I would just like to offer a few tips to new investors of cryptocurrencies. I am not a stock professional but have ties to the finance industry and have dabbled in forex and investments. I got burned so that you don't have to, so heed my advise. Especially since I have institutional friends who have helped me along the way (think Goldman, BNP, JP, etc).
1.) Do not over-diversify your portfolio but pay attention to exposure. Investing is all about the risk-reward ratio. Greater risk does not always mean greater reward. For example, I have 80% of my portfolio in traditional investment vehicles like real estate investment trusts, stocks, bonds, and exchange traded funds. 20% is for cryptos however this is what I consider my 'play' money since cryptos are a very young market, that is based more on potential rather than value (you can't gauge the financial health of crypto using traditional tools like cashflow analysis or price/earnings ratios). I think cryptos are incredibly valuable but going all in especially with the inflated nature of bitcoin, would be dangerous for any of you, so I would suggest you diversify between traditional and cryptos.
2.) Reduce crypto risk by analyzing competitors to your alt coin. As I said before, do not overcompensate this diversification but bet for and against a crypto. In forex institutions use this tool to limit exposure to currency volatility. Imagine you go long GBP/USD, then you should naturally short GBP/CAD to a degree in order to limit exposure, but maximize growth potential. In the crypto world crypto pairs aren't really traded so they are illiquid markets, but I would suggest hedging a bit of stellar with XRP and even bitcoin. With this strategy I have been able to mitigate my losses from the recent stellar drop. Picture cryptos as a ranked list with the most valuable on top and the worst in the bottom. If BTC is on the top of your ranked list and XLM is in 3rd place but XRP is in 2nd place, then short XRP/BTC and go long XRP/XLM. I know these pairings don't all exist but it's to give you an idea how to think about the market.
3.) Support and resistance is important for technical analysis. The way you determine this is simply by seeing the area where past price action has not been able to surpass (resistance) or where past price action has not been able to drop below (support). Usually when a support or resistance level is tested multiple times it becomes stronger. However, there are ways to guess how breakouts are formed. See the chart below.
https://imgur.com/u9r2e0c
In the chart you have what is called accumulation. The price keeps testing the 400 resistance mark, making it a stronger barrier, however every dip in price is higher than the proceeding dip. This signals that there is a solid accumulation that will result in a break out. Just because a price level is tested multiple times does not mean there is a break out. You need to usually have such an accumulation phase (think of the imagery of stairs). In the same chart you can also see the price has not been able to really go below 400 because it is the new support level and the more it tests it, the stronger the barrier will become.
4.) Statistics has a fine way of helping us in our journey. My best friend is a mathematician and was able to offer advise on statistical trend setting. He stated that the longer the trend is set, the higher probability that it will keep going in that direction. Sounds obvious right? Well there is some truth to this but this goes right to my next point.
5.) For every second and moment you have a position open you increase your risk exponentially. This is why high frequency trading exists. So I am trying to offer a nuanced point that while trend continuation is statistically likely, so is the exponential increase of risk. These two last tips are particularly for leveraged traders.
6.) Be creative. Try to implement value investing criteria on cryptos in order to assess the true value of your chosen currency, whatever that may be. It can truly be difficult for ones like Bitcoin but for centralized cryptos like XRP and non profits like XLM it isn't too difficult. I saw an investor here requesting stellars financial statements and had a slight grin. That is the type of investor you should be. Vigilant, because more than making money, we should all be focusing on protecting money. Do not be greedy, because you will be susceptible to hot tips and emotion. Make 'preserving' your capital a priority. As long as you are gaining above inflation, all of you are winning. And now...
7.) Luck number 7! Anyway, buying on the dips is a great strategy, especially when it is testing a support or resistance zone that has been tested a bit before. Buying into a dip in a zone that has only been tested once is a bit risky. You want to see a form of sustainable accumulation.
8.) Do not simply invest in a crypto purely based on the dip. I will admit I have done this sometimes to an extent and it is okay. But the point of this post is to encourage you to do your homework and measure valuations, based on market volume, liquidity, technological announcements, and financial statements. The reason I sometimes partially ignore this is because I usually enter investments to hold at least 8 months -1 year minimum.
9.) Centralization and decentralization do not matter in crypto. I know XRP gets hate and I'd prefer stellar lumens, but that is not purely a reason to not invest in a currency. With centralization you get more compliance and regulatory oversight which marks higher security in investment. Cryptos are amazing, but with institutional involvement, this is an important case to make.
10.) Governments do not have conventional ways to regulate cryptos, but they do have tools to manipulate the market, so be attentive. All it takes is one major country to become heavily involved, in order to ensure a large price drop.
11.) DO NOT SHORT! I REPEAT DO NOT SHORT! Leave this to the professionals. Whereas with buying a currency you have a limited downward risk (you only have the risk to lose all your money), with shorting you effectively have no price floor to limit risk and exposure since the price theoretically has unlimited growth potential. If you decide to short stellar at 0.10 cents then you can lose all your investment and even be in debt (depends on leveraging), because the price can go anywhere from 0 cents to infinity. When you buy, you limit your risk to 0 cents which is where you lose all your money, but maximize growth potential which is technically infinite. This plays into the concept that the longer you have a position open, the greater the exponential risk.
I hope you all enjoyed my guide. I am by no means an expert and am new to cryptos, however I've had associates involved for longer and friends that are also in finance (I worked in the back office of a private equity firm even though that wasn't glorious).