1. Don’t Invest Money You Can’t Afford To Lose
You are not buying bonds that give you a guaranteed return. The cryptocurrency market is volatile and it contains a lot of risk. If you have to take out a second mortgage on your house in order to buy a coin, DON’T DO IT! Winning in this game comes down to being smart and fighting against the hype.
2. Be Careful With The Coins You Buy
I see so many traders throwing their money around because they think it is invincible. The crazy part about the cryptocurrency industry is that it is full of some of the most intelligent computer scientists out there. This also means that it is full of hackers that want to steal your money. You need to make sure to buy your coins through a reputable exchange and store your coins in a safe wallet. Protecting your coins is vital if you plan on trading.
3. Understand What You Are Buying
Do not buy into a coin that you do not understand. I wrote an article about ICO’s and I talked about how millions of people are buying the hype of these “get rich quick” coins. You should never put your money into something that you do not understand. Although buying into an ICO might have its merits, some ICO’s (like the EOS ICO) do not even give you a coin after you pay. You were basically donating to the tech company. Just be smart and do your research.
4. Buy The Rumor, Sell The News
Once you start becoming a more advanced trader, you are going to learn more about this. You are going to end up losing money because you bought into the hype. Let me give you a secret, you should be buying in when everybody is saying to sell and you should be selling when everyone is saying to buy. Hype causes major crashes. Either buy before the hype even starts, or wait until after the hype to buy at a low point.
5. Never Join Pump and Dump Groups
If you think you are going to become a millionaire overnight, think again. Many people promise crazy returns but all they want is your money. Do not fall into any of these traps. Focus on making steady returns on GOOD currencies. Never trust somebody that claims they are making millions. If they were, they wouldn’t be trying to sell you something.