Your 4 Personal Finance Rules in Cryptocurrency Investment
Did you know that you can earn from crypto? All hype and hate aside, people have made huge returns from this monster known as cryptocurrency.
Possibly you have heard of Bitcoin and Ethereum. But you wonder how you can reap the benefits. Even with benefits, in the world of business and investment, there is risk involved. The chance of making loss and profit is the way of life in investment. And crypto investment is like forex trading but with its own context.
Should you wait till you are sure enough? Any investment is riddled with a lot of possibilities. It can happen for you such that you reap big after your first investment. Also, it can sink you into a loss. Now, are you ready to cushion this uncertainty? If you can cushion the possibility of losing then be prepared to win. For businessmen say that big risks attract huge financial benefits.
Are you a beginner in crypto investment? Do you want to manage your personal finances in crypto? Here are the rules to help you indulge.
1. Know how the Crypto World runs.
For your world of crypto investment to be a sure bet, before anything else learn. The first step before plunging into the deep end of crypto is reading content from both the advocates and opposers. You will know how the two opposing thoughts relate to crypto trends.
Your sources should report information without bias. Any little information can create panic and make people sell their crypto stock. Moreover, it can make people buy for fear of losing out on potential benefits. Igor Cornelsen, a renown Brazilian investment advisor, advises on reliable and accurate information sources.
There are common phrases that are used to convey information between crypto enthusiasts. You do not want to miss out on useful information for not knowing about FOMO or HODL. They work like coded language to the only target audience. In addition to those, there are others. But you do not have to worry knowing all of them at once. As you grow to be a top crypto trader, the terminology will be at your fingertips.
You also cannot ignore cryptocurrency exchanges. Crypto exchanges will be where you do your trading of Bitcoin or even Ethereum.
You are now ready to get your hands dirty.
2. Invest Amounts you are Ready to Lose
But before you indulge in the trade, are you safe? You are thinking safe from online safety for your money. Yeah, that is important. However, are you financially safe? Can you cushion yourself from a loss and uncertainty? This means you should be ready to lose any time. And the loss should not throw you off your game. I mean, you can meet your daily needs with some other money.
For instance, if you put all your money in buying crypto, then a bear trend happens. Oh! You must have covered this. A bear trend is a dive in prices of cryptocurrencies. If the dive happens, you will panic into shock. The shock won’t help you cover your bills. So, NEVER put all your money in crypto.
3. Select your Investment Portfolio
If you list all cryptocurrencies, you will possibly take days to achieve that. Of course, you can invest in all of them. But, you will not manage the analysis needed. Even the wealthiest man with all resources will not invest in all of them.
So, do your research on potential crypto projects. All of them are projects if not companies started with specific intentions. Ripple, for instance, is a payment protocol developed by Ripple Labs. It was created to connect financial institutions and has seen an increase in use by banks.
For your research, potential crypto projects are seen by trends in prices, market cap and number of transactions made. By now, I assume you know what market cap is. Additionally, a big point to note is the overall purpose and objective of the project.
Potential coins are like Bitcoin, Ethereum, Ripple, Cardano, and Monero. It happens that most potential coins are among the top in market cap. But other coins are not good in the market cap and still potential. So, your online analysis will be key. Bitcoin is a potential coin because other coins to a significant extent depend on it. For Ethereum, digital contracts and dapps will be applicable in transactions.
4. Pick your Tools and Strategy
You aim to make money. Tools and strategies that you employ MUST work out.
If you are lazy like me, you will depend on online opinions. However, if you are a do-it-yourself guy, then your ways will matter. Your methods will rely on your continuous growth in experience. Before that, you will have to try it on your own.
You will make decisions based on previous trends to choose the appropriate time to trade. And the tools you use must be able to help you model trends. There are many tools, but you can consider most available and cheap. Google Sheets has downloadable extensions that can explore crypto prices numerically.
It is essential that your goals are clear. I once invested in Ethereum in a dive. It soared high up. I let it high up hoping it will continue to rise. You will ask yourself what happened? Imagine the hope and desire of making the most money failed. The prices dived again more than at the time I had invested. Isn’t this what is known as greed? You cannot afford to be greed. If your profit intentions are 20%, let them be. Your wait will be your LOSS.
Even with the intent to be risky, it is valuable to exercise caution.
Take the hoe and start working. Crypto can be your next big thing. Stick to your risk and safe personal finance strategy.
© 2018 Bebeto Nyamwamu