Lessons From The Market #2

In the last article, I focused more on the lessons this market teaches you that can impact your personal life too besides just the way you manage your investment in crypto but in this post, I’ll focus on stuff you can apply to improve your investing strategy.

Before we get any deeper, you have to understand that a critical thing is learning how not to lose money before you start making money. Plenty of so-called opportunities are popping up every day in this ecosystem, but you have to be able to realize which are valuable and which are just going to steal your hard earn bucks.

Scams

If something sounds too good to be true, then you have to do brief research into that thing and try to come up with a conclusion for yourself based on which you will start investing because it might be too good to be true after all. But that’s never an easy task considering that you will get blinded by something that sounds like the opportunity that will change your life. A known example is Bitconnect, a damn scam that stole many people’s money because it seemed very appealing, but 1% every day is too much, even for this volatile market since nothing is certain.

The problem with these scams is that you will outweigh the pros, the things that seem okay because you want to believe that they are legit but I say that by making an in-depth analysis and consulting other trusted people’s opinion on the matter, the chances of you losing money are smaller.

The worst thing you can do is just investing your money into something because someone said it's great, without doing any research. A long time ago, I put $85 into a Ponzi scheme, CryptoSolutions, without doing any research about it and by the end, I realized that it's a complete scam and one week before getting my money, everything went down. For most, $85 may not seem much but for me, back then it was a shitload, pretty much all the liquid money I had and it felt bad losing them, but you can avoid something like this by doing the proper research. If it has too many question marks, then it's probably a scam.

ICOs

The ICOs bring up a lot of controversies because we keep on hearing the success stories of people that made 10X, 100X, even 1000X through these damn things so we get lured into investing, thinking we will pick the next hot deal but we might just get fucked in the end. I’m not saying they are bad for the ecosystem, plenty ICOs were successful, they made the investors a lot of money and ended up being trustworthy projects but percent wise, they are only a small fraction out of all the other scams and failed projects that are launching all the time.

Not every ICO is going to be successful, most of them are going to fail directly, especially in this market, so the risks are slightly high but also the potential rewards are high too. I haven’t invested in ICOs yet mostly because I like to buy in released projects even if I wanted to get some EOS in the ICO stage, shame on me for not doing that. But one of the most crucial things you should look for is the team, I mean, if @Dan is launching another token you know that it has very high chances of being successful.

Also, not everything that’s popular is necessarily going to be successful, for example, look back at what happened in January, everything was selling like crazy, no matter if it was a shitcoin, a scam or something trustworthy, people were buying anything. ICOs can make you money but know your stuff and don’t follow blindly what other people are saying because otherwise you might get thrown under the bus.

Know your risk tolerance

This is very basic, and it’s almost a cliché but don’t invest more than what you are willing to lose. When the market goes down, you will be stressed out as fuck and check your blockfolio every minute, or you will be just selling at a loss because you’re scared that the market will go to zero. All that because you have too much money on the table, money that you can't afford to lose.

If you have a high-risk tolerance and you don’t mind losing everything you have in crypto, then you can get invested more heavily in altcoins that you think have significant potential. They have a higher risk of failure in the end, but the rewards are potentially enormous since we certainly have some quality undervalued projects.

If you like lower risks then try aiming for already known, more stable coins, the chances of going wrong with the ones from top ten are low. You can even make money with Ripple which is a shitcoin, even if I don't advise it. The top 20-30 coins are already trustworthy enough for your investment, but they will bring you smaller rewards since they can’t multiply that easier.

Being uncomfortable is great because then you can grow as a person but being out of your comfort zone financially is not advised if you are not grounded as a person. For example, I was way out of my comfort zone with my investment, but because I was grounded enough, I didn’t sold tokens on a loss and at the same time, I grew, and now I feel comfortable even on this significant dip.

The pictures are from Pixabay: 1, 2, 3.