The Crypto world | First, Learn the Fundaments

 The Crypto world | First, Learn the Fundaments

As a newbie, you’re probably eager to trade. Really, I understand.

But don’t hurriedly complete it. Take a little time to establish a basic bitcoin trading strategy and learn more about the industry.

Are you familiar with the fundamentals of blockchain technology and Bitcoin cryptocurrency? Are you familiar with the concept of circulating vs. total supply? Is inflation something you’ve ever heard of? What do you know about the various types of wallets and exchanges?

Getting into problems quickly if you can’t answer these simple questions. You must take some time to get ready.

To get started, simply look around our website. We’ve got tons of helpful information there.

1. You Don't Do Anything.

Every day, potential cryptocurrency investors miss out on the opportunity because they are unsure of how to get started in the market.

Even the most seasoned investors can miss out on huge earnings if they don’t keep up with the latest technology and cryptocurrency.
Why? Due to apprehensions about making blunders Taking action is the initial stage, so don’t hold back.

The more you do, the more you’ll learn, and the more you’ll be able to make better decisions. In reality, the experience is all about learning from your mistakes.
Investing your first money is never a bad idea. Even if it’s just $10, you can use it on any exchange and with any payment method you like.
You won’t believe the difference a single action can make compared to inaction.
It’s a roller coaster ride, and this is where you begin your journey into the world of investing.

2. You Must Know the Crypto Technology

The uniqueness of Bitcoin and other cryptocurrencies lies under their innovative technology. But, if you don’t grasp the technology’s fundamentals, the road ahead is a risky one.

Depending on others’ ‘knowledge’ may sometimes cause you to miss out on significant opportunities. You must have useful information to judge the investment projects for yourself.

Ultimately, Bitcoin was created and adopted by technology enthusiasts.

Use trusted sources of information and take the time to study; most importantly, enjoy during the learning process.

To become an improved and confident investor, you’ll need to be familiar with phrases like block rewards, pre-mining and other fancy crypto terminology.

It’s imperative that you stay on top of the latest technological developments in blockchain industry.

3. Never Ignore the Fees

Now you are ready to start your investment journey. Before taking your first step, consider all the pros and cons and find the right trading exchange with the best rates.

New investors often make lots of trades a day in the hope of making some profits. Theoretically, it seems nice strategy but practically they lose by paying killing fees.

When people first begin trading, they place a large number of orders each day in the hope of making a few cents each. Fees are killing them, despite the fact that this is wonderful in theory. All the little things add up.

Before you trade, do your homework. As soon as possible, you need to develop solid habits to become a successful investor.

4. Avoid overtrading in the Beginning

The majority of these investors are newbies who aim to place 20 trades a day. This is a serious mistake.

Eventually, most of the new investors lose from fees or by making bad trades a mistake. They, then trade more to recover their losses. Only to dig a deeper and deeper hole for themselves.

In reality, traders rarely get 20 good trading opportunity in a single day. Trading too much leads to poor decision making.

In reality, there aren’t 20 good trading opportunities in a single day. Too much Trading leads to poor decision making.

5. Consider the Tax Liabilities

Overtrading raises your tax bill.

In North America and Canada, a vast majority of consumers believe that they only owe taxes on profits that were earned in USD/CAD, whereas in fact, you owe taxes on every single deal you do – even crypto to crypto.

Every transaction is regarded by the IRS and CRA as a realised gain or loss for tax purposes. Basically, if you use Bitcoin to acquire Ether, you’ll have to pay taxes on any realised gains or losses.

It is assumed that you sold Ethereum for USD, then acquired Bitcoin using USD, even if this is not what happened.
It will have a significant influence on your whole cryptocurrency investment plan if you ignore tax issues as well as exchange fees.

Tax implications, in addition to accumulated fees and bad trades, is one of the reasons why you should not overtrade.

6. Don't Invest your whole life savings

The first rule of investing is to never put more money into your account than you can afford to lose.

You should be prepared to lose whatever you invest. Keep your nerves calm, and continue to live a healthy lifestyle with room for regular expenditure, regardless of the fluctuations in the market.

