10 Important Lessons to Learn Before Investing in Crypto
Everyone talks about failing fast, but no one talks about how painful those experiences are and why these learning lessons will ingrain and you forevermore so than the Biology teacher that forces you to memorize the Krebs cycle.
Crypto = stock market on steroids + extreme fear + extreme greed + volatility + scammers + hope + easy availability of leverage
The cryptocurrency place is commonly compared to the Wild West. It’s filled with scams and innovation; sometimes, it is hard to pick between the two.
The winners that can come out long term are those who can focus, stay disciplined, control greed, and continue to learn while taking a risk. It is a high-risk, high reward space because you can become a millionaire very quickly and be broke. Just ask quickly.
So what are some of the things that you can alleviate your rest so that you can be a part of a brand new space that might disrupt the world of finance as we know it?
1. Have a plan and stick to it
Before starting crypto, you need to identify the goals you want to achieve, and you need to discipline yourself only to want to achieve that and not more. In crypto, there are so many opportunities to make money, making people forget that there are many more opportunities to lose money. If your strategy is to buy and hold, then you should not jump out of the market when it goes down significantly. If your strategy is to dollar cost average, you should not start trading on leverage when you see that you can make even more money. If your strategy is a short-term trader, don’t lie to yourself that you’re a long-term Hodler when the trade isn’t going your way.
You need to identify a plan and stick to it to not lie to yourself later on. You cannot cry to anyone if you make these mistakes because it is the wild west on steroids.
2. Take profits and don’t be too greedy
The crypto market moves extremely fast due to its volatility, so you need to take profits when possible because the next day, all of that can be gone. Of course, there are opportunities where you miss out on even more when the market goes up even more, but the chances of those are low, and it will hurt more if you lose money rather than miss out. The market always dips so that you will have better opportunities.
3. Research, rinse, and repeat
The crypto space is filled with weak hands and ignorant people who buy whatever is marketed to them.
The best opportunities aren’t the ones that are most promoted. Research is vital because there are so many scammers mixed in with real projects that, on the initial look, you will find that everything is an opportunity. Ensure the project is audited and has a significant value to the world by improving traditional finance in one way or another.
Scammers make a lot of money because people are lazy and do not do their research. Although Crypto has been around for over 10 years, the number of scams continues to grow because space is filled with greed and people who think they can become millionaires overnight. Scammers will take advantage of those whose that psychology makes money off of your stupidity.
4. Have long term perspectives
Crypto is going to change the world and will be an integral part of our finances. As that is growing, there is a lot of opportunities to change and to expand further. Don’t let the volatility and the short-term gains of the market short-term going into bubbles or dips scare you off from investing in it. Sometimes it’s better to forget the short-term gains you can get and focus more on the long-term gains that you can have.
5. Don’t send crypto to anyone other than yourself or your exchange
Crypto is almost non-traceable, so if you send money to a person, not only can they hide their identity, but you will lose money in a bunch of transactions that you will never be able to trace short-term back since they can quickly put it in their cold wallet somewhere and hide the transactions. This is one of the features that I hope will change because identity on the Internet is essential since it will protect many false transactions that will happen. Unfortunately,y there have been too many cases of transactions either being sent to the wrong person by accident or transactions being sent to scammers on purpose. Nonetheless, until we have a better system, triple-check your transactions and never send money via crypto to another person.
If you can’t control your money or take out your money from your exchange, it’s probably a scam if you are going to send something, test it out with a small amount of less than $100 and then try to get it back right away and see whether or not it works.
6. Start small fail fast
Crypto is not for the faint of heart, so you will need to get used to space before you ramp up larger. Start with a small account that you can lose and take as many many and dumb learning opportunities as possible so that you can get out all of the dumbest steaks he can make any crypto.
Although I say all these things here, I’m sure that you can only absorb so much, and the best way to learn is to do something yourself. So start with an amount you can lose because you’re probably going to lose it and learn as much as possible.
Don’t invest more than you can lose because you probably will lose it the first few times around.
7. Don’t give up because, despite the downsides, there are huge upsides
So far, I have talked about so many negative things that can happen in Crypto but let us not forget that it is one of the most disruptive spaces with the fastest-growing right in the world. We are seeing a tremendous amount of innovation that is going on. In the long run, productivity is what matters, and that is what some of the best crypto projects are providing for the world out there. After you have gone through the ugly bushes, you can get to the beautiful flowers that are hidden away, and you’ll see them grow, and you will grow with them as well.
8. Don’t get obsessed. Keep your mental health straight
Because crypto is highly volatile and has so many upsides of potential profits, it can get to your head of whether or not you shouldn’t have done something or whether you should have done something. Would you please keep in mind that you need a long-term perspective to play this game in the long run? Suppose you focus too much on the day-to-day of what happens to crypto. In that case, it will not get you very far because you’re going to drive you insane with trying to predict each and individual movements of crypto that might not have any particular pattern at all. Still, it’s just some variations in the market. I personally think if something is taking too much of your time and stress, it is not worth the money that you can earn from it. Your mental health will be an important factor in how much profit you can gain. Stay sane.
9. Follow multiple sources of information and continue consuming knowledge from crypto peers
Crypto is such a fast-growing space with so many new projects, and there aren’t any trendy Crypto books or courses that are available right now to learn about everything in the space. The best way to learn about it is from the source of the projects themselves, and they are available online via Twitter the actual projects websites and communities of crypto, surprisingly on TikTok as well (don’t listen to kids, you have better chances listening to someone with a bit of age).
10. Technical analysis can only get you so far
I have seen so many charts analyses of crypto, and although they give you a good structure of how to think, it is not a perfect prediction of what will happen. The market is more than just technical analysis because it is controlled by the news, whales (rich people), and random fluctuations that might not have any patterns. So use multiple sources of information to make the best-educated guess-taking leverage sources of. Diversify in case you’re mistaken, and don’t put all your eggs in one basket.
Assume you’re wrong more than you are right and take the best risk-reward opportunities.
Crypto is highly risky because you can lose a lot of money. Although space promises a lot of returns, it comes with its downfall as well. Assume that you are not very smart and not very disciplined and make every single trade and every single decision as simple as possible to reduce your chances of making a mistake. Since crypto is highly volatile, it already has an inherent risk to the asset’s cost, so if you can take the least amount of risk as possible and crypto, then take it because they will work better for you in the long run. The game is to make the highest amount of return in the short term, but it’s actually to see who can survive the longest and still see the endgame. This is why I believe that simple strategies like buy-and-hold, dollar cost average, resources staking are probably your best bet rather than day trading and taking leverage.
Also, don’t use leverage. Sharks are preying on your leveraged trades to shake you out of the game.
