Cryptocurrencies seem to be the main topic of conversation when it comes to side hustles and passive income. Everybody and their grandma are hustling to get their crypto investment plan going and hope to get in on the bottom floor of the next Bitcoin.
Of course, investing in cryptocurrency, just like investing in anything else, requires serious dedication and isn’t something that should be taken lightly. If you want to see a return on your investment, you need to do some leg work first. Without it, you can easily lose your money on a bad trade. Here are some tips that should help you get started.
Research, Research, Research
This can’t be emphasized enough. Getting tips about upcoming market swings is all well and good, but that should only be a starting point in your decision-making process. Never invest money on someone’s word alone, regardless of how much you trust them. Always perform your own research and make sure you fully understand what is about to transpire before committing to a trade. Acting on rumors and hearsay is a sure way of losing your money.
Don’t Experiment Too Much
There will come a time when you have enough knowledge about the crypto market when you will be able to take some calculated risk, but as a beginner, you are far from it. At first, the best play is to stick to assets that are more established and have a legitimate history. Crypto coins like Bitcoin, Ethereum, Terra Luna, and similar should be on top of your list when deciding which crypto assets to buy. Later on, you will know enough to venture into unexplored territory, but for now, stick to the well-chartered waters.
Diversify Your Crypto Portfolio
Keeping all your eggs in one basket is never a good idea, so make sure your crypto portfolio is well-diversified. That way even if some coins take a tumble, you will retain enough value in them to salvage your position later on. The Crypto market is known for its volatility and sudden and unexpected swings are fairly common.
Choose Your Crypto Exchange Carefully
Choosing which crypto trading platform to use is critical. It isn’t enough to simply google where to buy Terra Luna, for instance, and just click on the first result that pops up. You need to research several things before deciding which crypto exchange to use. First, you need to compare transaction fees and see which one offers the most favorable terms. Another important feature is the selection of digital coins an exchange offers. The more digital assets the platform lists, the more chance you will have for investment.
Monitor Trends
Some investors swear by the old saying that the past is past and that no one should base their trading decisions on past events. That being said, sometimes you have to go back a while to fully understand developing trends. Understanding them can give you an edge that can be quite profitable. Of course, the past is only a part of the equation. Keeping an eye on future events and understanding their impact on the crypto market is crucial to fully understand and even predict trends. Even if you don’t have enough experience to do it, you can still make money on trends. Follow the crowd and never go against the market, at least until you are 100% sure you know what you are doing. Even then, make sure you have considered all the angles of such a move. After all, there is plenty to be said about the will of the people.
Set a Budget and Stick to It
Investing can be addictive at times, so much so that it is often compared to gambling. Just like a gambler often goes bust pursuing that one hand that will recuperate all their losses, investors also tend to make similar mistakes. Desperately chasing that one trade that will make up for all the losses is a sure way of losing even the money you didn’t plan on investing. That is why it is so important to have a budget and stick to it. When deciding on how much money you should devote to investing, make sure that you never invest more than you can afford to lose. Blowing your rent money on some crypto scheme will hurt you in more ways than one. People have been making even graver mistakes than that one.
Be Active
Investing in crypto is not a source of passive income, something that you can set up and just reap the benefits. IT requires active participation and can be time-consuming. It can be done as a part-time occupation, but you will need to set aside time for it every day. Tracking your investment and market, reading up on new coins and tokens, following up on the news about the industry, and assessing risks are just some of the things that will occupy your time. Crypto investing can be, and often is, very time-consuming. If you are not prepared to put in the work, you might be better off finding some other source of income.
It's a Long Game
Hit and run is not exactly a profitable tactic when it comes to crypto investing, except in some very specific situations. It is a long haul and if you are planning on some quick cash and grab, you might be in for a rude surprise. Building a profitable position takes time and effort and you need to be ready to invest both, not just money.
Keep a Reserve
Having reserve cash on hand is an excellent way of keeping liquidity and making sure you can act when an opportunity presents itself. Even if you see the best trade of your life, it won’t do you any good if all your money is tied up in other investments, and getting out takes time, not to mention you will probably lose money on such short notice. A healthy cash reserve will prevent that from happening.