There are innumerable examples of people putting their entire life savings into an investment or borrowing significant sums of money and losing everything. What a terrible mistake.

For example, if you invest $50,000 and at one point have $150,000, then your mind will rationalize and normalize these winnings to feel less significant than they are.

The next thing you know, the market drops, and you are back at break-even or at a loss.

Don’t let your greed run you over, even if you earn a huge profit. For example, if you start with a $50,000 investment and end up with $150,000, your mind will justify and normalise these earnings instead of giving them more significance than they are.

If the market falls, you’ll be back to break even or possibly worse.

7. Cryptocurrencies are Not Like Stock Shares

Invest some time in learning about the product or service you’re investing in.

Cryptocurrencies are not like equities in that they are not publicly traded. You hold no stock in the firm and earn no dividends.

If a firm creates a cryptocurrency, it is extremely likely that the company will profit or be purchased, with no benefit to you. Even if a firm is doing well, their currency may fall.

The main exemption here might be security tokens which can allow possession to their buyers. Even then, the offering’s criteria must be followed.

Trading in cryptocurrencies, as compared to the stock market, is a totally different game.

8. You Chase Cheap Coins

Don’t chase cheap coins with dreams of Lambos and private jets.

Lots of uneducated investors in the crypto space buy low priced cryptocurrencies because they think there is a higher chance of big returns.

If presented with one coin priced at $0.01 and another at $75, they blindly purchase the $0.01 coin because they think it’s easier for a coin to go from $0.01 to $0.02, rather than from $75 to $150.

This is a common trap.

There are lots of factors that affect a coin’s price, including two important ones:

the circulating supply and the real world value of the coin.

More often than not, a cheap coin has a huge supply of coins, which dilutes the price of each coin. If the supply is massive and there is little real-world value, then the coin priced at $0.01 is not undervalued and should be priced that low.

A better factor to consider when looking for coins with growth potential is the market capitalization of the coin. The ‘market cap’ is calculated as [current price * circulating supply] and is often a better (although not perfect) indicator of a coin’s valuation by investors.

If you want to find the next gem coin, look for coins that have a low market cap.

Low market cap coins have more potential for growth, but they also come with a lot more risk (failure, illiquidity, etc.)

Ultimately, you should stay away from those coins if you’re still at a beginner level, and pick your next investments based on their potential real-world value.

9. Do Not Pursue Low-Cost Coins

Don’t chase after cheap coins while fantasising about Lambos and luxury aircraft.

Many inexperienced crypto investors acquire low-priced cryptocurrencies because they believe they have a better chance of making a profit.

When presented with a $0.01 coin and a $100 coin, they will buy the $0.01 coin because they believe it is simpler for a coin to move from $0.01 to $0.02 than from $100 to $200.

This is a typical trap.

Among other factors that affect the price of a coin, the most significant of which are the coin’s circulating supply and it’s real-world worth.

A cheap coin usually contains a large quantity of coins, which dilutes the price of each coin. If there is a large supply and little real-world value, the coin offered at $0.01 is not undervalued and should be priced at that level.

When looking for currencies with growth potential, the market capitalization of the currency is a preferable metric to examine. The ‘market cap’ is computed as [current price * circulating supply] and is frequently a better (though not always exact) estimate of a coin’s investor worth.

Look for currencies with a low market cap if you want to locate the next gem currency.

Low market cap currencies have greater potential for development, but they also carry significantly more risk (failure, illiquidity, etc.)

Finally, if you’re still a newbie, you should avoid such coins and choose your next investments based on their prospective real-world worth.

10. You Think You Must Always Be Right

I hate to tell you this, but get over yourself. You’re not always right. And it’s okay.

Investing is a game of speculation which involves some amount of luck – even for professional investors. To be a winner in this space, you only need to be right a certain percent of the time.

For example, if you 2x your investment 55% of the time, then you can afford to lose 45% of the time as you will make money in the long run.

11. You Make Sloppy Mistakes

Hold your horses, buddy! Take your time when transferring your money.

Don’t rush, and make sure the sending and receiving addresses are correct. Never type an address. Just copy and paste them. This way you avoid any chance of typos. And hey, it’s faster!

