While higher-risk investments can mean bigger profits, you can also lose a lot. Stock market traders are aware that the money they invest is not insured. They know that there is no guarantee that they will always make a profit. However, they always choose and trade in the safest, most secure, and most stable stock market exchange.
Like the stock market, you can invest in cryptocurrency through its own exchange platforms for buying, selling, and trading. For instance, the Japan-based Binance is one of the leading and most secure exchange platforms for cryptocurrencies. If you read a review of Binance here, you will find that it is also known for discounts and low transaction fees. At the same time, the process of funds deposit and withdrawals at Binance is the same as in the stock market.
If you are thinking of investing your savings in crypto but aren’t quite sure about this monetary innovation, here are five tips about how you can increase your safety margins when investing in cryptocurrency.
You can make millions in a day and, at the same time, you can lose millions in a day. This is how volatile and risky investing in cryptocurrency. There are some market events that can entice you to jump into cryptocurrency. You should remember that, in many cases, speculation is started by a group of people who bought at a low price and then they create events that will attract investors to buy.
This will increase the demand and raise the price, particularly with Bitcoin, which is arguably the top cryptocurrency exchange in the world. Then when the price reaches a certain point, the group will unload their holdings and, eventually, prices will dive with a very sharp drop.
In that scenario, if you bought at a high price, you will then lose your money overnight. If you don’t know anything and tend to believe the news that many people make millions overnight, you are engaging a highly risky undertaking. This is not considered as an investment but as a gamble.
Do your homework. Know the real nature of cryptocurrency and how it works in the market. Study price trends over a period of time and never take a short-term look. Learn the factors that can affect the price fluctuations of cryptocurrency. Identify the cryptos that have been in the market for a long time.
Be aware that cryptocurrencies can be either small-cap, mid-cap, or large-cap. The large-caps are less risky because they have been in the market for a long time and have many investors. Bitcoin, the most popular among the cryptocurrencies in the market for so many years, is considered as large-cap.
Be careful; be very careful in your research. Know the many cryptocurrencies that have disappeared; their values are zero. The investors who still own such cryptocurrencies have lost their money completely. You can start your study on Bitcoin. Look at its historical performance. From there, you will have a better idea of how cryptocurrencies work in the market.
Go with the saying ‘Don’t put all your eggs in one basket’ and diversify your crypto investments. Identify low-risk, medium-risk, and high-risk investments. Then, assign a certain percentage to each of the risks. From the money that you allocated for cryptocurrency, invest it on two to three cryptocurrencies.
Since this is a very high-risk and highly unstable investment, you should create an investment formula or strategy so that, if you lose in one crypto investment, you will not go bankrupt. Make sure that any such loss will have only a little effect on your financial status.
Use the averaging method
Of the many strategies used in crypto investment, the averaging method is where you put the same amount of money in one cryptocurrency in periodic intervals, either weekly or monthly.
On an annual basis, review the overall status of your accumulated placement. Most of the time, you will realize a profit. Then, you can decide whether you want to cash in and get your profits or wait for another year. Using this method can help and relieve you from the stress of watching crypto prices going up and down.
Initially, start with small capital to invest in cryptocurrency. You are just starting and learning the ropes, the opportunities, and the pitfalls of this type of investment. As you go along, you may increase your initial capital.
To help ensure that you do not lose your money overnight, your initial investment should be on the strongest cryptocurrency in the market. As a reminder, do not be greedy. Put a limit on your total cash investment in crypto. The money you put in here should only be the extra income that will not hurt you if you lose everything.
These five summarized insider tips are just some of the ways to help you think about how you can invest your money in cryptocurrency. Learn the ropes, don’t be afraid to start small, and you will eventually get to where you want to be.