Before entering cryptocurrency market, you must define your cryptocurrency investment strategies.
There is no BEST strategy as it depends on your goals and purpose.
In this article, I am going to talk about my investment strategies.
Before my strategies, let’ s have a look at:
What is an Investment?
An investment is an asset or item acquired with the goal of generating income or appreciation. In an economic sense, an investment is the purchase of goods that are not consumed today but are used in the future to create wealth.
Who is an Investor?
An individual who commits money to investment products with the expectation of financial return. Generally, the primary goal of an investor is reducing the risk while maximizing the profit.
What is Speculation?
Speculation is the act of conducting a financial transaction that has a substantial risk of losing all value but with the expectation of a significant gain. With speculation, the risk of loss is more than offset by the possibility of a huge gain.
Who is a Speculator?
An individual who is accepting a higher level of risk in the hopes of collecting higher-than-average profits. Speculators are generally in the markets where price movements of securities are highly frequent and volatile.
As we can see the difference between an investor and a speculator, now let’ s have a look at the investment strategies.
Buy the dip, Sell the high
“We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.” – Warren Buffet
Always try to find out a good entry point, especially it is ideal when the price is low. Finding a solid project in the early phase is something that can make you rich.
Generally, people tend to buy when the price is getting high and sell it when it is getting low. That is the most common MISTAKE that I see in the cryptocurrency market.
Buy the dip, sell the high. That is my rule of making profits.
Whereas holding onto a good project for a long period of time can pay off massively, always keep in mind to take some profit in order to reduce the risk.
Do not go all in
Never buy with your whole money. Always keep some so if the price gets lower, you can buy more.
Do not Chase the Hype (FOMO)
The fear of missing out (FOMO) is the most common reasons that people lose their money in the cryptocurrency market. It is not investing, it is speculating. As an investor, you have to look at the quality of the project, not the hype.
Hype is definitely important but do not fomo in purely based on the hype.
We saw lots of coins that overhyped and made people lost their money.
Follow the market news
Investing is not about putting money on something or buying a coin. Also, you must go where the crypto market goes. A new can change the way of the market.
Always remember: More knowledge equals less risk.
Do not invest in too many cryptocurrencies
Generally, people tend to diversify their portfolio. You must have heard the saying, “Do not put all your eggs in one basket.”
Generally, it might be true but when it comes to the cryptocurrency market, I am not thinking in that way.
“Put all your eggs in one basket and watch the basket very carefully.” – Warren Buffet
Putting all your eggs in one basket might be risky but I suggest you not to invest more than 3-4 coins as it becomes hard to follow the news about your investments. (If you have time, that will not be a problem for you).
As an investor, we need to know what we are investing (developments, risks, and plans). Investing more and more coins will make it difficult.
Do not forget “Risk comes from not knowing what you’re doing.“
Keeps your funds safe in a wallet
As there are too many hacking issues, it is always best to keep your coins in a wallet.