After you copy and paste it, always verify the first two characters and the last three characters match your address.

12. You Don't Diversify Your Portfolio

Your cryptocurrency investment strategy must involve diversification.

While it may be tempting, don’t put all your eggs in one basket. Every experienced investor hedges, or protects his/her risk by investing in multiple assets.

You might notice some coins correlate where when one goes up, the other goes down. If this is the case and you like both coins’ futures, then invest in both. Your investment will be much safer.

My recommendation: own a minimum of 5 cryptocurrencies.

13. You believe you must always be correct.

I’m sorry to tell you this, but you need to grow up. You are not always correct. And that’s OK.

Even for experienced investors, investing is a game of speculation that incorporates some element of luck. To win in this field, you simply need to be correct a certain percentage of the time.

For example, if you double your investment 55 percent of the time, you can afford to lose 45 percent of the time since you would profit in the long term.

14. You Make Careless Mistakes

Hold your horses, buddy! When transferring money, take as much time as you need.

Don’t hurry, and double-check the sending and receiving addresses. Never, ever type an address. Simply copy and paste them. This eliminates the possibility of typos. And, hey, it’s quicker!

After you’ve copied and pasted it, double-check that the first two and last three characters match your address.

15. Don't try to Diversify Your Portfolio

Diversification is an important part of any bitcoin investment plan.

Don’t put all your eggs in one basket, no matter how tempting it may be. Every seasoned investor hedges or shields his or her risk by investing in various assets.

You may have noticed that some coins have an inverse relationship, so that as one goes up, the other goes down. If this is the case, and you like the futures of both coins, you should invest in both. Your investment will be considerably more secure.

Own at least 5 cryptocurrencies, in my opinion.

16. You Over Diversify Your Portfolio

Be sure to pick a number of coins that you can keep track of. This means keeping up with news and price action.

My recommendation: invest in a maximum of 10 cryptocurrencies at a time.

Diversify responsibly!

17. You Don't Do Your Own Research (DYOR)

Research a coin before you invest in it.

So many people invest based off of hype. They see other investors on Twitter or Facebook talking about a coin, see the coin’s price rising, and then buy off of impulse. This often ends badly.

Do your own research.

When researching a project, you should be able to answer the following:

• What is the mission of the project?

• Who are the core team members? Have they worked together before or have past success?

• When is the mainnet expected to launch?

If you can answer these, then it’s a good start.

Don’t be afraid to miss out on investment; there will always be more to come.

18. You Research Poorly

Once you understand WHAT you should research, then next is starting the research.

The process will be time-consuming if you’re just starting. But the more you research, the better you’ll become at it.

Here are a few basics to get started:

• Have a look at each coin’s BitcoinTalk.org announcements thread and website.

• Search on the internet to see if there are reviews on the coin or mentions of it being a scam. If you see lots of talk about it being a scam on Google or Reddit, then it’s worth digging deeper into that to understand the reasoning.

• Check on the economics of the coin such as its market cap, trading volume, price history, and total versus circulating supply.

• Cross-reference opinions from industry experts. Never trust one single opinion.

19. You Extremely Diversify Your Portfolio

Choose a number of coins that you can keep track of. This entails staying current on news and price movements.
My advice is to invest in no more than ten cryptocurrencies at a time.

Diversify carefully!

20. Conduct your own research (CYOR)

Before investing in a coin, do some research on it.

So many people make investments based on hype. They see other investors discussing a coin on Twitter or Facebook, notice a rise in the price of a coin, and then buy on impulse. This often ends badly.

Conduct your own research.

While conducting research for a project, you should be able to answer the following questions:
• What is the project’s mission?
• Who are the members of the core team? Have they previously collaborated or had previous success?
• When is the mainnet expected to launch?

If you can answer these, you’re off to a good start.

Keep your options open; there will always be more investment opportunities.

21. You conduct insufficient research

After determining WHAT to research, the next step is to conduct the research.

If you’re just getting started, the process will take some time. However, the more you research, the better you’ll get at it.

Here are some fundamentals to get you started:

• Check out the BitcoinTalk.org announcements thread and website for each coin.

