Investing in cryptocurrency may be the latest fad but it would be a huge blunder to dive into it without knowing the risks. Investments, no matter what kind they are, will always have some risks. But, unlike traditional stock markets, the crypto market does not behave according to standard financial theory. Prices of Bitcoins are largely speculative and this is why risks can also be more.
Eight (8) tips to remember when investing in cryptocurrencies:
1. To begin with, if you do not understand something properly, you must never invest in it. This has been emphasized by Warren Buffet and holds a lot of significance. You should never put in your hard-earned money into an asset regarding which you have limited or zero knowledge.
2. To understand risks, you must research. There is no sense in following what people around you are saying. You must conduct your own background research, read articles about the blockchain to understand what it is all about, evaluate security measures to be sure you are protected against hackers. If you are planning to invest in bitcoin and using automated trading bots, you need to research speculations like bitcoin era truffa and learn the truth. No research can ever be enough and you need to constantly update yourself.
3. It is also better to get your hands dirty first to get a feel of the workings of the crypto market. This means investing a small amount at first to see how it works, and whether the risks are too great. For trading small amounts you can create an account on a reputed exchange; when you find that you are getting reasonably good returns, you can consider making bigger investments.
4. As a trader or investor in crypto coins you must not let emotions guide you. The fear of missing out or FOMO, and fear, uncertainty and, disinformation or FUD are the key threats that you should protect yourself against. The fear of missing out makes you jump into the deep side without properly considering the downsides of any investment. You tend to think that the more you trade the richer you will become. But over-trading only leads to mental exhaustion and you end up making wrong decisions. FUD is one of the biggest curses of social media networking because you can easily become a prey to fake news and fabricated images.
5. It is big mistake to be obsessed with the Bitcoin exclusively, and putting all your savings into one crypto asset just because it had been performing well. The truth is there are many crypto coins out there and you can get good returns from these too. So, never keep all your eggs in one basket. Diversifying your investments lowers your risks.
6. You must avoid pump-and-dump groups who are known to market an asset aggressively and then take advantage of the less-experienced investors when they manipulate prices and make the values crash. Most P&D groups are scammers and they can wreck you before you know it.
7. You must keep yourself updated with whatever is happening in the crypto market; for this, you must monitor trade charts and graphs. Use tools which are available for tracking your assets.
Additionally, keeping your fund secure should be your biggest concern and for this you must be prepared to take every measure needed. The crypto world is known for frequent hacks and security breaches, so you can never be too careful. Remember to type in your passwords carefully, choose exchanges which support two-factor authentication, disable unnecessary extensions, and never click on every link Google search gives to open any crypto-exchange site, unless you have really verified its authenticity.