3 Simple Tips to Apply Before You Start Investing in Cryptocurrency

  • Arsenii Veriho
  • Dec 6, 2018
  • Beginners
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Investing in cryptocurrency isn’t complicated. In fact, digital currency is designed for ease of use, and learning how to trade it is no exception. Whether you’re a new investor or a seasoned trader, here are 3 tips to help you get started in the digital economy.

Make security a top priority

Although the transparent, immutable ledger of the blockchain protocol is the security backbone of the digital economy, investing in cryptocurrencies presents a unique set of risks. Top exchanges like Binance or Coinbase provide easy and secure access to giants like Bitcoin and Ethereum, but their centralized models require you to inherit some custodial risk in order to start trading crypto pairs.

Tip: Always hold a third-party to a high standard and use an offline or hardware wallet to securely store your funds. Above all else, keep your investments private and refrain from posting information about your holdings. Social engineering attacks, which use public, personal information to manipulate account vulnerabilities, are the easiest to prevent.

Do your research and learn valuation techniques

The historic highs of Bitcoin and other tokens demonstrates an immense opportunity for growth, but the volatility of the cryptocurrency market often pushes new investors to act spontaneously and to call it quits early. As with any investment, performing due diligence and valuation is a must, and holding yourself to a predetermined trading strategy will help you stay on track in a hectic, developing asset class.

Tip: Don’t invest any amount you aren’t prepared to lose and use an exchange that offers paper trading to try your hand at simulated speculation. Key indicators are always a part of valid crypto trading strategies, but practicing technical analysis without worrying about outcomes will make for a painless introduction to digital assets.

Diversify your cryptocurrency portfolio

Bitcoin is just one of many digital tokens, and diversification will allow you to minimize the risk of loss and help you preserve your budding crypto capital. Instead of relying on a single coin to see returns, consider trading other cryptocurrencies with high market capitalizations, such as Ethereum (ETH) or Ripple (XRP), to complete your token portfolio. As with traditional markets, some altcoins move against BTC trends and allow you to hedge your investments, whereas others present different trading opportunities altogether.

Tip: Based on expert recommendations, you can build a balanced crypto portfolio by allocating your funds into different digital assets. A complete portfolio might look something like this: Bitcoin (50%), Bitcoin Cash (5%), Ethereum (15%), Litecoin (10%), Monero (10%), Zcash (10%).