• Check the internet to see if there are any reviews or mentions of the coin being a scam. If you see a lot of talk about it being a scam on Google or Reddit, it’s worth looking into it further to understand why.

• Review the coin’s market cap, trading volume, price history, and total vs. circulating supply to get an understanding of the coin’s economics.

• Use opinions from industry experts as cross-references. Never believe one single opinion.

22. You Don't Keep Up to Date with your Investments

As you come to own 5, 6, 7, or more coins, the amount of responsibility on your shoulders increases.

Be sure you keep up to date with all of their developments and price action.

To do this:

• Follow them on social and through their blog

• Join their communication channels (Telegram, Discord)

• Bookmark their websites and Bitcointalk threads

23. Keep an eye on your investments and keep yourself up to date.

With each more currency you acquire, the burden of obligation grows.

Don’t forget to monitor their progress and price movements.

To accomplish this, first:

• Connect with them on social media and through their blog;
• Join their communication channels (Telegram, Discord); and
• Connect with them on social media and through their blog;

24. You Don't Have a Plan that you Stick With

Lots of folks let the market highs get to their head. Once their portfolio hits an all time high, they only want to go higher.

On the other hand, as a coin drops in price, they hold until 0 because they are stubborn about their investments.

The best way to avoid these situations is to set a target, stick with it, and don’t be greedy.

So, when you enter a position, be sure to write down your plan.

25. You Don't Take Your Profits

If you want your cryptocurrency investment strategy to profit, you have to sell and accumulate profits eventually.

Learn from others mistakes. At the end of 2017, during the big boom of cryptocurrencies, lots of investors became rich IF they sold for profits. On the other hand, many had theoretical profits but overheld into this bear market.

Now, they are stuck holding at a loss, waiting for the next bull run.

Remember: you don’t profit until you sell back to realize your gains.

26. Have a Plan That You Follow With

Many people have become captivated with the market’s highs. They only want to go higher after their portfolio reaches an all-time high.

On the other side, as the price of a coin falls, they keep until it reaches zero because they are passionate about their investments.

Setting a goal, sticking to it, and not being greedy are the best ways to prevent these situations.
So, when you start a new job, make sure to write down your strategy.

27. You Don't Keep Your Profits

Selling and accumulating earnings are necessary if your bitcoin investing strategy is to succeed.

Learn from the errors of others. During the massive cryptocurrency spike at the end of 2017, many investors got wealthy IF they sold for a profit. On the other side, many people had potential gains but continued to invest in this down market.

They are now trapped at a loss, waiting for the next bull run.

Remember that you don’t profit until you sell back to recoup your losses.

28. You Don't Cut Your Losses

Being stubborn is easy. But at the end of the day, the market moves despite how you feel.

Don’t hold a coin you no longer believe in.

You should always ask yourself: “if I had not bought this coin, would I buy this coin right now?”

Be honest with yourself. It’s okay for things to change.

Additionally, if you planned to cut losses at 15%, then do it, no matter how you feel at the time. Don’t rationalize that it will rise – cut your losses and trust the plan.

29. Avoid Cutting Your Losses

It’s simple to be obstinate. There are times when it is impossible to predict the market’s movements.
Having a coin that you no longer believe in is a bad idea.
It’s important to ask oneself, “Would I buy this coin today if I hadn’t bought it before?”
Be sincere to yourself. Even if Anything changes, it’s OK.
If you expected to reduce losses by 15%, stick to your goal, regardless of how you feel. Consider cutting your losses rather than speculating that it will rise.

30. Never Buy High

In the past, I bet your friends and family asked you about cryptocurrencies when Bitcoin was at $15,000 or $20,000.

That’s because people are naturally drawn to follow trends. However, those who jumped on the trend early will profit.

When a coin is near its all-time high, don’t buy it.

Why purchase Bitcoin for $20,000 when you can get it for $3,500? Buying high may be the appropriate move in some situations, but it is usually a mistake.

You Buy High

I bet that when Bitcoin was at $15,000 or $20,000, your friends and family were asking you about cryptocurrencies.

