEM /r/NEO /r/IOTA
Sidenote: I'd like to take a second to commend r/Bitcoin, those guys have been around forever. I'm still a Padawan in this community and the resources and info that people have created (completely for free) in these communities are amazing.
3. Get a basic understanding of how the market moves i.e. how ETH/BTC/LTC & Altcoins affect one another
There are a lot of coins. Ethereum, Bitcoin, and Litecoin are top market cap coins, they've been around for quite some time- and they're usually one of the first coins a beginner will invest in.
Sidenote: regardless of what you're investing in, you should grab some BTC as well because a lot of coins aren't paired to USD (or even ETH) and you need to have BTC to be able to buy them.
Despite it's recent extreme volatility (at the time of writing: BTC broke it's all time high last night $8,000, and seems on track to potentially touch $10k before the run is over), BTC and the other top 2 are the best places to store your money long term within cryptocurrency.
Don't freak out when you see huge % fluctuations in your price, just buy the dip, and HODL.
Bitcoin, and the other two crypto bae's, ETH and LTC, are the most stable places to store your money in Crypto. Think of these as your safe investments.
Personally, I keep the majority of my holdings (about 60%) split up amongst these three coins. I use my remaining 40% to invest into coins with smaller market caps, but higher reward potential.
LTC is extremely stable, if you're looking to buy into it wait for it to consolidate and dip (it's been on a beautiful bull run lately, never, ever, ever buy during an uptrend. You might catch the top).
Once you've read up on Blockchain, ETH, BTC, & LTC, step into the bad side and enter the altcoin world.
Affectionally referred to as "shitcoins", altcoins are pretty much any coin that isn't a top 10 market cap coin, although some purists would argue that altcoins are all coins that aren't BTC.
Altcoins can be exciting because the reward potential on these can be so much greater than their higher priced cousins in the top market cap list.
One thing to keep in consideration is that altcoins fluctuate with the price of BTC, so don't freak out if one day your altcoin portfolio is down a ridiculous %.
When BTC goes on an uptrend, people move their money from altcoins into BTC to try and catch the wave.
THIS IS THE BEST TIME TO BUY ALTCOINS.
Second time I've quoted Warren Buffet in two days on Quora but here it goes, "Buy when there's blood on the streets".
When you search #altcoin on Twitter and everyone is crying about how much money their losing, that means its time to invest in your favorite coins at a huge discount.
4. Do extreme due diligence into the teams behind each coin you want to invest in, and the concept they are bringing to reality.
This should go without saying, don't invest in something if you don't know what the company does. The difference between shitcoins and small market cap coins that have the potential to become Top 10 are their teams, and their vision.
5. Pick the coins you want to invest in, and watch their charts for months before investing.
You don't have to follow this one if you don't want to.
Full transparency:
I didn't.
The loss I experienced from jumping into my first coin before watching the chart for a while was so gargantuan I almost stopped trading/investing all together.
I saw a coin was on the rise, a friend had been telling me about it for months and I didn't do anything about it.
I saw it increase 100x, "It's too late", I thought.
Then I watched it increase another 100x.
"Well Fck me", I exclaimed.*
Then I saw it begin to increase again, I hopped in around 400x where my friend initially told me to get in out of FOMO.
Then, I watched it drop 100x.
And another 100x.
I watched my hard earned money, the money I thought I was being smart with by investing, lose the majority of its value in a matter of minutes.
LONG STORY SHORT
Study the chart. Not because you're going to turn into Fibonacci himself and become a coin-whisperer, but because you're going to begin to understand the true volatility that the coin experiences, and get a general idea for its price range.
Watch the chart, identify what you believe is a good entry point, set a limit order to buy at that price, and walk away. (Figuring out good entry points is much harder than I make it seem here, I suggest finding a mentor or checking out a Technical Analysis course on Udemy).
Further Education: If you want to be able to read charts and make your own decisions on charts, start off with some basic TA. Learn about Candlestick Patterns, Chart Patterns, Support & Resistance, and ALL of the indicators on StockCharts.
My personal favorite Overlays/Indicators:
Once you have a solid understanding of the basics: take a DEEP dive into Fibonacci Retracement & Elliot Wave Theory. These are my personal favorites and I swear by them.
6. BUYING YOUR FIRST COINS
- Set up an account on Coinbase
- Set up an offline Wallet
- Exodus/Jaxx/GreenAddress
- Purchase your first coin on Coinbase after verifying your account.
- Transfer your coins to your wallet if you plan on holding long term.
- Transfer your coins to an exchange if you want to trade.
- Here are some popular exchanges:
GDAX (owned by Coinbase)
Good luck, and don't lose faith when you take a loss. Everyone takes losses, and most people don't learn how to trade/invest intelligently until they've obtained a few battle scars anyways.
No one to talk to at 3 AM while you frantically stare at crypto charts?
Check out our new Discord server, meet other traders/investors and learn.