That’s because there is a natural tendency for people to follow trends. But those who profit are those who entered the trend early.

DO NOT buy high, especially when a coin is close to its all-time high.

After all, why buy Bitcoin at $20,000 when you can buy it at $3,500? Buying high may be the right decision in some cases, but is a mistake more often than not.

31. You Don't HODL Hard Enough

On the flip side, lots of investors are impatient and ‘cut their losses’ early because of emotions.

The cryptocurrency market is made of cycles, where prices rise and fall drastically.

If you buy high, then you will need to wait out an entire new market cycle to end up with profits – meaning a new bear, the bull run – which can be well over a year of waiting.

Remember: if you still believe in the project, then your best bet is to be patient and hold strong, even if the price is dropping fast.

32. Take Your Time and Find the Right Time to Sell

Investors might sometimes be impatient and prematurely “cut their losses” due to their own emotions.

In the bitcoin market, values increase and fall dramatically.

In order to profit from a purchase made at a high price, you will have to wait for a new market cycle, which might take several months or even more than a year.

As long as you have faith in the project, don’t become discouraged if the price begins to decrease rapidly.

33. You Must Be Familiar with Basic Maths

Any successful investor needs to understand the basic maths behind trading. If you don’t understand the real implications of a 20% drop, it’s time to learn.

Here are some examples of math-related confusions:

  • If an asset drops 50% in price, it does not need to raise 50% to break even again. In reality, it needs to raise 100%.
  • Think about it: if you purchase a coin for $100 and it drops to $50, it needs to double (+100%) in price from $50 to hit $100 again. If it only goes back up 50%, then you will have $75 – still at a loss.
  • The difference between an 80% loss and a 95% loss is extremely significant. To break even after an 80% loss, the price needs to bounce back 5x. To come back from a 95% loss, you’re looking at 20x.
  • Every 10% drop, makes a bigger and bigger difference.

34. You Must Be Familiar with Basic Maths

To be a good investor, you must have a firm grasp of the fundamentals of mathematics. If you don’t know what a 20% decline means, it’s time to get educated.

Examples of math-related mistakes:

  • It is not necessary for an asset to rise 50% in order to break even again if its price has fallen 50%. However, in actuality, it should be increased by 100%.
  • A coin that costs $100 and decreases to $50 has to double in price from $50 in order to regain its original value of $100. Even if the price simply rises by half, you will still be out $75.
  • The difference between a loss of 80% and a loss of 95% is enormous. After an 80 percent loss, the price needs to rise five times in order to break even. You’re looking at a 20x recovery from a 95% loss.
  • Every 10% percent decrease has a growing impact.

35. You Don't Use 2FA

The crypto world is the wild west. Full of opportunities, but extremely dangerous.

One crucial step when working on your cryptocurrency investment strategy is to reinforce the security of your cryptocurrencies.

Enabling 2FA on every sensitive website is the most important habit you need to adapt to increase the security of your accounts.

2FA, or two-factor authentication, is another layer of security upon login. Most cryptocurrency exchanges, wallets, and services offer to enable 2FA.

To enable 2FA, you will need to download an app on your phone – either Authy or Google Authenticator, and sync it with the exchange or wallet via a QR code. It’s super simple.

Next time you go to log in to the exchange/wallet, you will be required to enter your username, password, and the passcode that the 2FA app shows. The passcode changes every 30 seconds, so for someone to hack your account, they will need your phone as well.

36. Use 2FA

One crucial step when working on your cryptocurrency investment strategy is to reinforce the security of your cryptocurrencies.

Enabling 2FA on every sensitive website is the most important habit you need to adapt to increase the security of your accounts.

2FA, or two-factor authentication, is another layer of security upon login. Most cryptocurrency exchanges, wallets, and services offer to enable 2FA.

To enable 2FA, you will need to download an app on your phone – either Authy or Google Authenticator, and sync it with the exchange or wallet via a QR code. It’s super simple.

Next time you go to log in to the exchange/wallet, you will be required to enter your username, password, and the passcode that the 2FA app shows. The passcode changes every 30 seconds, so for someone to hack your account, they will need your phone as well.

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